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on Labour Economics |
| By: | Ioana Marinescu; Daphne Skandalis; Daniel Zhao |
| Abstract: | During the COVID-19 pandemic, the Federal Pandemic Unemployment Compensation (FPUC) increased US unemployment benefits by $600 a week. Theory predicts that FPUC will decrease job applications, and could decrease vacancy creation. We estimate the effect of FPUC on job applications and vacancy creation week by week, from March to July 2020, using granular data from the online jobs platform Glassdoor. We exploit variation in the proportional increase in benefits across local labor markets. To isolate the effect of FPUC, we flexibly allow for different trends in local labor markets differentially exposed to the COVID-19 crisis. We verify that trends in outcomes prior to the FPUC do not correlate with future increases in benefits, which supports our identification assumption. First, we find that a 10% increase in unemployment benefits caused a 3.6% decline in applications, but did not decrease vacancy creation; hence, FPUC increased tightness (vacancies/applications). Second, we document that tightness was unusually depressed during the FPUC period. Altogether, our results imply that the positive effect of FPUC on tightness was welfare improving: FPUC decreased competition among applicants at a time when jobs were unusually scarce. Our results also help explain prior findings that FPUC did not decrease employment. |
| JEL: | J63 J64 J65 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28567&r=all |
| By: | Charles Bellemare; Natalia Kyui; Guy Lacroix |
| Abstract: | We show that survey and administrative data-based estimates of a panel data model of earnings, employment, and outmigration yield very different qualitative and quantitative predictions. Survey-based estimates substantially overpredict outmigration, in particular for lower performing immigrants. Consequently, employment and earnings of immigrants who remain in the country are overpredicted relative to model predictions from administrative data. Importantly, estimates from both data sources find opposite self-selection mechanisms into outmigration. Differences hold despite using the same cohort, survey period, and observable characteristics. Differences in predictions are driven by difficulties of properly separating non-random sample attrition from selective outmigration in survey data. |
| Keywords: | Sample Attrition,Outmigration,Measurement Errors,Employment and Earnings, |
| JEL: | C33 J31 J15 J61 |
| Date: | 2021–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2021s-14&r=all |
| By: | Matthew Freedman; David Neumark; Shantanu Khanna |
| Abstract: | We evaluate the effects of one of a new generation of economic development programs, the California Competes Tax Credit (CCTC), on local job creation. Incorporating perceived best practices from previous initiatives, the CCTC combines explicit eligibility thresholds with some discretion on the part of program officials to select tax credit recipients. The structure and implementation of the program facilitates rigorous evaluation. We exploit detailed data on accepted and rejected applicants to the CCTC, including information on scoring of applicants with regard to program goals and funding decisions, together with restricted access American Community Survey (ACS) data on local economic conditions. Using a difference-in-differences approach, we find that each CCTC-incentivized job in a census tract increases the number of individuals working in that tract by over two – a significant local multiplier. We also explore the program’s distributional implications and impacts by industry. We find that CCTC awards increase employment among workers residing in both high income and low income communities, and that the local multipliers are larger for non-manufacturing awards than for manufacturing awards. |
| JEL: | H25 H71 J68 R11 R23 R58 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28594&r=all |
| By: | Rafael Dix-Carneiro (Duke University and NBER); João Paulo Pessoa (São Paulo School of Economics); Ricardo Reyes-Heroles (Federal Reserve Board); Sharon Traiberman (New York University) |
| Abstract: | We study the role of global trade imbalances in shaping the adjustment dynamics in response to trade shocks. We build and estimate a general equilibrium, multicountry, multisector model of trade with two key ingredients: 1) consumption-saving decisions in each country commanded by representative households, leading to endogenous trade imbalances, and 2) labor market frictions across and within sectors, leading to unemployment dynamics and sluggish transitions to shocks. We use the estimated model to study the behavior of labor markets in response to globalization shocks, including shocks to technology, trade costs, and intertemporal preferences (savings gluts). We find that modeling trade imbalances changes both qualitatively and quantitatively the short- and long-run implications of globalization shocks for labor reallocation and unemployment dynamics. In a series of empirical applications, we study the labor market effects of shocks accrued to the global economy, their implications for the gains from trade, and we revisit the “China Shock” through the lens of our model. We show that the U.S. enjoys a 2.2 percent gain in response to globalization shocks. These gains would have been 73 percent larger in the absence of the global savings glut, but they would have been 40 percent smaller in a balanced-trade world. |
| Keywords: | Globalization, Trade Imbalances, Labor Markets, Unemployment |
| JEL: | F16 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:21-345&r=all |
| By: | Erica L. Groshen (Cornell University ILR School); Harry J. Holzer (Georgetown University) |
| Abstract: | We describe trends in wages and labor force participation for the “working class”—whom we define as workers with high school or less education—compared to those with college or more. We compare cyclical peaks over the entire period 1979–2019, with particular focus on the Great Recession (2007–2010) and recovery (2010–2019). We also present results by gender and race. We find real wage growth in the latter period for all workers, but not enough to change the long-term trends of growing inequality and stagnant wages for the less-educated; and we also find that labor force participation continued to decline for the less-educated, even during the recovery. Gaps between whites and blacks also grew, while Hispanics and Asians made more progress. We consider various explanations of these findings and show that the early effects of the 2020-2021 pandemic recession hurt less-educated workers and those of color more than anyone else. |
| Keywords: | Wages, participation, working class, Great Recession |
| JEL: | J15 J16 J31 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:21-342&r=all |
| By: | German Feierherd (Universidad de San Andres); Patricio Larroulet (CEQ Institute); Wei Long, (Tulane University); Nora Lustig (Tulane University) |
| Abstract: | Latin American countries experienced a significant reduction in income inequality at the turn of the 21st century. From the early 2000s to around 2012, the average Gini coefficient fell from 0.514 to 0.476. The period of falling inequality coincided with leftist presidential candidates achieving electoral victories across the region: by 2009, ten of the seventeen countries had a leftist president – the so-called Pink Tide. We investigate whether there was a “leftist premium” on the decline in inequality and, if there was one, through which mechanisms. Using a range of econometric models, inequality measurements, and samples, we find evidence that leftist governments lowered income inequality faster than non-leftist regimes, increasing the income share captured by the first seven deciles at the expense of the top ten percent. Our analysis suggests that this reduction was achieved by increasing social pensions, minimum wages, and tax revenue. |
| Keywords: | Income Inequality, Political process, Latin America, Minimum wages, Pensions, Taxes |
| JEL: | D63 D72 H20 I38 N36 O1 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2105&r=all |
| By: | Thomas J. Sargent; Neng Wang; Jinqiang Yang |
| Abstract: | The cross-section distribution of U.S. wealth is more skewed than the distribution of labor earnings. Stachurski and Toda (2019) explain how plain vanilla Bewley-Aiyagari-Huggett (BAH) models with infinitely lived agents can't generate that pattern because an equilibrium risk-free rate is lower than the time rate of preference and each person's wealth process is stationary. We provide two modifications of a BAH model that generate this pattern: (1) overlapping generations of agents who have low wealth at birth and pass through N life-stage transitions of stochastic lengths, and (2) labor-earnings processes that exhibit stochastic growth. With only a few parameters such a model can well approximate mappings from the Lorenz curve and Gini coefficient for cross-sections of labor earnings to their counterparts for cross sections of wealth. Three forces amplify inequality in wealth relative to inequality in labor-earnings: stochastic life-stage transitions; a precautionary savings motive for high wage earners that is especially strong after they receive positive permanent earnings shocks; and an energetic life-cycle saving motive for agents who have low wealth at birth. An equilibrium risk-free interest rate that exceeds a time preference rate fosters a fat-tailed wealth distribution. |
| JEL: | D14 D31 E21 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28473&r=all |
| By: | Yalcintas, Murat; Iyigun, Oykü; Karabulut, Gokhan |
| Abstract: | This study analyzes the relationship between entrepreneurship intention and personal characteristics and skills by using the surveys we conducted in Turkey on 1465 senior university students. We use a modified version of the Entrepreneurial Orientation (EO) scale and the Political Skills Inventory to measure some personal characteristics and skills. We also use the nine sub-dimensions of these two scales. Probit model and wavelet coherence analysis results show that proactivity, entrepreneurship, and networking sub-dimensions of the scales are related to entrepreneurship intention. We also find that gender, the number of siblings, the grade point average (GPA) of the students, their family's education level, the parent' ownership of an enterprise, and the number of non-governmental organizations (NGO) that they are a member of are also related to entrepreneurship intention. Results may be useful to understand and enhance entrepreneurship potential. |
| Keywords: | Entrepreneurship,Self-employment entry,Occupational choice |
| JEL: | C90 D63 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:808&r=all |
| By: | Luisito BERTINELLI; Olivier CARDI; Romain RESTOUT |
| Abstract: | Motivated by recent evidence pointing at an increasing contribution of asymmetric shocks across sectors to economic fluctuations, we explore the labor market effects of technology shocks biased toward the traded sector. Our VAR evidence for seventeen OECD countries reveals that the non-traded sector alone drives the increase in total hours worked following a technology shock that increases permanently traded relative to non-traded TFP. The shock gives rise to a reallocation of labor which contributes to 35% on average of the rise in non-traded hours worked. Both labor reallocation and variations in labor income shares are found empirically connected with factor-biased technological change. Our quantitative analysis shows that a two-sector open econ- omy model with flexible prices can reproduce the labor market effects we document empirically once we allow for technological change biased toward labor together with additional specific elements. When calibrating the model to country-specific data, its ability to account for the cross-country reallocation and redistributive effects we esti- mate increases once we let factor-biased technological change vary between sectors and across countries.. |
| Keywords: | Sector-biased technology shocks; Factor-augmenting effciency; Open economy; Labor reallocation; CES production function; Labor income share. |
| JEL: | E25 E32 F11 F41 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2021-09&r=all |
| By: | Barili, E.; Grembi, V.; Rosso, A.C. |
| Abstract: | Relying on a survey of more than 4,000 female respondents, we investigate the main determinants of women's mental distress during the first wave of the COVID-19 pandemic in Italy. We focus on two groups of variables to capture both the health and the economic emergency: present concerns and future expectations. Our results show that the main predictors of mental health are future expectations, such as the fear of losing a job, which is more relevant than concerns related to the spread of the virus. Younger women (less than 35), those lacking a high school degree, and those working in education or in remote work with school-aged children are in most distress. Using a panel fixed effects model that includes respondents to a re-call run in February 2021, we show that there was no adjustment to the new normal. Finally, using data on gender norms, we show that where the role of women is conceived in a more traditional way, the level of mental distress as driven by future employment is lower, suggesting that women's expectations for their role in society do play a relevant role in self-assessed well-being. |
| Keywords: | mental health; COVID-19; expectations; gender stereotypes |
| JEL: | I1 I12 J16 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:21/07&r=all |
| By: | Christian Dustmann (University College London, Department of Economics and CReAM); Hyejin Ku (University College London, Department of Economics and CReAM); Tanya Surovtseva (Universitat Pompeu Fabra, Department of Economics and Business and CReAM) |
| Abstract: | Higher price levels in the destination relative to the origin increase the effective real wages of immigrants, thereby affecting immigrants’ reservation and entry wages as well as their subsequent career trajectories. Based on micro-level longitudinal administrative data from Germany and exploiting within-country and across-cohort variations in the real exchange rate (RER) between Germany and countries that newly joined the European Union in the 2000s, we find that immigrants arriving with high RERs initially settle for lower paying jobs than comparable immigrants arriving with low RERs. In subsequent periods, however, wages of high RER arrivals catch up to that of their low RER counterparts, convergence achieved primarily through changes to better paying occupations and firms. Our findings thus point to the persistent regional price differences as one possible reason for immigrants’ downgrading, with implications for immigrants’ career profiles and the assessment of labor market impacts of immigration. |
| Keywords: | real exchange rate, reservation wage, immigrant downgrading, earnings assimilation |
| JEL: | J24 J31 J61 O15 O24 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:2110&r=all |
| By: | Apablaza, Mauricio; Sehnbruch, Kirsten; González, Pablo; Mendez Pineda, Rocio |
| Abstract: | This paper uses a multi-dimensional methodology for measuring the quality of employment (QoE) across Chile's regions using household survey data from 1996 – 2017. The paper shows how much a regional perspective can add to an analysis of the QoE and how it can inform policy makers in a way that goes beyond traditional variables such as participation or unemployment rates, which are not always good indicators of labour market performance in developing countries with large informal sectors. Building on previous work that measures QoE deprivation, we use the Alkire/Foster (AF) method to construct a synthetic indicator of the quality of employment (QoE) at an individual level. We select three dimensions that must be considered as both instrumentally and intrinsically important to workers: income, job security and employment conditions. Job security is then divided into two sub-dimensions (occupational status and job tenure), as is employment conditions (social security affiliation and excessive working hours). A threshold is then established within each dimension and sub-dimension to determine whether a person is deprived or not within each dimension, before calculating composite levels of deprivation. The results generated by this index highlight important differences between Chile's regions, but also a process of convergence, which has been driven by employment regulation on minimum wages and the statutory working week in particular. National policies such as the improvement of educational standards have also contributed to this process. On the one hand, this paper illustrates the importance of public policies in labour market performance, and on the other, the index also enables policy makers to focus more precisely on the most vulnerable groups of workers in the labour market. This paper opens up important avenues for future research: once a QoE index has been developed, it can be used to track workers' employment trajectories using either panel or administrative data. This would allow policy makers to understand, whether and to what extent workers become trapped in poor quality jobs, and what active labour market policies could do to help them. |
| Keywords: | quality of employment; Latin America; labour markets; capability approach; Alkire/Foster method; multi-dimensional index |
| JEL: | N0 R14 J01 |
| Date: | 2021–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:109819&r=all |
| By: | OECD |
| Abstract: | This report explores the spatial dimension of productivity in the co-operatives of Italy, a country where they make up a relatively large share of total national employment. Co-operatives play a countercyclical role in job creation during crises. In a post-pandemic world, they could make a major contribution to steering the economy towards inclusiveness and sustainability. Productivity growth ensures that co-operatives can achieve both economic and social goals in the future. This report applies a place-based approach to investigate the issue of productivity in co-operatives, given their many interdependencies with local communities. Novel evidence points to the local factors that are linked with the concentration and productivity of co-operatives across regions, sectors and firm size classes in Italy. A comparison with other Italian firms as well as with Spanish co-operatives and other Spanish firms serves to illustrate how productivity performance varies across space and firm types. This report constitutes an empirical test for the analytical approach developed by the OECD Spatial Productivity Lab. |
| Keywords: | cooperatives, Italy, productivity, regional economics, social economy, Spain |
| JEL: | D24 E24 J54 L31 O32 O35 P13 Q13 R12 |
| Date: | 2021–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:oec:cfeaaa:2021/02-en&r=all |
| By: | Osea Giuntella; Lorenzo Rotunno; Luca Stella (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore) |
| Abstract: | Using longitudinal data from the German Socio-Economic Panel, we analyze the effects of exposure to trade on the fertility and marital behavior of German workers. We find that individuals working in sectors that were more affected by import competition from Eastern Europe and suffered worse labor market outcomes were less likely to have children. In contrast, workers in sectors that benefited from increased exports had better employment prospects and higher fertility. These effects are driven by low-educated and married men, and reflect changes in the likelihood of having any child (extensive margin). While among workers exposed to import competition there is evidence of some fertility postponement, we find a significant reduction of completed fertility. There is instead little evidence of any significant effect on marital behavior. |
| Keywords: | International Trade, Labor Market Outcomes, Fertility, Marriage. |
| JEL: | F14 F16 J13 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie1:def100&r=all |
| By: | CHIVU, LUMINITA (National Institute of Economic Research - Romanian Academy); GEORGESCU, GEORGE (National Institute of Economic Research - Romanian Academy) |
| Abstract: | The extremely fragile balance of the Romanian labour market is severely affected by the crisis caused by the COVID-19 pandemic and by the sudden and almost general deterioration of the macroeconomic context and the business environment. The present study aims to argue that, in times of crisis, such as the current one, the labour market policies need to be varied but also synergistic, in order to stimulate employment and capitalize the potential of each category, so as to contribute to the recovery of the country's macroeconomic and financial framework. Despite the Government's anti-crisis and economic support measures, in the short term, the Romanian labour market is facing the unemployment rate increase, at least in 2020, as a result of the restrictions in many activities, exacerbating the vulnerabilities of the employed population structure described in the study. The analyses carried out revealed that, in Romania, the crisis affected practically all the members of society, but in a disproportionate manner, the most exposed being the vulnerable groups, namely people in the "grey" or informal area of the economy, those working in the most affected sectors and workers with low qualification, many deprived of the needed protection and social assistance. In the context of efforts to identify ways to reduce the distortions generated by the crisis, the integration of social security systems with social assistance can be a viable solution. As activities resume, the labour market tensions are expected to be mitigated both by labour market-specific measures, including those presented in the study, and at the macroeconomic level, adapted to the post-COVID-19 restructuring of the economy, with the necessary policy support at central and local level, including in terms of employment |
| Keywords: | labour market, COVID-19 pandemic, employment, vulnerable groups, protection and social assistance, macroeconomic risks |
| JEL: | E24 F66 J10 J21 J46 O15 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:ror:wpince:210325&r=all |
| By: | Pedro Bento (Texas A&M University, Department of Economics); Sunju Hwang (Texas A&M University, Department of Economics) |
| Abstract: | The number of black-owned businesses in the U.S. has increased dramatically since the 1980s, even compared to the number of non-black-owned businesses and the rise in black labor-market participation. In 1982 less than 4 percent of black labor-market participants owned businesses, compared to over 14 percent of other participants. By 2012 more than 16 percent of black participants owned businesses while the analogous rate for non-black participants increased to only 19 percent. This and other evidence suggest black entrepreneurs have faced significant barriers to starting and running businesses and these barriers have declined over time. We examine the impact of these trends on aggregate output and welfare. Interpreted through a model of entrepreneurship, declining barriers led to a 2 percent increase in black welfare, a 0.7 increase in output per worker, and a 0.7 decrease in the welfare of other labor-market participants. These impacts are in addition to any gains from declining labor-market barriers. |
| Keywords: | black, minority, distortions, entrepreneurship, business dynamism, misallocation, aggregate productivity, economic growth. |
| JEL: | E02 E1 J7 J15 O1 O4 |
| Date: | 2021–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:txm:wpaper:20210324-001&r=all |
| By: | Gabrielle Pepin (W.E. Upjohn Institute for Employment Research) |
| Abstract: | The federal Child and Dependent Care Credit (CDCC) subsidizes child care costs for working families. Before 2021, the CDCC was nonrefundable, so only families with positive tax liability after other deductions benefited. I estimate how CDCC eligibility, benefits, and marginal tax rates would change if the credit were made permanently refundable, relative to 2020 CDCC parameters set to be restored in 2022. Under refundability, some 5 percent of single parents gain eligibility and receive on average over $1,000 annually. Eligibility increases are largest among Black and Hispanic households. Increases in marginal tax rates among moderate-income taxpayers are small. |
| Keywords: | Child and Dependent Care Credit, marginal tax rates, eligibility, refundability |
| JEL: | H24 J13 J22 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:21-344&r=all |
| By: | Lee Elliot Major (Graduate School of Education, University of Exeter; Centre for Economic Performance, London School of Economics); Andrew Eyles (Centre for Economic Performance, London School of Economics); Stephen Machin (Department of Economics and Centre for Economic Performance, London School of Economics) |
| Abstract: | The unequal learning and labour market losses arising in the UK due to the Covid-19 pandemic are used to assess the consequences for social mobility. Labour market and learning losses have been more pronounced for people from poorer families and this is incorporated into a generalisation of the standard, canonical social mobility model. A calibration shows a significantly higher intergenerational elasticity -- reflecting lower social mobility -- because of the uneven nature of losses by family income, and from dynamic scarring. Results from a randomised information experiment incorporated in a bespoke Social Mobility Survey corroborate this, as participants become more sceptical about the social mobility prospects of the Covid generation when given information about the losses that have occurred in the crisis. |
| Keywords: | learning loss, labour market loss, crisis, social mobility |
| JEL: | I24 J63 J21 J62 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:ucl:cepeow:21-02&r=all |
| By: | Kitov, Ivan |
| Abstract: | Ten years ago we presented a modified version of Okun’s law for the biggest developed economies and reported its excellent predictive power. In this study, we revisit the original models using the estimates of real GDP per capita and unemployment rate between 2010 and 2019. The initial results show that the change in unemployment rate can be accurately predicted by variations in the rate of real economic growth. There is a discrete version of the model which is represented by a piecewise linear dependence of the annual increment in unemployment rate on the annual rate of change in real GDP per capita. The lengths of the country-dependent time segments are defined by breaks in the GDP measurement units associated with definitional revisions to the nominal GDP and GDP deflator (dGDP). The difference between the CPI and dGDP indices since the beginning of measurements reveals the years of such breaks. Statistically, the link between the studied variables in the revised models is characterized by the coefficient of determination in the range from R2=0.866 (Australia) to R2=0.977 (France). The residual errors can be likely associated with the measurement errors, e.g. the estimates of real GDP per capita from various sources differ by tens of percent. The obtained results confirm the original finding on the absence of structural unemployment in the studied developed countries. |
| Keywords: | unemployment, GDP, modelling, Okun’s law |
| JEL: | E1 E3 E32 E50 J64 |
| Date: | 2021–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105873&r=all |