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on Labour Economics |
| By: | Francesco De Palma; Yann Thommen |
| Abstract: | Policy advisers repeatedly call on Western European countries to reform their employment protection legislation (EPL) by adopting layoff taxes to finance unemployment insurance (UI). This new design, partly based on the existing "experience-rating" (ER) system in the U.S., would induce firms to internalize layoff fiscal costs and hence reduce unemployment. Its success remains uncertain in economies with a collective wage-setting system, as in many Western European countries. Using a matching model with endogenous job destruction, we provide an ex-ante evaluation of this policy reform’s effects on labor market outcomes in a firm-level bargaining economy and a sector-level bargaining one. Using numerical exercises, we show that compared to a scenario of a simple increase in EPL stringency, the implementation of an ER system results in a decrease in unemployment under both bargaining regimes. Because of the possibility for firms to adjust most terms and conditions of employment (including wage) in decentralized negotiations, juxtaposing the ER system with the existing EPL yields the best labor market performance under a firm-level bargaining regime. The lack of internal flexibility in sector-level bargaining calls for accompanying the implementation of the ER with a relaxation of the existing EPL’s stringency. Lastly, we show that in industries with a turbulent economic environment, accompanying the introduction of ER while reducing the existing EPL’s strictness is recommended. |
| Keywords: | Search and matching models, Collective bargaining, Experience rating, Employment protection. |
| JEL: | E10 J48 J50 J60 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2019-16&r=all |
| By: | Kai-Uwe Müller (German Institute for Economic Research Berlin (DIW Berlin)); Michael Neumann; Katharina Wrohlich (German Institute for Economic Research Berlin (DIW Berlin)) |
| Abstract: | The paper extends a static discrete-choice labor supply model by adding participation and hours constraints. We identify restrictions by survey information on the eligibility and search activities of individuals as well as actual and desired hours. This provides for a more robust identification of preferences and constraints. Both, preferences and restrictions are allowed to vary by and are related through observed and unobserved characteristics. We distinguish various restrictions mechanisms: labor demand rationing, working hours norms varying across occupations, and insufficient public childcare on the supply side of the market. The effect of these mechanisms is simulated by relaxing different constraints at a time. We apply the empirical frame- work to evaluate an in-work benefit for low-paid parents in the German institutional context. The benefit is supposed to increase work incentives for secondary earners. Based on the structural model we are able to disentangle behavioral reactions into the pure incentive effect and the limiting impact of constraints at the intensive and extensive margin. We find that the in-work benefit for parents substantially increases working hours of mothers of young children, especially when they have a low education. Simulating the effects of restrictions shows their substantial impact on employment of mothers with young children. |
| Keywords: | labor supply, hours restrictions, involuntary unemployment, gender |
| JEL: | J22 J23 J16 J64 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:pot:cepadp:03&r=all |
| By: | Johan Klaesson; Özge Öner; Dieter Pennerstorfer |
| Abstract: | This article analyses the relationship between the size and the quality of ethnic enclaves on immigrants’ labor market integration. Using exogenously defined grid cells to delineate neighborhoods, we find robust empirical evidence that the employment rate of the respective immigrant group in the vicinity (as a measure of enclave quality) facilitates labor market integration of new immigrants. The influence of the overall employment rate and the share of co-nationals in the neighborhood tend to be positive, but less robust. We thus conclude that the quality is more important than the size of ethnic enclave in helping new immigrants finding jobs. |
| Keywords: | Refugee immigrants, Ethnic enclave quality, Labor market outcomes |
| JEL: | F22 J15 J60 R23 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2019_07&r=all |
| By: | Jirjahn, Uwe; Mohrenweiser, Jens |
| Abstract: | While education and labor force participation of women have been increased, there is still a substantial gender gap in labor market opportunities. This gives rise to the question of what factors lead employers to promote work-family balance and gender equality. We address this question by examining the influence of works councils on the gender policies of establishments in Germany. Using data of the IAB Establishment Panel, we find that the incidence of a works council is associated with an increased likelihood that an establishment provides family-friendly practices and promotes equal opportunities of men and women. This finding also holds in a recursive multivariate probit model that accounts for potential endogeneity of works council incidence. |
| Keywords: | Non-union employee representation,works councils,gender equality,work-family balance,equal opportunities,organizational gender policies |
| JEL: | J13 J16 J52 J53 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:347&r=all |
| By: | Kai-Uwe Müller (German Institute for Economic Research Berlin (DIW Berlin)); Katharina Wrohlich (German Institute for Economic Research Berlin (DIW Berlin)) |
| Abstract: | Expanding public or publicly subsidized childcare has been a top social policy priority in many industrialized countries. It is supposed to increase fertility, promote children’s development and enhance mothers’ labor market attachment. In this paper, we analyze the causal effect of one of the largest expansions of subsidized childcare for children up to three years among industrialized countries on the employment of mothers in Germany. Identification is based on spatial and temporal variation in the expansion of publicly subsidized childcare triggered by two comprehensive childcare policy reforms. The empirical analysis is based on the German Microcensus that is matched to county level data on childcare availability. Based on our preferred specification which includes time and county fixed effects we find that an increase in childcare slots by one percentage point increases mothers’ labor market participation rate by 0.2 percentage points. The overall increase in employment is explained by the rise in part-time employment with relatively long hours (20-35 hours per week). We do not find a change in full-time employment or lower part-time employment that is causally related to the childcare expansion. The effect is almost entirely driven by mothers with medium-level qualifications. Mothers with low education levels do not profit from this reform calling for a stronger policy focus on particularly disadvantaged groups in coming years. |
| Keywords: | childcare provision; mother’s labor supply; generalized difference-in-difference |
| JEL: | J22 J13 H43 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:pot:cepadp:09&r=all |
| By: | Muge Adalet McGowan; Juan Antona San Millán |
| Abstract: | Spain is a highly decentralised country, making the effective implementation of national reforms dependent on regional policies. Some regional disparities are high and need to be reduced. High regional dispersion in education and job outcomes, compounded by low inter-regional mobility, emerge as key drivers of regional inequalities in income and wellbeing. Lifelong learning programmes that take into account regional specific needs would help foster regional skills and attract firms to lagging regions. Ensuring full portability of social and housing benefits across regions, by providing temporary assistance either by the region of origin or the central government, would improve inter-regional mobility. At the same time, barriers to achieving a truly single market limit productivity growth of regions, including the most advanced. Reducing regulatory barriers and better innovation policies would boost productivity. Effective intergovernmental coordination bodies and a well designed interregional fiscal equalisation system will be key to ensuring that regions have the incentives to implement policies for inclusive growth. |
| JEL: | D24 E24 I24 J24 J61 J65 O31 |
| Date: | 2019–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1549-en&r=all |
| By: | Fuchs, Michaela (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Rossen, Anja (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Weyh, Antje (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Wydra-Somaggio, Gabriele (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "This paper provides first-time evidence on the magnitude and determinants of regional differences in the gender pay gap (GPG) in Germany. Using a comprehensive data set of all full-time employees, we conduct Oaxaca-Blinder decompositions for Germany and its regions to explain the regional variation of the GPG with theory-based individual, job-related and regional characteristics. Our results provide several novel insights into the regional dimension of the GPG. First, men's wages are more strongly correlated with the regional GPG than those of women, indicating that their wages drive the regional variation in the GPG much more than the wages of women. Second, the decomposition results reveal pronounced differences in the impact of the individual and job-related characteristics between the regions. Whereas job-related characteristics are important in regions with a high GPG, individual characteristics rather come into play in regions with a low or negative GPG. The results underscore the role played by the establishment composition in a region and the kind of jobs provided for the regional GPG. Women earn more than men in regions with a weak local economic structure and the absence of large firms providing well-paid manufacturing jobs. In regions with a high GPG, in contrast, men usually benefit from such jobs. The third result relates to the validity of the theoretical determinants of the GPG in regional respect. In contrast to the clear-cut decomposition results at the national level, at the regional level their validity mainly applies to specific subsets of regions. We conclude that analyses at the national level come too short in precisely explaining the regional variation of the GPG." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | Lohnunterschied, erwerbstätige Frauen, erwerbstätige Männer, Vollzeitarbeit, sozialversicherungspflichtige Arbeitnehmer, regionale Disparität, regionaler Vergleich, Landkreis, Wirtschaftsstruktur, geschlechtsspezifische Faktoren |
| JEL: | J31 R23 J16 |
| Date: | 2019–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:201911&r=all |
| By: | Landaud, Fanny (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | Family formation has been substantially delayed in recent decades, and birth rates have fallen below the replacement rates in many OECD countries. Research suggests that these trends are tightly linked to recent changes in the labor market; however, little is know about the role played by increases in job insecurity. In this paper, we investigate to what extent the decline in the share of permanent jobs among young workers explains observed delays in age at first cohabitation and age at first child. Using French data on the work and family history of large samples of young adults, we provide evidence that access to permanent jobs has a much stronger effect than access to temporary jobs on the probability of entering a first cohabiting relationship as well as on the probability of having a first child. We find that about half of the increases in age at first cohabitation and at first child can be explained by the rise in unemployment and in the share of temporary jobs among young workers. |
| Keywords: | job insecurity; unemployment |
| JEL: | C32 J12 J64 |
| Date: | 2019–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2019_010&r=all |
| By: | Marco Caliendo (University of Potsdam, IZA Bonn, DIW Berlin, IAB Nuremberg); Stefan Tübbicke (University of Potsdam) |
| Abstract: | The German start-up subsidy (SUS) program for the unemployed has recently undergone a major make-over, altering its institutional setup, adding an additional layer of selection and leading to ambiguous predictions of the program’s effectiveness. Using propensity score matching (PSM) as our main empirical approach, we provide estimates of long-term effects of the post-reform subsidy on individual employment prospects and labor market earnings up to 40 months after entering the program. Our results suggest large and persistent long-term effects of the subsidy on employment probabilities and net earned income. These effects are larger than what was estimated for the pre-reform program. Extensive sensitivity analyses within the standard PSM framework reveal that the results are robust to different choices regarding the implementation of the weighting procedure and also with respect to deviations from the conditional independence assumption. As a further assessment of the results’ sensitivity, we go beyond the standard selection-on-observables approach and employ an instrumental variable setup using regional variation in the likelihood of receiving treatment. Here, we exploit the fact that the reform increased the discretionary power of local employment agencies in allocating active labor market policy funds, allowing us to obtain a measure of local preferences for SUS as the program of choice. The results based on this approach give rise to similar estimates. Thus, our results indicating that SUS are still an effective active labor market program after the reform do not appear to be driven by “hidden bias”. |
| Keywords: | Start-Up Subsidies, Policy Reform, Matching, Instrumental Variables |
| JEL: | J68 H43 C14 C26 L26 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:pot:cepadp:06&r=all |
| By: | Katherine Michelmore (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Leonard M. Lopoo (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244) |
| Abstract: | This study analyzes the effect of exposure to the Earned Income Tax Credit (EITC) in childhood on marriage and childbearing in early adulthood. Results suggest that exposure in childhood leads women to delay marriage and first births in early adulthood (ages 18-25), but not men. These results have implications for the well-being of both individuals exposed to the EITC in childhood as well as their future children. In addition, because childless adults cannot claim the EITC until age 25, our back-of-the-envelope calculations suggest that these delays likely save up to $199 million annually in social welfare costs. |
| Keywords: | Earned Income Tax Credit, Marriage, Fertility |
| JEL: | J12 J13 I38 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprwps:215&r=all |
| By: | Lee, Y-W.; |
| Abstract: | In the last two decades, after the Asian financial crisis, Korea has witnessed a rapid increase in the share of temporary contractual work in its employment composition. In this paper, we investigate the impact of job insecurity and job loss on children’s health using Korea Welfare Panel Study data. We find that paternal job loss and insecurity has a significantly negative effect on health, while maternal job loss and insecurity has no effect. This could be because the effects of income loss and financial hardship are greater for male workers than for females. |
| Keywords: | child health: parental job loss and insecurity; panel data estimation; Korea welfare panel study; |
| JEL: | I12 J13 J63 C33 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:19/09&r=all |
| By: | Sascha O. Becker; Ana Fernandes; Doris Weichselbaumer |
| 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 largescale 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-àvis 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: | Fertility; Discrimination; Experimental economics |
| JEL: | C93 J16 J71 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2019_10&r=all |
| By: | Surbhi Kesar (Faculty of Economics, South Asian University, New Delhi, India.) |
| Abstract: | In much of the literature on economic development, sustained economic growth is expected to be accompanied by several interrelated processes of structure change, which involve a shift in economic activities from ‘traditional’ / agricultural / informal to ‘modern’ / industrial / formal sectors. Such transitions are usually accompanied by a transition in the economic dependence of households towards relatively ‘modern’ and formal segments of the economy, along with a rise in their general economic well-being. In this paper, we examine the Indian economy using the only available household-level pan-India panel data over the high growth period between 2005 and 2011-12, to analyse the patterns and natures of household-level transitions across sectors and identify factors that affected the likelihood and nature of such transitions. We categorize households based on their primary income sources into seven sectors characterised by varying degrees of formality/informality and various production structures and labour processes. We find that while substantial proportion of households have transitioned across these sectors during the period, there has been a continued reproduction of the same economic structure, including a regeneration of dependence on ‘traditional’ informal sector and casual wage employment, which are often expected to dissolve over time with high economic growth. To ascertain the nature of these transitions (‘favorable’ or ‘unfavorable’), we employ a ‘counterfactual’ analysis. Contrary to some recent influential literature, we find that, on an average, the transitions towards informal and ‘traditional’ economic spaces are ‘unfavourable’ in nature in terms of well-being of households. Further, using a multinomial logit regression framework, we find that the likelihood and nature of these transitions are largely dependent on household characteristics like levels of education and social caste, some of which are structurally given and cannot be optimally chosen by households. The results show that despite significant churning in the economy, the structure continues to remain fractured, with substantial ‘unfavourable’ transitions towards economic spaces that are continuously reshuffled and reconstituted. |
| Keywords: | structural transformation, informality, transition, segmentation, dualism, India |
| JEL: | O17 J60 O10 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2019-03&r=all |
| By: | Christopher Hartwell (Bournemouth University); Roman Horvath; Eva Horvathova; Olga Popova |
| Abstract: | We examine the causal effect of natural resource discoveries on income inequality using the synthetic control method on data from 1947 to 2009. We focus on the natural discoveries in Denmark, Netherlands and Norway in the 1960–1970s and use top 1% and top 10% income share as the measure of income inequality. Many previous studies have been concerned that natural resources may increase income inequality. To the contrary, our results suggest that natural resources decrease income inequality or have no effect. We attribute this effect to the high institutional quality of countries we examine. |
| Keywords: | Natural resources, income inequality, synthetic control method |
| JEL: | D31 O13 O15 Q33 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:ost:wpaper:381&r=all |
| By: | Jessica Pac (Columbia University); Ann P. Bartel (Columbia University); Christopher Ruhm (University of Virginia Frank Batten School of Leadership and Public Policy); Jane Waldfogel (Columbia University) |
| 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. |
| Keywords: | paid family leave, maternity leave, child health, breastfeeding |
| JEL: | I12 I18 J13 J18 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2019-031&r=all |
| By: | Angela Cools (Cornell University); Raquel Fernandez (New York University); Eleonora Patacchini (Cornell University) |
| Abstract: | This paper studies the effect of exposure to female and male “high-achievers” in high school on the long-run educational outcomes of their peers. Using data from a recent cohort of students in the United States, we identify a causal effect by exploiting quasi-random variation in the exposure of students to peers with highly- educated parents across cohorts within a school. We find that greater exposure to “high-achieving” boys, as proxied by their parents’ education, decreases the likelihood that girls go on to complete a bachelor’s degree, substituting the latter with junior college degrees. It also affects negatively their math and science grades and, in the long term, decreases labor force participation and increases fertility. We explore possible mechanisms and find that greater exposure leads to lower self-confidence and aspirations and to more risky behavior (including having a child before age 18). The girls most strongly affected are those in the bottom half of the ability distribution (as measured by the Peabody Picture Vocabulary Test), those with at least one college-educated parent, and those attending a school in the upper half of the socio- economic distribution. The effects are quantitatively important: an increase of one standard deviation in the percent of “high-achieving” boys decreases the probability of obtaining a bachelor’s degree from 2.2-4.5 percentage points, depending on the group. Greater exposure to “high-achieving” girls, on the other hand, increases bachelor’s degree attainment for girls in the lower half of the ability distribution, those without a college-educated parent, and those attending a school in the upper half of the socio-economic distribution. The effect of “high-achievers” on male out- comes is markedly different: boys are unaffected by “high-achievers” of either gender. |
| Keywords: | gender, education, cohort study, high achievers, peers |
| JEL: | I21 J16 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2019-032&r=all |
| By: | Soares, Ana Cristina |
| Abstract: | Using firm-level data between 2004 and 2012 for eleven countries of the European Union (EU), we document the size of product and labour market imperfections within narrowly defined sectors including services which are virtually undocumented. Our findings suggest that perfect competition in both product and labour markets is widely rejected. Levels of the price-cost margin and union bargaining power tend to be higher in some service sectors depicting however substantial heterogeneity. Dispersion within sector and across countries tends to be higher in some services sectors assuming a less tradable nature which suggests that the Single Market integration is partial particularly relaxing the assumption of perfect competition in the labour market. We report also figures for the aggregate economy and show that Eastern countries tend to depict lower product and labour market imperfections compared to other countries in the EU. Also, we provide evidence in favour of a very limited adjustment of both product and labour market imperfections following the international and financial crisis. |
| Keywords: | market imperfection,market structure,nash bargaining,European Union |
| JEL: | D40 J50 L10 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhcom:42019&r=all |
| By: | George J. Borjas |
| Abstract: | Immigration is sometimes claimed to be a key contributor to economic growth. Few academic studies, however, examine the direct link between immigration and growth. And the evidence on the outcomes that the literature does examine (such as the impact on wages or government receipts and expenditures) is far too mixed to allow unequivocal inferences. This paper surveys what we know about the relationship between immigration and growth. The canonical Solow model implies that a one-time supply shock will not have any impact on steady-state per-capita income, while a continuous supply shock will permanently reduce per-capita income. The observed relationship between immigration and growth obviously depends on many variables, including the skill composition of immigrants, the rate of assimilation, the distributional labor market consequences, the size of the immigration surplus, the potential human capital externalities, and the long-term fiscal impact. Despite the methodological disagreements about how to measure all of these effects, there is a consensus on one important point: Immigration has a more beneficial impact on growth when the immigrant flow is composed of high-skill workers. |
| JEL: | J6 O4 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25836&r=all |