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on Labour Economics |
| By: | Itzik Fadlon; Frederik Plesner Lyngse; Torben Heien Nielsen |
| Abstract: | Do early labor market experiences determine longer-run life and career outcomes, and do they operate differentially for males and females? We study this question in the context of the physician labor market by exploiting a randomized lottery that determines the sorting of Danish physicians into internships, where students with bad lottery numbers end up assigned to less desirable local labor markets and entry-level jobs. Using administrative data that span up to ten years after physicians’ graduations, we study key decisions that determine their longer-run life trajectories. We find causal effects of early-career labor market sorting on a range of life-cycle outcomes that cascade from longer-run labor market sorting, to human capital accumulation, to occupational choice, and even to fertility. Notably, we find that the persistent longer-run effects are entirely driven by females, whereas males experience only temporary career disruptions from unfavorable early-stage sorting. The gender divergence is unlikely to be explained by preferences over entry-level markets, but differential family obligations, attitude toward competition, and mentorship appear to play operative roles. Our findings have implications for policies aiming at outcome-based gender equality, as they reveal how persistent gaps can arise even in an institutionally gender-neutral setting with early-stage equality of opportunity. |
| JEL: | H0 I11 I23 J01 J13 J16 J24 R23 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28245&r=all |
| By: | Vassilis Monastiriotis (London School of Economics); Stylianos Sakkas (European Commission - JRC) |
| Abstract: | Does employment flexibility facilitate cross-regional adjustments via labour mobility? Or is it instead a hinderance to cross-regional equilibration in the labour market? We examine this, drawing on a sample of 11 European countries belonging to different 'varieties' of European capitalism. We identify two opposing potential effects of employment flexibility on outmigration (a negative necessitating effect and a positive facilitating effect) and provide original evidence on the ways in which employment flexibility impacts of the responsiveness of inter-regional outmigration to regional unemployment. We find that employment flexibility is at large associated with less cross-regional adjustability. This is especially so for numerical aspects of flexibility (non-standard forms of employment contracts) and more true for countries in the European south and Scandinavia; while for internal aspects of employment flexibility (irregular hours and patterns of work), as well as for countries of the Continental 'variety' (coordinated market economies), employment flexibility appears to be more synergetic to cross-regional adjustability (via outmigration). We draw implications for our understanding of cross-regional equilibration and for labour market and wider EU policies. |
| Keywords: | Employment flexibility, regional migration, labour market adjustment |
| JEL: | R11 R23 J08 J61 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:termod:202101&r=all |
| By: | Isil Erol (Queensland University of Technology); Umut Unal (Philipps University Marburg) |
| Abstract: | Germany has undergone a significant migration policy shift since the early 2000s. This paper examines the total employment effect of immigration during the liberalization of migration policies from 2005 to 2018 using a spatial approach. A set of methods, along with static and dynamic macro-econometric models, were applied on a balanced panel formed by a unique and manually collected data for 156 statistical regions based on the definition of the German Federal Employment Agency. We find suggestive evidence that there has been a significant adverse impact of new immigrants on the overall employment rate, and this negative effect is substantially larger than those reported in previous studies on the employment effect of immigration in the German labour market. In a further step, we divide our sample into two subsamples to capture the employment effect of the massive humanitarian inflows that began in 2015. Our results indicate that, in addition to the new immigrants' lower rate of integration into the local labour markets, a sudden influx of asylum seekers may possibly lead to a substantial fall in the employment rates, because asylum seekers are not immediately allowed to work in the country. |
| Keywords: | Immigration, Labour market, Employment, Labour Economics, Asylum seekers |
| JEL: | J00 J15 J61 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:202104&r=all |
| By: | Canessa, Eugenia (University of Florence); Giannelli, Gianna Claudia (University of Florence) |
| Abstract: | We employ georeferenced data and longitudinal household panel survey data to investigate the impact of the dramatic flooding that hit Bangladesh from August-September 2014 on women's employment and empowerment. Development economics models suggest an increase in household members' labour supply as a shock-coping strategy. Our difference-in-differences estimates confirm this assumption: women's employment probability increases by approximately 13 percentage points. Correcting for selection bias due to the initial employment status of women, we also find significant increases in the probability of non-employed women entering employment, in the average monthly income of employed women and in the probability of women engaging in autonomous wage-earning activities. Finally, we show that the greater earning capacity of employed women—instrumented by the intensity of flooding in the villages where women live—contributes to raising their bargaining power within the household as measured by the Women's Empowerment in Agriculture Index and by economic decision-making indicators. |
| Keywords: | Bangladesh, flood, shock-coping strategy, women's employment, intrahousehold bargaining |
| JEL: | F66 J16 Q12 Q54 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14055&r=all |
| By: | Timothy J. Bartik (W.E. Upjohn Institute for Employment Research) |
| Abstract: | This paper estimates that long-run changes in a county’s prime-age employment rate are significantly affected by labor demand shocks to both the county and its overlying commuting zone (CZ). The overall benefits of labor demand shocks are due more to CZ demand shocks than county demand shocks. A lower preexisting county employment rate increases the effects of CZ demand shocks. Simulations suggest that low prior employment rate CZs, versus higher-rate CZs, will have much larger employment rate effects from demand shocks. Targeting jobs at more distressed counties within a CZ has modest effects, much lower than the effects of targeting jobs at more distressed CZs. |
| Keywords: | Local labor markets, job creation benefits, local labor demand, regional distress |
| JEL: | R23 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:21-339&r=all |
| By: | Timothy J. Bartik (W.E. Upjohn Institute for Employment Research) |
| Abstract: | In this paper, estimates are presented on short-run effects of demand shocks on a local labor market’s employment to population ratio (employment rate). Based on the estimates, commuting zones (CZs) better define a local labor market than counties, because both employment and employment rate effects exhibit large spillovers across counties within a CZ. In addition, the estimates suggest that demand shock effects vary, by an amount that is both statistically and substantively significant, with a CZ’s prior overall employment rate. |
| Keywords: | Local labor markets, distressed regions, job creation benefits, local labor demand |
| JEL: | R23 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:20-335&r=all |
| By: | Jesús Fernández-Villaverde; Federico S. Mandelman; Yang Yu; Francesco Zanetti |
| Abstract: | This paper develops a dynamic general equilibrium model with heterogeneous firms that face search complementarities in the formation of vendor contracts. Search complementarities amplify small differences in productivity among firms. Market concentration fosters monopsony power in the labor market, magnifying profits and further enhancing the output share of high-productivity firms. The combination of search complementarities and monopsony power induce a strong "Matthew effect" that endogenously generates superstar firms out of uniform idiosyncratic productivity distributions. Reductions in search costs increase market concentration, lower the labor income share, and increase wage inequality. The model also transforms short-lived negative aggregate shocks into persistent recessions that heighten market concentration. |
| Keywords: | market concentration; superstar firms; search complementarities; monopsony power in the labor market |
| JEL: | C63 C68 E32 E37 E44 G12 |
| Date: | 2021–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:89581&r=all |
| By: | Kai A. Konrad; Tim Lohse; Sven A. Simon |
| Abstract: | We study self-selection into earning money in an honest or dishonest fashion based on individuals' attitudes toward truthful reporting. We propose a decision-theoretic framework where individuals' willingness to pay for honest earnings is determined by their (behavioral) lying costs. Our laboratory experiment identifies lying costs as the decisive factor causing self-selection into honest earning opportunities for individuals with high costs and into cheating opportunities for those prepared to misreport. Our experimental setup allows us to recover individual lying costs and their distribution in the population. |
| Keywords: | lying behavior, lying costs, misreporting, honest earnings, self-selection, laboratory experiment |
| JEL: | C91 D81 D91 K42 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2020-14_2&r=all |
| By: | Perez Perez, Jorge |
| Abstract: | Local minimum wage laws are becoming common across U.S. cities, and their effects may be different from the effects of state or national minimum wage policies. This paper studies the effect of changes in the minimum wage on spatial equilibriums in local labor markets. Using residence and workplace data for the United States, I analyze how commuting, residence, and employment locations change across city and state borders if the minimum wage changes on one side of the border. I find that areas in which the minimum wage increases receive fewer low-wage commuters. A 10 percent increase in the minimum wage reduces the inflow of low-wage commuters by about 2.5 percent. Rises in the minimum wage are also associated with employment relocation across borders toward areas that did not witness an increase in the minimum wage. I formulate a spatial equilibrium gravity model to explain the distribution of workers between low- and high-minimum wage areas. I calculate counterfactual equilibriums with a higher minimum wage for U.S. counties with cities considering an increase, highlighting the role of commuting and migration responses. About two-fifths of the counties considering increases would receive fewer low-wage commuters. Employment relocation away from high-minimum wage areas drives the commuting losses. |
| Date: | 2020–12–24 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:fpx9e&r=all |
| By: | Chakraborty, Tanika (Indian Institute of Management); Pandey, Manish (University of Winnipeg, Manitoba) |
| Abstract: | We use panel data for rural Kyrgyzstan to examine households' international migration response when faced with shocks. Using a household fixed effects regression model, we find that while a drought shock increases the likelihood of migration, winter and earthquake shocks reduce the likelihood of migration. We use a simple theoretical framework to illustrate the trade-off between two effects of a shock for a household: loss of income and increase in the need of labor services. We show that migration increases when the former effect of a shock dominates, it reduces when the latter effect dominates. We explore these mechanisms by examining how the migration-response to shocks changes in the presence of alternate coping mechanisms and by evaluating the effect of shocks on a household's decision to send and recall a migrant member. We find that when households have easier access to informal finance the migration-response is muted only for shocks for which the adverse income effect dominates. Our findings also suggest that while shocks for which the loss of income effect dominates have a greater effect on the decision to send a migrant, shocks for which the need of labor services effect dominates only affect the decision to recall a migrant. These findings provide evidence in favor of the proposed mechanisms through which shocks affect temporary migration. |
| Keywords: | temporary migration, shocks, insurance, informal finance, Asia, Kyrgyzstan |
| JEL: | J61 O15 O16 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14051&r=all |
| By: | Vera Tolstova |
| Abstract: | In a real economy, decisions on investments in child human capital of children are made by families rather than by atomistic parents as is typically assumed in the literature. This paper incorporates family formation into an otherwise standard dynastic framework with human capital accumulation. The study finds that accounting for differences in taxation and education policies between the U.S. and 10 OECD countries is sufficient to replicate cross-country variations in the degree of assortative matching and its positive correlation with the persistence of intergenerational earnings. Positive assortative matching is crucial to a model’s ability to generate realistic levels of intergenerational earnings correlation observed in the data. |
| Keywords: | marital sorting; intergenerational earnings persistence; taxation; education subsidies; |
| JEL: | E62 H31 H52 I24 J12 J62 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp680&r=all |
| By: | Isha Gupta (Department of Economics and Management “Marco Fanno†University of Padova, Italy) |
| Abstract: | This paper estimates the causal effect of having young children aged 0 to 5 years on mothers’ labour force participation in rural India. In order to address the potential endogeneity in the fertility decision, I exploit Indian families’ preference for having sons. I leverage exogenous variation in the gender of older children aged 6+ years as an instrumental variable for having younger children aged 0 to 5 years in the family. IV estimates show that the mothers’ participation is significantly reduced by 9.9% due to the presence of young children aged 0 to 5 years in the household, with the negative effect mostly driven by mothers belonging to the highest income quartile; mothers with high education; and mothers residing in nuclear families. |
| Keywords: | Female labour force participation, Fertility, Instrumental variable, Local average treatment effect (LATE), India, Compliers |
| JEL: | J13 J22 C26 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0267&r=all |
| By: | Chloe N. East; David Simon |
| Abstract: | An extensive literature in economics documents large and persistent declines in earnings following involuntary job loss. We study whether the public safety net mitigates this loss in resources using the Survey of Income and Program Participation in 1996-2013. With an individual fixed effects model, we document which public safety net programs provide the most insurance, and how this varies by pre-job-loss characteristics. We find that Unemployment Insurance provides the largest buffer against lost income, but that due to the structure of the program, the neediest are less-well insured (in terms of dollars transferred and percentage of lost earnings replaced), compared to middle and higher income job losers. This has important implications for the progressivity of the safety net, and how best to support displaced workers, which is crucial to understand for job losers at any time, and especially now, in light of the historic number of job losses during the COVID-19 pandemic. |
| JEL: | H0 H31 J18 J65 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28218&r=all |
| By: | Sandra E. Black; Paul J. Devereux; Fanny Landaud; Kjell G. Salvanes |
| Abstract: | Much attention has been given to rising wealth inequality in recent decades. However, understanding inequality requires an understanding of how wealth relates to the potential wealth an individual could accumulate and where this wealth comes from. Using administrative data from Norway, we create measures of potential wealth that abstract from differential consumption and spending behavior. We then examine how these measures relate to observed net wealth of individuals at a point in time and the role played by different sources of wealth in the distribution of potential wealth. We find that net wealth is a reasonable proxy for potential wealth, particularly in the tails of the distribution. Importantly, people in different parts of the potential wealth (or actual net wealth) distribution get their wealth from very different sources. Labor income is the most important determinant of wealth, except among the top 1%, where capital income and capital gains on financial assets become important. Inheritances and gifts are not an important determinant of wealth, even at the top of the wealth distribution. Finally, although inheritances are not important, parental wealth does influence child’s wealth; children of wealthy parents accumulate wealth from very different sources than children of less wealthy parents. |
| JEL: | G51 J01 J1 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28239&r=all |
| By: | Barber, Brad M. (U of California, Davis); Jiang, Wei (Columbia U and ECGI); Morse, Adair (U of California, Berkeley); Puri, Manju (Duke U); Tookes, Heather (Yale U); Werner, Ingrid M. (Ohio State U) |
| Abstract: | How has COVID-19 impacted faculty productivity? Does it differ by characteristics such as gender and family structure? To answer these questions, we conduct a survey of American Finance Association (AFA) members. Overall, faculty respondents report lower research productivity with less time allocated to research and more time allocated to teaching. There is also heterogeneity: 14.5% of respondents report an increase in productivity. We find the negative effects on research productivity are particularly large for women and faculty with young children regardless of gender. Thus, the pandemic has the effect of widening the gender gap for women and creates a "family gap" in productivity for both men and women with young children. Lower research productivity for faculty with young children is explained, to a large extent, by increased time spent on childcare. Our results suggest the need for deliberate policy to factor in these underlying mechanisms. We caution that a one-size-fits-all tenure-clock extension can have unintended negative consequences of increasing disparity. |
| JEL: | A22 A23 G0 I23 J13 J16 J22 J24 J44 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2020-31&r=all |
| By: | Marchetta, Francesca (CERDI, University of Auvergne); Sahn, David E. (Cornell University); Tiberti, Luca (Partnership for Economic Policy (pep)); Dufour, Johany (Université Laval) |
| Abstract: | We analyze the impact of climate events on migration among a cohort of young adults residing in rural Madagascar. We find a strong negative impact of drought on the decision of youth to migrate in the year after the adverse weather shock. Household assets and access to savings institutions attenuate this impact, consistent with the notion that wealth and savings cushion the blow of the shock on the resources required to finance migration. We also find that households that report more social connections outside their villages are more likely to have their young adult members migrate. Our findings suggest that the liquidity constraints from climate shocks that prevent youth migration are more binding for young women who migrate largely for reasons of marriage and education. Males, in contrast, are more likely to migrate in search of employment, which often has higher economic returns than migration motivated by marriage and education. These factors likely explain why drought deters migration of young women, but not so for young men who still choose to migrate in search of a job. |
| Keywords: | climate shocks, Madagascar, youth migration, internal migration |
| JEL: | O15 J13 N3 N57 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14052&r=all |