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on Labour Economics |
| By: | Jonathan Cribb (Institute for Fiscal Studies and Institute for Fiscal Studies); Andrew Hood (Institute for Fiscal Studies and Institute for Fiscal Studies); Robert Joyce (Institute for Fiscal Studies and Institute for Fiscal Studies) |
| Abstract: | This paper estimates the effects of entering the labour market when the economy is weak on subsequent living standards using consistent long-running household survey data from the UK. In line with previous research, we find persistent scarring effects on employment and earnings. However, we also provide the first estimates of impacts on net household incomes and household expenditures – standard proxies for material living standards – and we find little or no impacts. This is primarily due to two particular forms of insurance: the UK tax and transfer system and, even more importantly on average, the incomes of parents, with whom many young adults live in the years after leaving education. The interplay between heterogeneity in labour market scarring and insurance is key to understanding why parental incomes insure so much of the shock: lower-educated young adults experience the worst labour market scarring effects, but they are also highly likely to live with their parents in the years after labour market entry (irrespective of economic conditions), and the negative labour market effects are not so persistent as to outlast the typical period of co-residence. However, young adults not living with parents do see negative and persistent scarring effects feed through to their net incomes and expenditures. It may therefore be useful for future research on scarring to focus on this group, as well as the degree to which resources are shared within households between parents and their co-resident adult children. Key findings of the research include: Leaving education when the economy is weak has a direct impact on employment and pay at least five years afterwards. Young adults five years after leaving education are still 1 percentage point less likely to be employed if they started out when the unemployment rate was 10% rather than 6% (unemployment has risen by 4 percentage points on average during the last three recessions). The average negative impact on the pre-tax earnings of young adults and their partners (if they have one) five years after leaving education is 4% – or £1,100 per year. These effects have faded away almost completely after a further five years. Some of the impact is offset by lower taxes and higher benefits. Once you account for taxes and benefits, the effect of leaving education when unemployment is high on the combined incomes of young adults and their partners (if they have one) five years later falls from 4% to 2%. Another important potential safety net is that most people live with their parents in the first few years after leaving education, irrespective of economic conditions. This is particularly important in the years immediately after leaving education, when the effects on employment and pay are the largest: between 2010 and 2015, 74% of young adults lived with their parents a year after leaving education, 54% three years in and 38% five years in. As a result, starting working life during a recession has little impact on the total resources available to the households that young adults live in, on average. Young adults’ net household incomes (including the incomes of all members of their household – most importantly parents) are hit by only 1% five years after leaving education. While there is no guarantee that resources in the household are always shared equally, at the very least this implies that many parents have the capacity to provide an important safety net for their children after they leave education. The safety net provided by parents is particularly significant because lower-educated people are both most affected by starting out in a recession and most likely to live with their parents. Five years after joining the labour market, the pre-tax earnings of young adults and their partners are 4% lower for those who left education at 16 but there is no effect on those who left when they were 19 or older. At the same five-year stage, 60% of those who left education at 16 still live with their parents, compared with 21% of those who left when they were 19 or older. For those young adults not living with parents, there are significant lasting effects on overall incomes and household spending. For this group, starting working life when the economy is weak causes household net incomes and spending to be 2–3% lower even five years later. |
| Keywords: | scarring, unemployment, household insurance |
| JEL: | D10 J23 J31 J64 |
| Date: | 2017–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:17/27&r=lab |
| By: | Elise Coudin (Institute for Fiscal Studies); Sophie Maillard (Institute for Fiscal Studies); Maxime To (Institute for Fiscal Studies) |
| Abstract: | In France, in 2014, women’s hourly wages were on average 14.4 % lower than men’s. Beyond differentials in observed characteristics, is this gap explained by segregation of women in low-wage firms, or by gender inequality within a given firm? To answer that question, we apply the approach of Card, Cardoso, and Kline (2016) on French data to disentangle the role of between-firm (sorting) and within-firm heterogeneity (bargaining) on the gender wage gap. We use a two-way fixed effect wage model, in which firm fixed effects differ between male and female employees to account for within-firm gender differences in bargaining power and wage policy. We estimate this model with linked employer-employee data covering French private sector from 1995 to 2014. The sorting effect accounts for almost 11% of the gender wage gap, whereas the bargaining effect is close to zero. This last result could be related to the protective role of the high French minimum wage level. We have access to very rich administrative data that allow us to recover information on family events. Hence, we can analyze sorting and bargaining effects all along the family life cycle. Our analysis shows that firm effect gap appears clearly around the first childbirth and deepens over the life cycle: in addition to the direct effects of childbirth on wages, mothers also experience wage losses associated to sorting into low-paying firms. |
| Keywords: | gender wage gap, gender inequalities, linked employer-employee data, two-way fixed effect models, discrimination |
| JEL: | J31 J71 J16 |
| Date: | 2018–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:18/01&r=lab |
| By: | Westphal, Matthias |
| Abstract: | In this paper, I evaluate potential side effects of the educational expansion in Germany on the learning outcomes of today's students. The educational expansion was a demand shock in the labor market of teachers, which could have thus encouraged individuals with different teaching abilities to eventually become teachers. I find that replacing a non-affected teacher with an educational expansion teacher leads to a 2 percent reduction in students' test scores. Explorative analyses suggest that these teachers are more extrinsically rather than intrinsically motivated. The results highlight that monitoring and investing in quality is important for future extensions of public institutions. |
| Keywords: | human capital acquisition,teacher effectiveness,educational expansion |
| JEL: | H75 I20 I21 I28 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:721&r=lab |
| By: | Balestra, Simone; Eugster, Beatrix; Liebert, Helge |
| Abstract: | Children starting school at older ages consistently exhibit better educational outcomes. In this paper, we underscore child development as a mechanism driving this effect. We study the causal effect of school starting age on a child's probability of developing special educational needs in early grades. We find that starting school at a relatively older age decreases the probability of developing special needs by approximately 6 percentage points. This decrease is due to a lower incidence of various behavioral and learning impairments. Importantly, the effect is not driven by non-expert over-referrals of relatively younger children to special needs services. The effect is persistent throughout compulsory schooling, resulting in higher test scores in grade eight. Although these performance differentials are significant, they do not affect labor market entry. |
| Keywords: | child development; school starting age; special needs |
| JEL: | I14 I21 J13 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12515&r=lab |
| By: | Giacomin Favre; Joël Floris; Ulrich Woitek |
| Abstract: | We analyze social mobility of decennial citizenry cohorts of Zurich born between 1780 and 1870. We categorize individuals according to their occupations and use different measures to show the level, change, and components of intergenerational mobility. Mobility was imperfect and weakly decreasing over time. Both level and change are driven by intergenerational persistence of occupations with a low socioeconomic position and low transition between low and high socioeconomic position. |
| Keywords: | Social mobility, occupational mobility, 19th century, Switzerland |
| JEL: | J62 N33 N34 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:274&r=lab |
| By: | Alexander Hijzen (OECD); Pedro S. Martins (Queen Mary University of London); Jante Parlevliet |
| Keywords: | employment, industrial relations, social dialogue |
| JEL: | J5 P52 |
| Date: | 2018–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:199-en&r=lab |
| By: | Shuai Chen; Paulina Oliva; Peng Zhang |
| Abstract: | This paper looks at the effects of air pollution on migration in China using changes in the average strength of thermal inversions over five-year periods as a source of exogenous variation for medium-run air pollution levels. Our findings suggest that air pollution is responsible for large changes in inflows and outflows of migration in China. More specifically, we find that independent changes in air pollution of the magnitude that occurred in China in the course of our study (between 1996 and 2010) are capable of reducing floating migration inflows by 50 percent and of reducing population through net outmigration by 5 percent in a given county. We find that these inflows are primarily driven by well educated people at the beginning of their professional careers, leading to substantial changes in the sociodemographic composition of the population and labor force of Chinese counties. Our results are robust to different specifications, including simple counts of inversions as instruments, different weather controls, and different forms of error variance. |
| JEL: | O15 Q53 Q56 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24036&r=lab |
| By: | Phu Nguyen-Van; Isabelle Terraz |
| Abstract: | It is nowadays accepted that labor market institutions matter in the economic development. However, empirical studies on unions’ effect are not univocal. Besides traditional indicators of unions’ presence, this paper uses a new indicator to estimate a growth equation using a recent panel dataset on OECD countries. We provide new insight on the impact of unions on the longrun performance of OECD economies. It is shown that a bargaining coverage lower than average and a high degree of union centralization can be harmful to growth. Our study makes the case for new indicators that capture more accurately the bargaining systems. |
| Keywords: | Bargaining indicators, coverage, Economic growth, Union centralization, Wage bargaining. |
| JEL: | J51 O40 O43 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2017-38&r=lab |
| By: | Chen, Anping; Dai, Tianshi; Partridge, Mark |
| Abstract: | China is experiencing rapid urbanization with the steady emergence of large cities, leading to policy discussions of the role of large cities in its development. While the consensus is that agglomeration plays an important role in economic development and large cities can act as engines of economic growth, there is relatively little empirical knowledge of the effects of agglomeration on inequality. In this study, we apply panel data from a micro firm-level survey and from city-level data to investigate whether there is a causal relationship between agglomeration and establishment wage dispersion in China. Given potential endogeneity of city size, we employ an instrumental variable regression (IV) approach. We find strong evidence that agglomeration has significant effects on wage dispersion in the short- and long-run. The link between agglomeration and wage dispersion is heterogeneous across regions. The spatially varying results appear to be due to different stages of development. Our results are consistent with two-sided sorting models in that it appears that the most productive and least productive firms are moving from inland cities to the coast. |
| Keywords: | Agglomeration, Wage Dispersion, City Size, Inequality, China |
| JEL: | R1 |
| Date: | 2017–12–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:83516&r=lab |
| By: | Axel Börsch-Supan; Irene Ferrari |
| Abstract: | The aim of this paper is to illustrate for Germany the factors that may explain the U-shaped pattern of older men’s labor force participation - from a long declining trend that began in the early 1970s to an increasing trend starting from the late 1990s - and at the same time the steady increase in older women’s labor force participation. In a first step, we provide graphical evidence of the trends of various variables which may be relevant, with the aim of investigating the presence or absence of common patterns between these factors and labor force participation. Then, through a decomposition analysis, we provide an empirical estimate of the contribution of some of these factors to the overall evolution of labor force participation. Our preliminary conclusion is that much of the change in the trend of older men’s labor force participation may be explained by changes in public pension regulations, and in particular by the phasing in of actuarial adjustments for early retirement. Regarding women, whether public pension rules play a role is unclear. Most probably, the secular change of women’s role in society is the main driver of the steadily increasing labor force participation among German women. |
| JEL: | H55 J14 J26 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24044&r=lab |
| By: | Jirjahn, Uwe (University of Trier) |
| Abstract: | From a theoretical viewpoint the relationship between foreign ownership and unionization is ambiguous. On the one hand, foreign owners have better opportunities to undermine workers' unionization. On the other hand, workers of foreign-owned firms have an increased demand for the protection provided by unions. Which of the two opposing influences dominates can vary according to moderating circumstances. This study shows that firm size and industry-level bargaining play a moderating role. The relationship between foreign ownership and unionization is negative in larger firms whereas it is positive in smaller firms. Coverage by industry-level collective bargaining makes a positive relationship both stronger and more likely. |
| Keywords: | corporate globalization, foreign direct investment, union membership, firm size, centralized collective bargaining |
| JEL: | F23 J51 J52 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11154&r=lab |