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on Labour Economics |
| By: | Glitz, Albrecht (Universitat Pompeu Fabra); Vejlin, Rune Majlund (Aarhus University) |
| Abstract: | In this paper, we study the role of coworker referrals for labor market outcomes. Using comprehensive Danish administrative data covering the period 1980 to 2005, we first document a strong tendency of workers to follow their former coworkers into the same establishments and provide evidence that these mobility patterns are likely driven by coworker referrals. Treating the presence of a former coworker in an establishment at the time of hiring as a proxy for a referral, we then show that referred workers initially earn 4.6 percent higher wages and are 2.3 percentage points less likely to leave their employers than workers hired through the external market. Consistent with a theoretical framework characterized by higher initial uncertainty in the external market but the possibility of subsequent learning about match-specific productivity, we show that these initial differences gradually decline as tenure increases. We structurally estimate the model using two different sets of auxiliary parameters and find that the noise of the initial signal about a worker's productivity is 14.5 percent lower in the referral market than in the external market, and that firms learn about their workers' true match-specific productivity with a probability of 48.4 percent per year. Counterfactual simulations show that average wages are 3.9 percent lower in the absence of a referral market, primarily because of lower average productivity in the external market. |
| Keywords: | referrals, employer learning, networks, wages, turnover |
| JEL: | J31 J63 J64 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12270&r=all |
| By: | Steve Bradley; Giuseppe Migali; Maria Navarro Paniagua |
| Abstract: | We investigate the ‘determinants’ of spatial variations in youth unemployment and NEET rates, and the presence of spatial clusters, for Italy, Spain and the UK. Using Labour Force Survey data for the period 1993-2011 at a ‘regional’ level we obtain broadly consistent measures of quarterly youth unemployment and NEET rates. Our findings suggest that youths are sensitive to aggregate labour market conditions with older youths being more cyclically sensitive than are teenagers. We find a discouraged worker effect, again larger for older youths than for teenagers. In the UK and Spain, temporary jobs are preferred to part-time jobs, perhaps as a way of avoiding unemployment, whereas in Italy the opposite occurs. There is evidence of spatial clustering of youth unemployment and NEET rates. Our paper concludes with a discussion of the implications for regional and labour market policies. |
| Keywords: | Youth unemployment, Regions, NEET, Clusters |
| JEL: | R11 R23 J40 J60 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:262342718&r=all |
| By: | Acciari, Paolo (Ministry of Economy and Finance of Italy); Polo, Alberto (New York University); Violante, Giovanni L. (New York University) |
| Abstract: | We link administrative data on tax returns across two generations of Italians to study the degree of intergenerational mobility. We estimate that a child with parental income below the median is expected to belong to the 44th percentile of its own income distribution as an adult, and the probability of moving from the bottom to the top quintile of the income distribution within a generation is 0.10. The rank-rank correlation is 0.25, and rank persistence at the top is significantly higher than elsewhere in the income distribution. Upward mobility is higher for sons, first-born children, children of self-employed parents, and for those who migrate once adults. The data reveal large variation in child outcomes conditional on parental income rank. Part of this variation is explained by the location where the child grew up. Provinces in Northern Italy, the richest area of the country, display upward mobility levels 3-4 times as large as those in the South. This regional variation is strongly correlated with local labor market conditions, indicators of family instability, and school quality. |
| Keywords: | intergenerational mobility, inequality, Italy, geographical variation |
| JEL: | J31 J61 J62 R1 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12273&r=all |
| By: | Benjamin Friedrich (Northwestern University, Kellogg School of Management); Lisa Laun (IFAU); Costas Meghir (Cowles Foundation, Yale University); Luigi Pistaferri (Stanford University, NBER, CEPR and SIEPR) |
| Abstract: | We use matched employer-employee data from Sweden to study the role of the firm in affecting the stochastic properties of wages. Our model accounts for endogenous participation and mobility decisions. We ?nd that firm-specific permanent productivity shocks transmit to individual wages, but the e?ect is mostly concentrated among the high-skilled workers; firm-specific temporary shocks mostly affect the low-skilled. The updates to worker-firm specific match effects over the life of a firm-worker relationship are small. Substantial growth in earnings variance over the life cycle for high-skilled workers is driven by firms accounting for 44% of cross-sectional variance by age 55. |
| Keywords: | Earnings dynamics, Inequality, Earnings dispersion, Rent sharing, Matched employer-employee data, competition in labor markets, Lifecycle wage growth, Lifecycle wage dispersion |
| JEL: | J24 J31 J62 J63 J64 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2175&r=all |
| By: | De Brouwer, Octave (Free University of Brussels); Leduc, Elisabeth (Free University of Brussels); Tojerow, Ilan (Free University of Brussels) |
| Abstract: | This paper investigates how the implementation of Job Search Monitoring (JSM) programs over the last two decades could have impacted the rise of disability rates in OECD countries. To do so, we use an RDD design to study how a JSM program that was implemented in 2006 in Belgium could have played a role not only in the transition to employment and inactivity but also in the transition to disability. The RDD exploits the fact that the program was only targeted at long‐term unemployed workers below the age of 50. Our results show that the JSM program has had a large impact on the transition rate from unemployment to disability and no impact on the transition rate to employment or inactivity. More precisely, individuals just below the age of 50 (the treatment group) are 1.43 percentage points (115%) more likely than individuals just above the age cut‐off (the control group) to enter into disability during the next quarter. Looking at heterogeneous effects, we find that the effect is above all important for women and more particularly for single‐women households. Overall, our study shows that JSM programs can have spillover effects on other social security branches, such as work disability. This is an important concern since it implies that JSM programs can push some individuals even further away from the labour market. Finally, our results show that the implementation of JSM could, constitute a viable explanation for the rise of the disability rate amongst unemployed workers. |
| Keywords: | disability, unemployment, Job Search Monitoring |
| JEL: | I13 J64 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12304&r=all |
| By: | Mathae, Thomas Y (Banque centrale du Luxembourg); Millard, Stephen (Bank of England); Rõõm, Tairi (Eesti Pank); Wintr, Ladislav (Banque centrale du Luxembourg); Wyszyński, Robert (Narodowy Bank Polski) |
| Abstract: | We use firm-level survey data from 25 EU countries to analyse how firms adjust their labour costs (employment, wages and hours) in response to shocks. We develop a theoretical model to understand how firms choose between different ways to adjust their labour costs. The basic intuition is that firms choose the cheapest way to adjust labour costs. Our empirical findings are in line with the theoretical model and show that the pattern of adjustment is not much affected by the type of the shock (demand shock, access-to-finance shock, ‘availability of supplies’ shock), but differs according to the direction of the shock (positive or negative), its size and persistence. In 2010–13, firms responding to negative shocks were most likely to reduce employment, then hourly wages and then hours worked, regardless of the source of the shock. Results for the 2008–09 period indicate that the ranking might change during deep recession as the likelihood of wage cuts increases. In response to positive shocks in 2010–13, firms were more likely to increase wages, followed by increases in employment and then hours worked suggesting an asymmetric reaction to positive and negative shocks. Finally, we show that strict employment protection legislation and high centralisation or coordination of wage bargaining make it less likely that firms reduce wages when facing negative shocks. |
| Keywords: | Shocks; firms; labour cost adjustment; wages; employment; hours; survey |
| JEL: | D21 D22 D24 |
| Date: | 2019–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0791&r=all |
| By: | Houseworth, Christina A. (Hobart & William Smith Colleges); Chiswick, Barry R. (George Washington University) |
| Abstract: | This paper analyzes the status of being currently divorced among European and Mexican immigrants in the U.S., among themselves and in comparison to the native born of the same ancestries. The data are for males and females age 18 to 55, who married only once, in the 2010-2014 American Community Surveys. Among immigrants, better job opportunities, measured by educational attainment, English proficiency and a longer duration in the U.S. are associated with a higher probability of being divorced. Those who married prior to migration and who first married at an older age are less likely to be divorced. Those who live in states with a higher divorce rate are more likely to be divorced. Thus, currently being divorced among immigrants is more likely for those who are better positioned in the labor market, less closely connected to their ethnic origins, and among Mexican immigrants who live in an environment in which divorce is more prevalent. |
| Keywords: | human capital, gender, immigrants, minorities, divorce, marriage, demographics |
| JEL: | J12 J15 J16 J24 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12295&r=all |
| By: | Tobias Seidel; Jan Wickerath |
| Abstract: | We use a spatial general equilibrium model with potential commuting of workers between their place of work and their place of residence to analyze the effects of rush hours on the spatial allocation of employment and population, average labor productivity and the housing market. Abolishing traffic congestion during rush hours leads to a more urbanized economy as households move from the low-density countryside to the commuter belts of cities rather than from the city centers to the periphery. Employment, however, becomes more agglomerated in high-density large cities. This adjustment implies an increase of average labor productivity of 7.2 percent and higher inequality of housing costs. |
| Keywords: | urbanization, commuting, traffic, congestion, spatial general equilibrium |
| JEL: | R12 R13 R41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7587&r=all |
| By: | Hospido, Laura (Bank of Spain); Laeven, Luc (CEPR); Lamo, Ana (European Central Bank) |
| Abstract: | We examine gender differences in career progression and promotions in central banking, a stereotypical male-dominated occupation, using confidential anonymized personnel data from the European Central Bank (ECB) during the period 2003-2017. A wage gap emerges between men and women within a few years of hiring, despite broadly similar entry conditions in terms of salary levels and other observables. We also find that women are less likely to be promoted to a higher salary band up until 2010 when the ECB issued a public statement supporting diversity and took several measures to support gender balance. Following this change, the promotion gap disappears. The gender promotion gap prior to this policy change is partly driven by the presence of children. Using 2012-2017 data on promotion applications and decisions, we explore the promotion process in depth, and confirm that during this most recent period women are as likely to be promoted as men. This results from a lower probability of women to apply for promotion, combined with a higher probability of women to be selected conditional on having applied. Following promotion, women perform better in terms of salary progression, suggesting that the higher probability to be selected is based on merit, not positive discrimination. |
| Keywords: | gender gaps, working histories, promotions, central banking |
| JEL: | J16 J31 J41 J63 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12306&r=all |
| By: | Becker, Sascha O. (University of Warwick); Fernandes, Ana (University of Bern); Weichselbaumer, Doris (University of Linz) |
| Abstract: | Due to conventional gender norms, women are more likely to be in charge of childcare than men. From an employer's perspective, in their fertile age they are also at "risk" of pregnancy. Both factors potentially affect hiring practices of firms. We conduct a large-scale correspondence test in Germany, Switzerland, and Austria, sending out approx. 9,000 job applications, varying job candidate's personal characteristics such as marital status and age of children. We find evidence that, for part-time jobs, married women with older kids, who likely finished their childbearing cycle and have more projectable childcare chores than women with very young kids, are at a significant advantage vis-avis other groups of women. At the same time, married, but childless applicants, who have a higher likelihood to become pregnant, are at a disadvantage compared to single, but childless applicants to part-time jobs. Such effects are not present for full-time jobs, presumably, because by applying to these in contrast to part-time jobs, women signal that they have arranged for external childcare. |
| Keywords: | experimental economics, discrimination, fertility |
| JEL: | C93 J16 J71 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12308&r=all |
| By: | Alexander Mihailov (Department of Economics, University of Reading); Giovanni Razzu (Department of Economics, University of Reading); Zhe Wang (Department of Economics, University of Reading) |
| Abstract: | This paper studies the effects of monetary policy on the national rates of unemployment in Germany, France, Italy and Spain, the four largest economies of the European Monetary Union (EMU), since the introduction of the euro in 1999 and before and after the Global Financial Crisis (GFC) of 2007-09. Estimating and simulating a version of a canonical medium-scale New Keynesian dynamic stochastic general equilibrium (DSGE) model with indivisible labor that incorporates unemployment developed by Galí, Smets and Wouters (2012), the paper compares the relative importance of monetary policy shocks, risk premium shocks, wage markup shocks and labor supply shocks and studies their effects on other labor market variables, such as labor force participation and real wages. We find that the same monetary policy of the European Central Bank (ECB) has had heterogeneous effects on unemployment rates and other labor market variables in these four major EMU economies. Moreover, in all of them monetary policy shocks are the second largest source of unemployment rate variability in the short, medium and long run, only preceded by risk premium shocks. Our results also confirm that the post-GFC zero lower bound environment has rendered ECB's interest rate policy much less powerful in affecting EMU unemployment rates. In addition to the heterogeneity documented in the effects of monetary policy along various labor market dimensions across the countries in our sample, we also reveal that the EMU economies are, further, characterized by important differences along these dimensions with respect to the United States (US). |
| Keywords: | single monetary policy, European Monetary Union, unemployment rate fluctuations, labor market heterogeneity, New Keynesian DSGE models, Bayesian estimation |
| JEL: | D58 E24 E31 E32 E52 |
| Date: | 2019–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2019-07&r=all |
| By: | Michael Dotsey (Federal Reserve Bank of Philadelphia); Wenli Li (Federal Reserve Bank of Philadelphia); Fang Yang (Louisiana State University) |
| Abstract: | We examine the role of demographics and changing industrial policies in accounting for the rapid rise in household savings and in per capita output growth in China since the mid-1970s. The demographic changes come from reductions in the fertility rate and increases in life expectancy, while the industrial policies take many forms. These policies cause important structural changes; first benefiting private labor-intensive firms by incentivizing them to increase their share of employment, and later on benefiting capital-intensive firms resulting in an increasing share of capital devoted to heavy industries. We conduct our analysis in a general equilibrium economy that also features endogenous human capital investment. We calibrate the model to match key economic variables of the Chinese economy and show that demographic changes and industrial policies both contributed to increases in savings and output growth but with differing intensities and at different horizons. We further demonstrate the importance of endogenous human capital investment in accounting for the economic growth in China. |
| Keywords: | aging, credit policy, household saving, output growth, China |
| JEL: | E21 J11 J13 L52 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2019-030&r=all |
| By: | Engbom, Niklas (Federal Reserve Bank of Minneapolis) |
| Abstract: | I develop an idea flows theory of firm and worker dynamics in order to assess the consequences of population aging. Older people are less likely to attempt entrepreneurship and switch employers because they have found better jobs. Consequently, aging reduces entry and worker mobility through a composition effect. In equilibrium, the lower entry rate implies fewer new, better job opportunities for workers, while the better matched labor market dissuades job creation and entry. Aging accounts for a large share of substantial declines in firm and worker dynamics since the 1980s, primarily due to equilibrium forces. Cross-state evidence supports these predictions. |
| Keywords: | Demographics; Employment; Economic growth; Labor turnover; Entrepreneurial choice |
| JEL: | E24 J11 O40 |
| Date: | 2019–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmwp:756&r=all |
| By: | Xing, Chunbing (Beijing Normal University); Sun, Yan (Beijing Normal University) |
| Abstract: | We study how the migration decision of young women in rural China is shaped by the return arrangement and opportunities of college education. Women outnumbered men in young rural-urban migrants in the early 2000s, but the surplus of young women has recently disappeared. We propose that the temporary nature of migration and an earlier return time relative to men are the major reasons that women migrate at a younger age. When higher education expansion increased women's chance of permanent migration, women stayed in school longer. Empirical evidence is consistent with this hypothesis. Marriage motives and demand factors are also considered. |
| Keywords: | migration, gender, education expansion, marriage |
| JEL: | J12 J16 O15 R23 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12311&r=all |
| By: | Koşar, Gizem (Federal Reserve Bank of New York); Ransom, Tyler (University of Oklahoma); van der Klaauw, Wilbert (Federal Reserve Bank of New York) |
| Abstract: | Residential mobility rates in the U.S. have fallen considerably over the past three decades. The cause of the long-term decline remains largely unexplained. In this paper we investigate the relative importance of alternative drivers of residential mobility, including job opportunities, neighborhood and housing amenities, social networks and housing and moving costs, using data from two waves of the NY Fed's Survey of Consumer Expectations. Our hypothetical choice methodology elicits choice probabilities from which we recover the distribution of preferences for location and mobility attributes without concerns about omitted variables and selection biases that hamper analyses based on observed mobility choices alone. We estimate substantial heterogeneity in the willingness-to-pay (WTP) for location and housing amenities across different demographic groups, with income considerations, proximity to friends and family, neighbors' shared norms and social values, and monetary and psychological costs of moving being key drivers of migration and residential location choices. The estimates point to potentially important amplifying roles played by family, friends, and shared norms and values in the decline of residential mobility rates. |
| Keywords: | migration, geographic labor mobility, neighborhood characteristics |
| JEL: | J61 R23 D84 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12271&r=all |
| By: | Niknami, Susan (SOFI, Stockholm University); Schröder, Lena (SOFI, Stockholm University); Wadensjö, Eskil (Stockholm University) |
| Abstract: | This paper uses administrative data to in detail document how the share of youths not in employment, education or training has evolved over time in the Scandinavian countries. We study both first- and second-generation immigrant youths as well as natives to explore whether the pattern differ depending on the region of origin. We show that the NEET rates are higher among youths with an immigrant background compared to youths with a native background in all countries. Even when controlling for youth background characteristics, first- and second-generation immigrant youths have significantly higher probability of being in NEET compared to native youths. |
| Keywords: | ethnic minority youths, NEET, Nordic countries |
| JEL: | J15 J13 J61 J64 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12274&r=all |
| By: | Sprengholz, Maximilian (DIW Berlin); Wieber, Anna (DIW Berlin); Holst, Elke (DIW Berlin) |
| Abstract: | We exploit the natural experiment of German reunification in 1990 to investigate if the institutional regimes of the formerly socialist (rather gender-equal) East Germany and the capitalist (rather gender-traditional) West Germany shaped different gender identity prescriptions of family breadwinning. We use data for three periods between 1984 and 2016 from the representative German Socio-Economic Panel (SOEP). Density discontinuity tests and fixed-effects regressions suggest that married couples in West (but not East) Germany diminished the wife's labor market outcomes in order to avoid situations where she would earn more than him. However, the significance of the male breadwinner prescription seems to decline in West Germany since reunification, converging to the more gender-egalitarian East Germany. Our work emphasizes the view that political and institutional frameworks can shape fairly persistent gender identity prescriptions that influence house-hold economic decisions for some time, even when these frameworks change. |
| Keywords: | gender identity, male breadwinner norm, institutions, female labor market outcomes, SOEP |
| JEL: | J16 J12 D10 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12284&r=all |
| By: | Jessica E. Pac; Ann P. Bartel; Christopher J. Ruhm; Jane Waldfogel |
| Abstract: | This paper evaluates the effect of Paid Family Leave (PFL) on breastfeeding, which we identify using California’s enactment of a 2004 PFL policy that ensured mothers up to six weeks of leave at a 55 percent wage replacement rate. We employ synthetic control models for a large, representative sample of over 270,000 children born between 2000 and 2012 drawn from the restricted-use versions of the 2003 – 2014 National Immunization Surveys. Our estimates indicate that PFL increases the overall duration of breastfeeding by nearly 18 days, and the likelihood of breastfeeding for at least six months by 5 percentage points. We find substantially larger effects of PFL on breastfeeding duration for some disadvantaged mothers. |
| JEL: | I12 I18 J13 J18 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25784&r=all |