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on Labour Economics |
| By: | Ransom, Tyler (University of Oklahoma) |
| Abstract: | This paper examines the role of labor market frictions and moving costs in explaining the migration behavior of US workers by employment status. Using data on low-skilled workers from the Survey of Income and Program Participation (SIPP), I estimate a dynamic model of individual labor supply and migration decisions. The model incorporates a reduced-form search model and allows for migration for non-market reasons. My estimates show that moving costs are substantial and that labor market frictions primarily inhibit migration of the employed. I use the model to study migration responses to local labor market shocks and to a moving subsidy. Workers' preferences for non-market amenities, coupled with substantial moving costs and employment frictions, grant market power to incumbent employers. Large moving costs also likely affect employers' recruiting behavior. |
| Keywords: | migration, job search, dynamic discrete choice |
| JEL: | C35 E32 J22 J61 J64 R23 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12139&r=all |
| By: | Acharya, Sushant (Federal Reserve Bank of New York); Wee, Shu Lin (Carnegie Mellon University) |
| Abstract: | We provide an information-based theory of matching efficiency fluctuations. Rationally inattentive firms have limited capacity to process information and cannot perfectly identify suitable applicants. During recessions, higher losses from hiring unsuitable workers cause firms to be more selective in hiring. When firms cannot obtain sufficient information about applicants, they err on the side of caution and accept fewer applicants to minimize losses from hiring unsuitable workers. Pro-cyclical acceptance rates drive a wedge between meeting and hiring rates, explaining fluctuations in matching efficiency. Quantitatively, our model replicates the joint behavior of unemployment rates and matching efficiency observed since the Great Recession. |
| Keywords: | rational inattention; hiring behavior; matching efficiency; composition of unemployed |
| JEL: | D8 E32 J63 J64 |
| Date: | 2019–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:878&r=all |
| By: | Lee, David S. (Princeton University); Leung, Pauline (Cornell University); O'Leary, Christopher J. (Upjohn Institute for Employment Research); Pei, Zhuan (Cornell University); Quach, Simon (Princeton University) |
| Abstract: | Central to the welfare analysis of income transfer programs is the deadweight loss associated with possible reforms. To aid analytical tractability, its measurement typically requires specifying a simplified model of behavior. We employ a complementary "decomposition" approach that compares the behavioral and mechanical components of a policy's total impact on the government budget to study the deadweight loss of two unemployment insurance policies. Experimental and quasi-experimental estimates using state administrative data show that increasing the weekly benefit is more efficient (with a fiscal externality of 53 cents per dollar of mechanical transferred income) than reducing the program's implicit earnings tax. |
| Keywords: | behavioral and mechanical effects, decomposition, sufficient statistics, optimal unemployment insurance, partial unemployment insurance, unemployment insurance, regression kink design, deadweight loss, fiscal externality |
| JEL: | C14 C20 C31 H2 H23 J64 J65 J68 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12154&r=all |
| By: | Burrone, Sara (University of Florence); Giannelli, Gianna Claudia (University of Florence) |
| Abstract: | This paper investigates the relationship between child labor and status in employment in adulthood. We aim to contribute to the literature that focuses on the obstacles to the formation early in life of the skills that allow people to avoid vulnerability. Using the panel data survey for the Kagera region of Tanzania, we select children who were 7 to 15 years old in the 1990s and follow up with them in the first decade of the 2000s to study the consequences of child labor on adult employment. We estimate fixed effects linear probability models. We find that child labor is associated with vulnerable employment in adulthood. Negative adult employment effects arise when children who are younger than 11-12 work more than ten to twenty hours per week. This result is driven by girls. As for types of child labor, work on the household farm shows the largest negative effects. |
| Keywords: | child labor, vulnerable employment, unpaid work, women's employment in developing countries, Kagera region of Tanzania, Africa |
| JEL: | J13 J21 J24 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12162&r=all |
| By: | Albanese, Andrea; Ghirelli, Corinna; Picchio, Matteo |
| Abstract: | We study how unemployment benefit eligibility affects the layoff exit rate by exploiting quasi-experimental variation in eligibility rules in Italy. By using a difference-indifferences estimator, we find an instantaneous increase of about 12% in the layoff probability when unemployment benefit eligibility is attained, which persists for about 16 weeks. These findings are robust to different identifying assumptions and are mostly driven by jobs started after the onset of the Great Recession, in the South and for small firms. We argue that the moral hazard from the employer’s side is the main force driving these layoffs. |
| Keywords: | Unemployment insurance,layoffs,employer–employee moral hazard,difference-in-differences,heterogeneous effects |
| JEL: | C31 C41 J21 J63 J65 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:323&r=all |
| By: | Mertens, Matthias |
| Abstract: | This article investigates how changing production processes and increasing market power at the firm level relate to a fall in Germany's manufacturing sector labour share. Coinciding with the fall of the labour share, I document a rise in firms' product and labour market power. Notably, labour market power is a more relevant source of firms' market power than product market power. Increasing product and labour market power, however, only account for 30% of the fall in the labour share. The remaining 70% are explained by a transition of firms towards less labour-intensive production activities. I study the role of final product trade in causing those secular movements. I find that rising foreign export demand contributes to a decline in the labour share by increasing labour market power within firms and by inducing a reallocation of economic activity from nonexporting-high-labour-share to exporting-low-labour-share firms. |
| Keywords: | labour share,market power,labour market distortions,international trade,factor substitution |
| JEL: | D24 E25 F16 J50 L10 L60 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhcom:32019&r=all |
| By: | Shuaizhang Feng (Jinan University); Naijia Guo (The Chinese University of Hong Kong) |
| Abstract: | This paper studies the effect of state-owned enterprises on the dynamics of the Chinese urban labor market. Using longitudinal monthly panel data, we document very low dynamics in the labor market, especially in the state sector. We develop and calibrate an equilibrium search and matching model with three differences between the state and the non-state sector: labor productivity, labor adjustment cost, and workers’ bargaining power. Counterfactual analysis shows that the lack of dynamics is mainly driven by the strong bargaining power of state-sector workers. Eliminating the differences between the two sectors substantially reduces the unemployment rate and long-term unemployment rate. |
| Keywords: | state sector, labor market dynamics, search and matching, China, long-term unemployment |
| JEL: | J64 J45 P23 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2019-008&r=all |
| By: | Mörk, Eva (Uppsala University); Sjögren, Anna (IFAU - Institute for Evaluation of Labour Market and Education Policy); Svaleryd, Helena (Uppsala University) |
| Abstract: | We study the effects of parental job loss on children’s health, educational achievement and labor market success as young adults. Past evidence shows mixed results which could be due to small sample sizes and that workers who suffer job loss are a selected group. Using Swedish register data, including more than 140,000 children whose parents were displaced due to workplace closures, and conditioning on a wide set of pretreatment outcomes of both parents and children, we find no effects of parental job loss on childhood health, school performance or outcomes as young adults although parents are negatively affected. |
| Keywords: | Parental unemployment; workplace closure; child health; human capital formation |
| JEL: | I12 J11 |
| Date: | 2019–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2019_003&r=all |
| By: | Haaland, Ingar (Dept. of Economics, Norwegian School of Economics and Business Administration); Roth, Christopher (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | We examine whether beliefs about racial discrimination causally affect support for pro-black policies. Using representative samples of Americans, we elicit quantitative and incentivized beliefs about the extent of labor market discrimination against blacks. 55 percent overestimate the extent of discrimination against blacks, and Republicans are 19 percentage points less likely than Democrats to overestimate discrimination. An information treatment substantially narrows Republican–Democrat differences in beliefs, but fails to narrow differences in political behavior. Overall, the results demonstrate that correcting biases in beliefs about the extent of racial discrimination is not sufficient to reduce political polarization in support for pro-black policies. |
| Keywords: | Racial discrimination; Beliefs; Pro-black Policies; Policy Preferences |
| JEL: | C91 D83 J15 J71 |
| Date: | 2019–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2019_002&r=all |
| By: | Kabátek, Jan (University of Melbourne) |
| Abstract: | Administrative divorce is an optional divorce procedure which allows couples to bypass the court system and dissolve their marriages in a streamlined, uncontested process. The lack of court involvement renders the administrative divorce faster and less expensive than the conventional divorce. In this paper, I investigate whether the administrative divorce option affected the stability of marriages in the Netherlands. Leveraging the ban of the procedure in 2009, I show that the divorce risks were 11.6% higher under the legal regime which allowed for administrative divorce. This effect is causal, and it exhibits considerable heterogeneity, being stronger among dual-earner couples, native couples, and couples living in rural regions. |
| Keywords: | marital stability, divorce, administrative divorce, divorce costs |
| JEL: | J12 J18 K36 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12150&r=all |
| By: | Boeri, Tito; Ichino, Andrea; Moretti, Enrico; Posch, Johanna |
| Abstract: | In many European countries, wages are determined by collective bargaining agreements intended to improve wages and reduce inequality. We study the local and aggregate effects of collective bargaining in Italy and Germany. The two countries have similar geographical differences in firm productivity - with the North more productive than the South in Italy and the West more productive than the East in Germany - but have adopted different models of wage bargaining. Italy sets wages based on nationwide contracts that allow for limited local wage adjustments, while Germany has moved toward a more flexible system that allows for local bargaining. We find that, as a consequence, Italy exhibits limited geographical wage differences in nominal terms and almost no relationship between local productivity and local nominal wages, while Germany has larger geographic wage differences and a tighter link between local wages and local productivity. While the Italian system is successful at reducing nominal wage inequality, it also creates costly geographic imbalances. In Italy, low productivity provinces have significantly higher non-employment rates than high productivity provinces, because employers cannot lower wages, while in Germany the relationship between non-employment and productivity is significantly weaker. In Italy, the relationship between real wages and productivity is negative, with lower real wages in the North compared to the South, since the latter has low housing costs but similar nominal wages. Thus, conditional on having a job, Italian workers have higher purchasing power in the South, but the probability of having a job is higher in the North. We conclude that the Italian system has significant costs in terms of forgone aggregate earnings and employment because it generates a spatial equilibrium where workers queue for jobs in the South and remain unemployed while waiting. If Italy adopted the German system, aggregate employment and earnings would increase by 11.04% and 7.45%, respectively. Our findings are relevant for several other European countries with systems similar to Italy's. |
| JEL: | J3 J5 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13545&r=all |
| By: | Adam, Antonis; Garas, Antonios; Lapatinas, Athanasios |
| Abstract: | This paper analyses the impact of economic complexity on the labour market using annual data on OECD countries for the period 1985-2008 and averaged data over the period 1990-2010 for 74 developed and developing countries with a large number of controls. We show that moving to higher levels of economic sophistication leads to less unemployment and more employment, showing that economic complexity does not induce job loss. Our findings remain robust across alternative econometric specifications. Furthermore, we place the spotlight on the link between products’ embodied knowledge (sophistication) and labour market outcomes at the micro-level. We build a product-level index that attaches a product to the average level of unemployment (or employment) in the countries that export it. With this index, we illustrate how the development of sophisticated products is associated with changes in the labour market and show that the economic sophistication of an economy captures information about the economy’s job creation and destruction. |
| Keywords: | economic complexity; product sophistication; unemployment; employment |
| JEL: | C13 J01 O31 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92401&r=all |
| By: | Lobo, José (School of Sustainability, Arizona State University); Mellander, Charlotta (Jönköping International Business School, Jönköping University & Centre of Excellence for Science and Innovation Studies (CESIS)) |
| Abstract: | We investigate if there are positive economic effects for individuals residing in ethnic neighborhoods, in particular if the likelihood of labor market participation among foreign born is affected by residentially aggregating with other people from the same region. We also examine to what extent the income level among foreign born who has a job is affected by the extent to which they congregate in ethnic enclaves. We use Swedish micro-level data for the time period 2007 to 2015 and run a Heckman estimation for the population overall, for immigrants, but also for four distinct immigration groups: those from poor and middle-income countries in Africa or Asia, from Former Yugoslavia, and from the Middle East. We control for personal and neighborhood characteristics, as well as work place characteristics. The results suggest that there may be positive effects from ethnic concentration, but only if the group makes up a significant share of the population in that neighborhood. |
| Keywords: | Labor market participation; foreign born; immigration; clustering effects; income levels |
| JEL: | J15 J31 R23 |
| Date: | 2019–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0475&r=all |
| By: | Norlander, Peter |
| Abstract: | The growing divergence in U.S. employee relations is described through a review of national and state-level changes to employment protection laws. Major employment laws are reviewed, as are the significant exceptions to the laws, and exemptions to the exceptions. Major regulatory actions, as well as reversals of the regulations, and reversals of the reversals are also described. An analysis of changes to state employment policies since 2000 shows an increasing ideologically driven divergence within the country between left-leaning “equity and voice” states and right-leaning “individual rights and efficiency” states. Instability and divergence are major features of the U.S. system of employee relations that require additional scrutiny. |
| Keywords: | Employee relations,employment protection,federalism,divergence |
| JEL: | J50 J80 H77 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:321&r=all |
| By: | Kelly Vosters; Jørgen Modalsli (Statistics Norway) |
| Abstract: | Intergenerational persistence estimates are susceptible to several well-documented biases arising from income measurement, and it has become standard practice to construct income measures to mitigate these. However, remaining bias can lead to a spurious grandparent coefficient estimate in multigenerational regressions, a recent focus of the mobility literature. We show with theory and simulations that even using a 30-year income average can result in a small positive spurious grandfather coefficient estimate. We further propose an IV approach, showing that it is not susceptible to this spillover bias in simplified settings and that it can provide bounds on the parameters in a more general scenario. With administrative data from Norway, we reveal a positive spillover bias in the grandfather coefficient estimates, and the combined evidence from our OLS and IV approaches suggest the preferred small positive OLS estimate could still be upward biased. |
| Keywords: | Multigenerational mobility; income mobility; measurement error; spillover bias |
| JEL: | J62 C30 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:897&r=all |
| By: | Mizushima, Atsue |
| Abstract: | In spite of an identical initial condition, why are some parts of the world so rich and others so poor? To address this question, this paper constructs a simple theoretical model that incorporates human infrastructure and child labor The first part of the paper shows that the condition of bifurcation from an identical initial condition depends on the technology level. We also show that current dynamic trends highly depend on initial endowments and productivity. The second part of the paper examines the effect of development assistance in recipient countries. By analyzing two types of programs; the elimination of child labor and support to strengthen human infrastructure, we show that the former (latter) program is effective for middle- (low-) income countries. |
| Keywords: | Child labor, human infrastructure, human capital, divergence, poverty trap, development aid |
| JEL: | I00 J01 O11 O41 |
| Date: | 2019–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92238&r=all |
| By: | Becher, Michael; Stegmueller, Daniel |
| Keywords: | Voting; Trade union; Political process |
| JEL: | A12 D72 J51 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:tse:iastwp:122815&r=all |