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on Labour Economics |
| By: | Cahuc, Pierre; Malherbet, Franck; Prat, Julien |
| Abstract: | According to French law, employers have to pay at least six months salary to employees whose seniority exceeds two years in case of unfair dismissal. We show, relying on data, that this regulation entails a hike in severance payments at two-year seniority which induces a significant rise in the job separation rate before the two-year threshold and a drop just after. The layoff costs and its procedural component are evaluated thanks to the estimation of a search and matching model which reproduces the shape of the job separation rate. We find that total layoff costs increase with seniority and are about four times higher than the expected severance payments at two years of seniority. Counterfactual exercises show that the fragility of low-seniority jobs implies that layoff costs reduce the average job duration and increase unemployment for a wide set of empirically relevant parameters. |
| Keywords: | Dismissal costs; Employment protection legislation; unemployment |
| JEL: | J32 J63 J65 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13767&r=all |
| By: | van Dijk, Mathijs; van Dalen, Harry (Tilburg University, Center For Economic Research); Hyde, Martin |
| Abstract: | How do young and old workers fare on the labor market when a banking crisis occurs? Using data on 41 banking crises in 38 developed countries over 1990-2014, we examine how banking crises affect the labor market position of workers from five different age groups (including 65 years and older) and whether employment protection legislation shields workers from unemployment. Results show that unemployment increases across the board in the aftermath of banking crises, but much more so for younger workers. The labor force participation of older women increases significantly in the medium run, whereas older men withdraw from the labor market. Countries with strong employment protection legislation shield workers from the impact of banking crises in the short run, but show signs of increases in unemployment rates for young and middle-aged workers in the medium run. |
| Keywords: | banking crisis; unemployment; employment protection; age; older workers; labor force |
| JEL: | G01 J01 J08 J14 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:3874c7cc-7e0c-4471-b73c-28fe5111abb9&r=all |
| By: | Alexandra Fedorets; Anna Gibert; Norma Burow |
| Abstract: | We examine the introduction of a gender quota law in Germany, mandating a minimum 30% of the underrepresented gender on the supervisory boards of a particular type of firms. We exploit the fact that Germany has a two-tier corporate system consisting of the affected supervisory boards and unaffected management boards within the same firm. We find a positive effect on the female share on supervisory boards of affected firms, but no effect on presidency of the board or its size. We also study whether the increased female representation has had an effect on the financial performance of the firm and conclude that, unlike some previous studies in other countries, there has not been any negative effect on the profitability of the firm, neither at the time when the law was announced nor when it was passed. |
| Keywords: | Gender quota, Economics of gender, Labor discrimination, Personnel economics, Firm performance |
| JEL: | J78 J16 M51 L25 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1810&r=all |
| By: | Nicoletta Berardi; Marie Lalanne; Paul Seabright |
| Abstract: | This paper examines how networks of professional contacts contribute to the development of the careers of executives of North American and European companies. We build a dynamic model of career progression in which career moves may both depend upon existing networks and contribute to the development of future networks. We test the theory on an original dataset of nearly 73 000 executives in over 10 000 firms. In principle professional networks could be relevant both because they are rewarded by the employer and because they facilitate job mobility. Our econometric analysis suggests that, although there is a substantial positive correlation between network size and executive compensation, with an elasticity of around 20%, almost all of this is due to unobserved individual characteristics. The true causal impact of networks on compensation is closer to an elasticity of 1 or 2% on average, all of this due to enhanced probability of moving to a higher-paid job. And there appear to be strongly diminishing returns to network size. |
| Keywords: | professional networks, labor mobility, executive compensation. |
| JEL: | E02 E32 E62 F41 H20 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:723&r=all |
| By: | Tobias Wolf; Maria Metzing; Richard E. Lucas |
| Abstract: | This paper examines experienced well-being of employed and unemployed workers. We use the survey-adapted day reconstruction method (DRM) of the Innovation Sample of the German Socio-Economic Panel Study (SOEP-IS) to analyze the role of the employment status for well-being, incorporating complete time use. Summarizing the average share of pleasurable minutes, we generate the P-index. We show that - in contrast to evaluative life satisfaction - the average unemployed experiences more pleasurable minutes due to the absence of working episodes. Hence, we examine working episodes in depth. While working is among the activities with the highest propensities for an unpleasant experience, it is also among the most meaningful activities. We show that meaning is a central non-monetary determinant for a pleasurable work episode and find that pleasure during work and job satisfaction in general have the same association with meaning. |
| Keywords: | Experienced well-being, time use, Unemployment, Day Reconstruction Method, DRM, SOEP-IS |
| JEL: | I31 J22 J60 D91 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1043&r=all |
| By: | Andreas Menzel; Christopher Woodruff |
| Abstract: | Data from 70 large export-oriented garment manufacturers in Bangladesh show that gender wage gaps are similar to those found in higher-income countries. Among production workers, women’s wages are 8 percent lower. We show that by combining short administrative panels, survey data from a representative sample of workers, and structure, we can estimate how the wage gap evolves over workers’ careers. Gender differences in internal and across-factory promotions contribute roughly equally to the emergence of the gender gap over worker careers. Differences in promotion rates appear to arise mainly from career concerns rather than frictions coming from household responsibilities. |
| JEL: | J16 J31 O14 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25982&r=all |
| By: | Olive Nsababera (Department of Economics, University of Sussex, Brighton, UK) |
| Abstract: | This paper examines the long-term impact of refugee camps on the health of local residents in Tanzania. Taking height-for-age z-score (HAZ) as a proxy for health, the paper exploits the fact that different birth cohorts were exposed to different stages of the camps’ lifecycle. Temporal variation through birth cohorts is combined with geographic variation in a difference-in-difference estimation approach. First, the paper examines the generation that were children at the opening of the camps and are now adults (as of 2012). It finds a negative and localised health effect that has persisted into adulthood. The result is comparable to a 2.9% to 5.9% reduction in adult hourly earnings. However, those that were exposed for a longer duration were less affected suggesting that subsequent economic development around camps mitigated the initial adverse effect. Second, this paper compares the subsequent generation that was born once the camps were already in operation, and those born after camps closed. It finds no observable difference in the HAZ score between those born during camps operation and in the post-camp period. |
| Keywords: | refugees, child health, Tanzania |
| JEL: | I15 O10 O15 J13 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:sus:susewp:0919&r=all |
| By: | Eiji Goto (The George Washington University); Constantin Bürgi (St. Mary’s College of Maryland) |
| Abstract: | We estimate Okun's law at the sectoral level for the US, the UK, Japan, and Switzerland to test several hypotheses that may explain why the aggregate Okun's coefficients are different across countries. Specifically, we show that the sectoral composition is not a driver and find that the sectoral coefficients are proportional to the aggregate in all four countries. We also show that the standard deviation of unemployment is the main driver of the cross-country differences. This is consistent with labor market policies being crucial to explain the cross-country cyclical differences in the aggregate Okun's coefficient. |
| Keywords: | Okun's law, Cross-country differences, Sectors |
| JEL: | E24 E32 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:gwc:wpaper:2019-002&r=all |
| By: | Massimo Anelli; Gaetano Basso; Giuseppe Ippedico; Giovanni Peri |
| Abstract: | Migration outflows, especially of young people, may deprive an economy of entrepreneurial energy and innovative ideas. We exploit exogenous variation in emigration from Italian local labor markets to show that between 2008 and 2015 larger emigration flows reduced firm creation. The decline affected firms owned by young people and innovative industries. We estimate that for every 1,000 emigrants, 10 fewer young-owned firms were created over the whole period. A simple accounting exercise shows that about 60 percent of the effect is generated simply by the loss of young people; the remaining 40 percent is due to a combination of selection of emigrants among highly entrepreneurial people, negative spillovers on the entrepreneurship rate of locals, and negative local firm multiplier effect. |
| JEL: | J61 M13 O3 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26055&r=all |
| By: | Addison, John T. (University of South Carolina); Teixeira, Paulino (University of Coimbra); Grunau, Philipp (Institut für Arbeitsmarkt- und Berufsforschung); Bellmann, Lutz (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | Using subjective information provided by manager respondents on the stance taken by the works council in company decision making, this paper investigates the association between a measure of works council dissonance or disaffection and plant closings in Germany, 2006-2015. The potential effects of worker representation on plant survivability have been little examined in the firm performance literature because of inadequate information on plant closings on the one hand and having to assume homogeneity of what are undoubtedly heterogeneous worker representation agencies on the other. Our use of two datasets serves to identify failed establishments, while the critical issue of heterogeneity is tackled via manager perceptions of works council disaffection or otherwise. The heterogeneity issue is also addressed by considering the wider collective bargaining framework within which works councils are embedded, and also by allowing for works council learning. It is reported that works council dissonance is positively associated with plant closings, although this association is not found for establishments that are covered by sectoral agreements. Taken in conjunction, both findings are consistent with the literature on the mitigation of rent seeking behavior. Less consistent with the recent empirical literature, however, is the association between plant closings and dissonance over time, that is, from the point at which works council dissonance is first observed. Although the coefficient estimate for dissonance is declining with the length of the observation window, it remains stubbornly positive and highly statistically significant. Finally, there is evidence that establishments with dissonant works councils are associated with a much higher probability of transitioning from no collective bargaining to sectoral bargaining coverage over the sample period than their counterparts with more consensual works councils. |
| Keywords: | dissonance, works councils, plant closings, collective bargaining regime, rent seeking, learning |
| JEL: | J51 J53 J65 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12438&r=all |
| By: | Andrea Salvatori; Thomas Manfredi |
| Abstract: | Labour markets across the OECD have polarised in recent decades, as the share of middle skill occupations has declined relative to that of both high- and low skill occupations. This paper shows that, contrary to what is often assumed in the public debate, job polarisation has not resulted in a decline in the share of households with middle-income across 18 OECD countries. Most of the changes in the share of middle-income households result instead from changes in the propensity of workers in different occupations to be in it. In fact the results point to a change in the relationship between occupational skill levels and household income as both middle and high skill jobs increasingly fail to deliver on the promise of the relative income status traditionally associated with their skill level. These changes might help explain some of the social frustration that has been at the centre of the political debate in recent years. |
| Keywords: | job polarisation, living standards, middle class |
| JEL: | J01 |
| Date: | 2019–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:232-en&r=all |
| By: | Jennifer Hunt; Ryan Nunn |
| Abstract: | Equating a job with an individual rather than an occupation, we re-examine whether U.S. workers are increasingly concentrated in low and high-wage jobs relative to middle-wage jobs, a phenomenon known as employment polarization. By assigning workers in the CPS to real hourly wage bins with time-invariant thresholds and tracking over time the shares of workers in each, we do find a decline since 1973 in the share of workers earning middle wages. However, we find that a strong increase in the share of workers in the top bin is accompanied by a slight decline in the share in the bottom bin, inconsistent with employment polarization. Turning to occupation-based analysis, we show that the share of employment in low-wage occupations is trending up only from 2002-2012, and that the apparent earlier growth and therefore polarization found in the literature is an artefact of occupation code redefinitions. This new timing rules out the hypothesis that computerization and automation lie behind both rising wage inequality and occupation-based employment polarization in the United States. |
| JEL: | J31 J62 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26064&r=all |
| By: | Hie Joo Ahn; James D. Hamilton |
| Abstract: | The underlying data from which the U.S. unemployment rate, labor-force participation rate, and duration of unemployment are calculated contain numerous internal contradictions. This paper catalogs these inconsistencies and proposes a reconciliation. We find that the usual statistics understate the unemployment rate and the labor-force participation rate by about two percentage points on average and that the bias in the latter has increased since the Great Recession. The BLS estimate of the average duration of unemployment overstates by 50% the true duration of uninterrupted spells of unemployment and misrepresents what happened to average durations during the Great Recession and its recovery. |
| Keywords: | Labor-Force Participation Rate ; Measurement Errors ; Unemployment Duration ; Unemployment Rate |
| JEL: | C5 J6 |
| Date: | 2019–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2019-35&r=all |
| By: | Conesa, Juan Carlos (Stony Brook University); Kehoe, Timothy J. (Federal Reserve Bank of Minneapolis); Nygard, Vegard (Federal Reserve Bank of Minneapolis); Raveendranathan, Gajendran (McMaster University) |
| Abstract: | We develop and calibrate an overlapping generations general equilibrium model of the U.S. economy with heterogeneous consumers who face idiosyncratic earnings and health risk to study the implications of exogenous trends in increasing college attainment, decreasing fertility, and increasing longevity between 2005 and 2100. While all three trends contribute to a higher old age dependency ratio, increasing college attainment has different macroeconomic implications because it increases labor productivity. Decreasing fertility and increasing longevity require the government to increase the average labor tax rate from 32.0 to 44.4 percent. Increasing college attainment lowers the required tax increase by 10.1 percentage points. The required tax increase is higher under general equilibrium than in a small open economy with a constant interest rate because the reduction in the interest rate lowers capital income tax revenues. |
| Keywords: | College attainment; Aging; Health care; Taxation; General equilibrium |
| JEL: | H20 H51 H55 I13 J11 |
| Date: | 2019–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:583&r=all |
| By: | Martellini, Paolo (University of Pennsylvania); Menzio, Guido (New York University); Visschers, Ludo (University of Edinburgh) |
| Abstract: | We revisit the hypothesis that labor market fluctuations are driven by shocks to the discount rate. Using a model in which the UE and the EU rates are endogenous, we show that an increase in the discount rate leads to a decline in both the UE and the EU rates. In the data, though, the UE and EU rates move against each other at business cycle frequency. Using a lifecycle model with human capital accumulation on the job, we show that an increase in the discount rate does indeed lead to a decline in the aggregate UE rate and to an increase in the aggregate EU rate. However, the decline in the UE rate is larger for younger workers than for older workers and the EU rate increases only for younger workers. In the data, fluctuations in the UE and EU rates at the business cycle frequency are nearly identical across age groups. |
| Keywords: | unemployment fluctuations, discount rate, human capital, lifecycle earnings |
| JEL: | E24 J63 J64 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12441&r=all |
| By: | Kai Ingwersen; Stephan L. Thomsen |
| Abstract: | This study provides new evidence on the levels of economic integration experienced by foreigners and naturalised immigrants relative to native Germans from 1994 to 2015. We decompose the wage gap using the method for unconditional quantile regression models by employing a regression of the (recentered) influence function (RIF) of the gross hourly wage on a rich set of explanatory variables. This approach enables us to estimate contributions made across the whole wage distribution. To allow for a detailed characterization of labour market conditions, we consider a comprehensive set of socio-economic and labour-related aspects capturing influences of, e.g., human capital quality, cultural background, and the personalities of immigrants. The decomposition results clearly indicate a significant growing gap with higher wages for both foreigners (13.6 to 17.6 %) and naturalised immigrants (10.0 to 16.4 %). The findings further display a low explanation for the wage gap in low wage deciles that is even more pronounced within immigrant subgroups. Cultural and economic distances each have a significant influence on wages. A different appreciation of foreign educational qualifications, however, widens the wage gap substantially by 4.5 ppts on average. Moreover, we observe an indication of deterioration of immigrants’ human capital endowments over time relative to those of native Germans. |
| Keywords: | Immigration, wage gap, unconditional quantile regression, Germany |
| JEL: | J61 J31 J15 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1042&r=all |
| By: | Afrouz Azadikhah Jahromi (Department of Economics, Temple University); Brantly Callaway (Department of Economics, Temple University) |
| Abstract: | This paper considers how the effect of job displacement varies across different individuals. In particular, our interest centers on features of the distribution of the individual-level effect of job displacement. Identifying features of this distribution is particularly challenging - e.g., even if we could randomly assign workers to be displaced or not, many of the parameters that we consider would not be point identified. We exploit our access to panel data, and our approach relies on comparing outcomes of displaced workers to outcomes the same workers would have experienced if they had not been displaced and if they maintained the same rank in the distribution of earnings as they had before they were displaced. Using data from the Displaced Workers Survey, we find that displaced workers earn about $157 per week less than they would have earned if they had not been displaced. We also find that there is substantial heterogeneity. We estimate that 42% of workers have higher earnings than they would have had if they had not been displaced and that a large fraction of workers have substantially lower earnings than the average effect of displacement. Finally, we also document major differences in the distribution of the effect of job displacement across education levels, sex, age, and counterfactual earnings levels. Throughout the paper, we rely heavily on quantile regression. First, we use quantile regression as a flexible (yet feasible) first step estimator of conditional distributions and quantile functions that our main results build on. We also use quantile regression to study how covariates affect the distribution of the individual-level effect of job displacement. |
| Keywords: | Job Displacement, Joint Distribution of Potential Outcomes, Distribution of the Treatment Effect, Quantile Regression, Heterogeneous Effects, Rank Invariance |
| JEL: | J63 C21 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:tem:wpaper:1901&r=all |