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on Labour Economics |
| By: | Joaquín García-Cabo; Joaquín Anna Lipińska; Gastón Navarro |
| Abstract: | Unemployment insurance and wage subsidies are key tools to support labor markets in recessions. We develop a multi-sector search and matching model with on-the-job human capital accumulation to study labor market policy responses to sector-specific shocks. Our calibration accounts for structural differences in labor markets between the United States and the euro area, including a lower job-finding rate in the latter. We use the model to evaluate unemployment insurance and wage subsidy policies in recessions of different duration. After a temporary sector-specific shock, unemployment insurance improves reallocation toward productive sectors at the cost of initially higher unemployment and, thus, human capital destruction. By contrast, wage subsidies reduce unemployment and preserve human capital at the cost of limiting reallocation. In the United States, unemployment insurance is preferred to wage subsidies when it does not distort job creation for too long. In the euro area, wage subsidies are preferred, given the lower job-finding rate and reallocation. |
| Keywords: | labor market policies, search and matching frictions, reallocation |
| JEL: | E24 J64 J68 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1095&r=lab |
| By: | Christian Merkl; Timo Sauerbier |
| Abstract: | Our paper analyzes the role of public employment agencies in job matching, in particular the effects of the restructuring of the Federal Employment Agency in Germany (Hartz III labor market reform) for aggregate matching and unemployment. Based on two microeconomic datasets, we show that the market share of the Federal Employment Agency as job intermediary declined after the Hartz reforms. We propose a macroeconomic model of the labor market with a private and a public search channel and fit the model to various dimensions of the data. We show that direct intermediation activities of the Federal Employment Agency did not contribute to the decline in unemployment in Germany. By contrast, improved activation of unemployed workers reduced unemployed by 0.8 percentage points. Through the lens of an aggregate matching function, more activation is associated with a larger matching efficiency. |
| Keywords: | Hartz reforms, search and matching, reform of employment agency |
| JEL: | E24 E00 E60 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1185&r=lab |
| By: | Matteo Picchio (Department of Economics and Social Sciences, Marche Polytechnic University); Michele Ubaldi (Department of Economics and Social Sciences, Marche Polytechnic University) |
| Abstract: | This paper studies whether individuals that experienced parental unemployment during their childhood/early adolescence have poorer health once they reach the adulthood. We used data from the German Socio-Economic Panel from 2002 until 2018. Our identification strategy of the causal effect of parental unemployment relied on plant closures as exogenous variation of the individual labor market condition. We combined matching methods and parametric estimation to strengthen the causal interpretation of the estimates. On the one hand, we found a nil effect for parental unemployment on mental health. On the other hand, we detected a negative effect on physical health. The latter is stronger if parental unemployment occurred in early periods of the childhood, and it is heterogeneous across gender. The negative effect of parental unemployment on physical health may be explained by a higher alcohol and tobacco consumption later in life. |
| Keywords: | Parental unemployment; plant closure; mental health; physical health; health behaviors |
| JEL: | I14 J13 J62 J65 |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:478&r=lab |
| By: | Mark Bils; Marianna Kudlyak; Paulo Lins |
| Abstract: | Typical measures of wages, such as average hourly earnings, fail to capture cyclicality in the effective cost of labor in the presence of (i) cyclical fluctuations in the quality of worker-firm matches, or (ii) wages being smoothed within employment matches. To address both concerns, we estimate cyclicality in labor’s user cost exploiting the longrun wage in a match to control for match quality. Using NLSY data for 1980 to 2019, we identify three channels by which hiring in a recession affects user cost: It lowers the new-hire wage; it lowers wages going forward in the match; but it also results in higher subsequent separations. All totaled, we find that labor’s user cost is highly procyclical, increasing by more than 4% for a 1 pp decline in the unemployment rate. For large recessions, like the Great Recession, that implies a decline in the price of labor of about 15%. |
| Keywords: | wages; wage rigidity; cyclicality |
| JEL: | E24 E32 J30 J41 J63 J64 |
| Date: | 2023–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:95886&r=lab |
| By: | Eichhorst Werner; Holger Bonin; Annabelle Krause-Pilatus; Paul Marx; Mathias Dolls; Max Lay |
| Abstract: | The aim of this study is to analyse the role of social policies in different European welfare states regarding minimum income protection and active inclusion. The core focus lies on crisis resilience, i.e. the capacity of social policy arrangements to contain poverty and inequality and avoid exclusion before, during and after periods of economic shocks. To achieve this goal, the study expands its analytical focus to include other tiers of social protection, in particular upstream systems such as unemployment insurance, job retention and employment protection, as they play an additional and potentially prominent role in providing income and job protection in situations of crisis. A mixed-method approach is used that combines quantitative and qualitative research, such as descrip-tive and multivariate quantitative analyses, microsimulation methods and in-depth case studies. The study finds consistent differences in terms of crisis resilience across countries and welfare state types. In general, Nordic and Continental European welfare states with strong upstream systems and minimum income support (MIS) show better outcomes in core socio-economic outcomes such as poverty and exclusion risks. However, labour market integration shows some dualisms in Continental Europe. The study shows that MIS holds particular importance if there are gaps in upstream systems or cases of severe and lasting crises. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:econpr:_40&r=lab |
| By: | Karin Mayr-Dorn; Gaia Narciso; Duc Anh Dang; Hien Phan |
| Abstract: | This paper investigates the effects of the U.S.-China trade war on trade diversion and the labor market in a third country, Vietnam. We exploit variation in Vietnamese exports to the U.S. across industries and districts based on the extent of the U.S. tariff hikes on Chinese imports and provide evidence of a positive effect on labor market outcomes in Vietnam. Vietnamese workers and districts that are more exposed to the trade war display higher employment, working hours, and wages as a result. Our findings reveal that bilateral trade policy can have substantial offsetting effects on trade flows and labor markets in third countries. |
| Keywords: | trade diversion, trade war |
| JEL: | F14 F16 R23 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2023-04&r=lab |
| By: | Katariina Mueller-Gastell |
| Abstract: | I outline the sociological theory that would predict that external labor markets – those in which more positions are filled with new hires rather from firm-internal promotions – heighten gender based discrimination and contribute to earnings inequality. I test this theory by treating industries as miniature labor markets within the US with varying levels of gender inequality and different hiring practices. Using high quality administrative data from 1985 to 2013, including detailed work histories from this period, I compare the earnings of alike men and women across industries with different levels of reliance on external markets at different times. I find that men experience greater unexplained earnings relative to women – unexplained in that it is not accounted for by work history or observable demographic characteristics – when a greater share of earnings increase events occur outside the firm. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:23-23&r=lab |
| By: | Natalie Bau; Gaurav Khanna; Corinne Low; Alessandra Voena |
| Abstract: | This paper examines whether an important cultural institution in India - dowry - can enable male migration by increasing the liquidity available to young men after marriage. We hypothesize that one cost of migration is the disruption of traditional elderly support structures, where sons live near their parents and care for them in their old age. Dowry can attenuate this cost by providing sons and parents with a liquid transfer that eases constraints on income sharing. To test this hypothesis, we collect two novel datasets on property rights over dowry among migrants and among families of migrants. Net transfers of dowry to a man's parents are common but far from universal. Consistent with using dowry for income sharing, transfers occur more when sons migrate, especially when they work in higher-earning occupations. Nationally representative data confirms that migration rates are higher in areas with stronger historical dowry traditions. Finally, exploiting a large-scale highway construction program, we show that men from areas with stronger dowry traditions have a higher migration response to reduced migration costs. Despite its potentially adverse consequences, dowry may play a role in facilitating migration and therefore, economic development. |
| JEL: | J12 J61 O12 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31176&r=lab |
| By: | Pierpaolo Benigno; Gauti B. Eggertsson |
| Abstract: | This paper proposes a non-linear New Keynesian Phillips curve (Inv-L NK Phillips Curve) to explain the surge of inflation in the 2020s. Economic slack is measured as firms' job vacancies over the number of unemployed workers. After showing empirical evidence of statistically significant nonlinearities, we propose a New Keynesian model with search and matching frictions, complemented by a form of wage rigidity, in the spirit of Phillips (1958), that generates strong nonlinearities. Policy implications include the thesis that appropriate monetary policy can bring inflation down without a significant recession and that the recent inflationary surge was mostly generated by a labor shortage -- i.e. an exceptionally tight labor market. |
| JEL: | E12 E3 E30 E40 E50 E60 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31197&r=lab |
| By: | Laurel Wheeler |
| Abstract: | Casino-style gaming is an important economic development strategy for many American Indian tribes throughout the United States. Using confidential Census microdata and a database of tribal government-owned casinos, I examine the local labor market effects of tribal gaming on different markets, over different time horizons, and for different subgroups. I find that tribal gaming is responsible for sustained improvements in employment and wages on reservations and that American Indians benefit the most. I also find that tribal gaming increases the average rental price of housing but by an amount smaller than the average wage increase, suggesting net local benefits. |
| JEL: | R23 R58 J40 J15 L83 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:23-22&r=lab |
| By: | Walls, Margaret A. (Resources for the Future); Wibbenmeyer, Matthew (Resources for the Future) |
| Abstract: | As large and damaging wildfires have increased in frequency in the western United States, the consequences of these events for local economies remain largely unknown. Studies of the effects of natural disasters on local economic growth have yielded mixed results, and few have examined wildfires—especially large and damaging wildfires. We investigate the local economic impacts of wildfires in the western United States using two empirical approaches, which rely on public county-level economic data and administrative-establishment-level data, respectively. Comparing findings with these two data sources allows us to investigate how local the local economic effects of wildfires are. We find no significant short- or long-run effects of major wildfires on county-level employment growth. However, when we analyze results closer to the actual fire locations, we find that job growth in the year of the fire declines by 1.3 percentage points, but rebounds after that with no significant long-run effect. When analyzed by industry, both approaches show a boost in employment growth in the construction sector, but the results for other sectors have some important differences. |
| Date: | 2023–03–08 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-23-03&r=lab |
| By: | Eric A. Hanushek; Babs Jacobs; Guido Schwerdt; Rolf van der Velden; Stan Vermeulen; Simon Wiederhold |
| Abstract: | The standard economic model of occupational choice following a basic Roy model emphasizes individual selection and comparative advantage, but the sources of comparative advantage are not well understood. We employ a unique combination of Dutch survey and registry data that links math and language skills across generations and permits analysis of the intergenerational transmission of comparative skill advantages. Exploiting within-family between-subject variation in skills, we show that comparative advantages in math of parents are significantly linked to those of their children. A causal interpretation follows from a novel IV estimation that isolates variation in parent skill advantages due to their teacher and classroom peer quality. Finally, we show the strong influence of family skill transmission on children’s choices of STEM fields. |
| JEL: | I24 I26 J12 J62 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31186&r=lab |
| By: | Kasy, Maximilian; Lehner, Lukas |
| Abstract: | We evaluate a guaranteed job program launched in 2020 in Austria. Our evaluation is based on three approaches, pairwise matched randomization, a pre-registered synthetic control at the municipality level, and a comparison to individuals in control municipalities. This allows us to estimate direct effects, anticipation effects, and spillover effects. We find positive impacts of program participation on economic and non-economic well-being, but not on physical health or preferences. At the municipality level, we find a large reduction of long-term unemployment, and no negative employment spillovers. There are positive anticipation effects on subjective well-being, status, and social inclusion for future participants. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2023–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:cd25u&r=lab |
| By: | Kenju Kamei (Faculty of Economics, Keio University); Katy Tabero (Durham University Business School) |
| Abstract: | Teams are increasingly popular decision-making and work units in firms. This paper uses a novel real effort experiment to show that (a) some teams in the workplace reduce their members f @private benefits to achieve a group optimum in a social dilemma and (b) such endogenous choices by themselves enhance their work productivity (per work time production) ? a phenomenon called the gdividend of democracy. h In the experiment, worker subjects are randomly assigned to a team of three, and they then jointly solve a collaborative real effort task under a revenue-sharing rule in their group with two other teams, while each individual worker can privately and independently shirk by playing a Tetris game. Strikingly, teams exhibit significantly higher productivity (per-work-time production) when they can decide whether to reduce the return from shirking by voting than when the policy implementation is randomly decided from above, irrespective of the policy implementation outcome. This means that democratic culture directly affects behavior. On the other hand, the workers under democracy also increase their shirking, presumably due to enhanced fatigue owing to the stronger productivity. Despite this, democracy does not decrease overall production thanks to the enhanced work productivity. |
| Keywords: | workplace democracy, moral hazard, experiment, free riding, teamwork |
| JEL: | C92 D02 D72 H41 |
| Date: | 2023–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:keo:dpaper:2023-011&r=lab |
| By: | Grijalva, Diego |
| Abstract: | In this paper we analyze the on-impact effect of the Covid-19 pandemic on Ecuadorian firms and, conditional on this, we analyze firms' short-run performance. We estimate various econometric models on a combined dataset of almost 5, 000 firms that includes fiscal-year performance variables from the Ecuadorian Superintendencia de Compañías and results from a survey conducted by a major financial institution in Ecuador at the beginning of the pandemic. Our main result is that micro women-led firms and women-led firms outside of the main Ecuadorian cities were more affected at the onset of the pandemic. Despite this impact, their performance by the end of 2020 was not worse compared to less affected firms. We also find that smaller firms as well as firms in the hospitality sector were both more affected and performed worse than other firms. Finally, younger firms were less affected and performed better than older firms, but at the cost of increased debt and less cash. |
| Keywords: | Firms' performance, Covid-19, emerging economies |
| JEL: | D22 G32 J16 L25 L26 O54 |
| Date: | 2023–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:117225&r=lab |
| By: | Christian Pfeifer (Leuphana Universität Lüneburg, Institut für Volkswirtschaftslehre) |
| Abstract: | Many citizens are relatively dissatisfied with the democratic regimes they live in, which can be a threat to political stability. This paper reports empirical evidence that workers in firms with works councils are on average significantly more satisfied with the democracy as it exists in Germany than workers in firms without such a participatory workplace institution. This result holds in regressions for subsamples, in panel regressions accounting for unobserved individual heterogeneity, and in endogenous treatment regressions. It gives support to the “spillover thesis” that participatory workplace characteristics have a broader effect on society. Consequently, strengthening worker codetermination might help to increase the overall satisfaction with the democratic regime and foster political stability. |
| Keywords: | democracy; codetermination; satisfaction; “spillover thesis”; works councils |
| JEL: | D02 D72 J58 |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:420&r=lab |
| By: | Clemens, Jeffrey (University of California, San Diego); Strain, Michael R. (American Enterprise Institute for Public Policy Research) |
| Abstract: | Over the past decade, organized labor has played a significant role in advocating for minimum wage increases. Why might this be, given that the minimum wage may act as a substitute for the bargaining power offered by labor unions? In this paper, we study the interplay between minimum wages and union membership. We estimate that each dollar in minimum wage increase predicts a 5 percent increase (0.3 pp) in the union membership rate among individuals ages 16–40. Consistent with a classic "free-riding" hypothesis, however, we find that minimum wage increases predict declines in union membership among the minimum wage's most direct beneficiaries. Instead, increases in union membership occur among much broader groups that are not directly affected by the minimum wage. |
| Keywords: | political economy, social choice, minimum wage, unionization |
| JEL: | D71 D78 P16 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16059&r=lab |
| By: | Benjamin W. Cowan; Todd R. Jones; Jeffrey M. Swigert |
| Abstract: | We demonstrate how mothers, fathers, and 15–17-year-old students alter their schedules around the K-12 academic year. Using regression discontinuity (RDD) methods, combined with dates on school year start and end dates by locality, we document several notable results. First, mothers are substantially more affected by the school year than are fathers. When school is in session, mothers sleep less, spend more time caring for family members and driving them around, and spend less time on eating, free time and exercise. Fathers see changes that are generally similar in sign but smaller in magnitude compared to mothers. 15–17-year-olds naturally reduce time spent in educational pursuits when school is out (a decrease of about 5.5 hours per day on weekdays), and most of that time is substituted toward free time (an additional 2+ hours per day) and sleep (1+ hours per day). Our results provide a holistic picture of how families build their days around the K-12 school calendar and have implications for policies targeted toward women’s and teenage children’s health and well-being. |
| JEL: | I12 I21 I31 J16 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31177&r=lab |
| By: | David Neumark |
| Abstract: | The effects of minimum wages on employment, wages, earnings, and incomes, have been studied and debated for decades. In recent years, however, researchers have turned to the effects on a multitude of other behaviors and outcomes – largely related to health. I review and assess the large and growing body of evidence on minimum wage effects on a wide variety of health outcomes and health-related behaviors. The evidence on overall physical health is mixed. The findings on diet and obesity either point to beneficial or null effects, but not negative effects, while other evidence indicates that higher minimum wages increase smoking and reduce exercise. The evidence for mental health is ambiguous, with somewhat more studies finding no impact than finding a positive impact (but none finding a negative impact). And the evidence for suicide points clearly to beneficial effects of higher minimum wages. Studies on family structure and children point in different directions, with evidence that mothers spend more time with children, no clear indication of changes in treatment of children, but declines in children’s test scores. The evidence generally points to minimum wages increasing risky behavior (drinking and smoking). Evidence on the effects of minimum wages on crime is mixed. The best evidence on employer-provided health insurance is more adverse, although Medicaid expansions under the Affordable Care Act (ACA) may have mitigated this influence, and there is not clear evidence of greater unmet medical needs. Other evidence suggests that higher minimum wages may affect health adversely via different channels. |
| JEL: | H0 I14 J08 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31191&r=lab |
| By: | Taha Choukhmane; Lucas Goodman; Cormac O'Dea |
| Abstract: | Pareto Efficiency is a core assumption of most models of household decision-making. We test this assumption using a new dataset covering the retirement saving contributions of over a million U.S. individuals. While a vast literature has failed to reject household efficiency in developed countries, we find evidence of widespread inefficiency in our setting: retirement contributions are not allocated to the account of the spouse with the highest employer match rate. This lack of coordination cannot be explained by inertia, auto-enrollment, or simple heuristics. Instead, we find that indicators of weaker marital commitment correlate with the incidence of inefficient allocations. |
| JEL: | D13 D15 D19 J12 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31195&r=lab |