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on Labor Markets - Supply, Demand, and Wages |
| By: | Bassanini, Andrea; Caroli, Eve; Rebérioux, Antoine; Breda, Thomas |
| Abstract: | We study compensation packages in family and non-family firms. Using French matched employer-employee data, we first show that family firms pay on average lower wages. We find that part of this wage gap is due to low wage workers sorting into family firms and high wage workers sorting into non-family firms. However, we also find evidence that company wage policies differ according to ownership status, so that the same worker is paid differently under family and non-family firm ownership. We also find evidence that family firms are characterised by lower job insecurity, as measured by dismissal rates and by the subjective risk of dismissal perceived by workers. In addition, family firms appear to rely less on dismissals – and more on hiring reductions – than non-family firms when they downsize. We show that compensating wage differentials account for a substantial part of the inverse relationship between the family/non-family gaps in wages and job security. |
| Keywords: | family firms; wages; job security; compensating wage differentials; linked employer-employee data |
| JEL: | G34 J31 J33 J63 L26 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:1110&r=lma |
| By: | Addison, John T. (Department of Economics, Moore School of Business, University of South Carolina, Columbia, USA and Institute for Advances Studies, Vienna); Blackburn, McKinley L. (Department of Economics, Moore School of Business, University of South Carolina, Columbia, USA); Cotti, Chad D. (Department of Economics, University of Wisconsin-Oshkosh, USA) |
| Abstract: | Do apparently large minimum wage increases in an environment of straightened economic circumstances produce clearer evidence of disemployment effects than is typically reported in the new economics of the minimum wage? The present paper augments the sparse literature covering the very latest increases in the U.S. minimum wage, using three different data sets and the principal estimation strategies for handling geographically-disparate trends. Despite the seemingly more favorable milieu for identifying displacement effects, and although our treatment calls into question one well-received estimation strategy, our preferred specification generally fails to support a finding of negative employment effects. That is to say, minimum-wage workers are apparently concentrated in sectors of the economy for which the labor demand response to statutory wage hikes is minimal. Popular concern with a “recessionary multiplier” thus seems overdone. |
| Keywords: | Minimum wages, Disemployment, Earnings, Low-wage sectors, Geographically-disparate employment trends, Recession |
| JEL: | J2 J3 J4 J8 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihsesp:273&r=lma |
| By: | Lindley, Joanne (University of Surrey); Machin, Stephen (University College London) |
| Abstract: | This paper considers what has hitherto been a relatively neglected subject in the wage inequality literature, albeit one that has been becoming more important over time, namely the role played by increases in postgraduate education. We document increases in the number of workers with a postgraduate qualification in the United States and Great Britain. We also show their relative wages have risen over time as compared to all workers and more specifically to graduates with only a college degree. Consideration of shifts in demand and supply shows postgraduates and college only workers to be imperfect substitutes in production and that there have been trend increases over time in the relative demand for postgraduate vis-à-vis college only workers. These relative demand shifts are significantly correlated with technical change as measured by changes in industry computer usage and investment. Moreover, the skills sets possessed by postgraduates and the occupations in which they are employed are significantly different to those of college only graduates. Over the longer term period when computers have massively diffused into workplaces, it turns out that the principal beneficiaries of this computer revolution has not been all graduates, but those more skilled workers who have a postgraduate qualification. This has been an important driver of rising wage inequality amongst graduates over time. |
| Keywords: | wage inequality, postgraduate education, computers |
| JEL: | J24 J31 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5981&r=lma |
| By: | Pimenta, António M. S. (University of the Azores); Silva, Francisco J. F. (University of the Azores); Vieira, José A. Cabral (University of the Azores) |
| Abstract: | This paper includes a survival analysis which attempts to explain the duration, as in the number of years a worker remains in a low wage situation. Explanatory variables take into account the characteristics of the employee, such as education, age, tenure with the company, gender and nationality, and the characteristics of the job and the company such as industry affiliation, number of employees, age of the company and location. |
| Keywords: | low wage, survival, Portugal |
| JEL: | J31 J42 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5972&r=lma |
| By: | Bayo-Moriones, Alberto (University of Navarra); Galdón-Sánchez, José Enrique (Universidad Pública de Navarra); Martinez-de-Morentin, Sara (Universidad Pública de Navarra) |
| Abstract: | This article presents a study of the influences on the factors that shape wage adjustments. The cost of living, comparability with other firms' wages, the fulfilment of collective agreements at sector level, the need to recruit and retain employees, the performance of the organisation, and the climate of industrial relations are included as factors of interest. The analysis was carried out using a sample of Spanish manufacturing plants. Our results show that the structural characteristics of the establishment such as its size or foreign ownership, as well as the wage setting arrangements and trade unions, play a role in explaining the importance of the factors mentioned in shaping wage adjustments. The human resource management policies adopted by the employer seem to be less relevant, although the qualification of workers and the use of pay for performance have a significant impact on the process of wage adjustment. |
| Keywords: | pay settlements, collective bargaining, wage negotiation |
| JEL: | J30 J40 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5998&r=lma |
| By: | Kar, Saibal (Centre for Studies in Social Sciences, Calcutta); Marjit, Sugata (Centre for Studies in Social Sciences, Calcutta) |
| Abstract: | We provide an analysis of enforcement policies applicable to formal sector in dual labor markets. We use a framework with heterogeneous firms, endogenous determination of informal wage and politically dictated enforcement strategies. Firms which operate both in the formal and informal sectors do very little to increase employment when faced with the opportunity of hiring workers in the informal labor market. Thus enforcement of labor laws and other regulations should not have aggregate employment effects, particularly when workers are productively homogeneous. For firms operating exclusively in the informal sector, the outcome is different. Such features determine the stringency of enforcement in a market characterized by firms with varying levels of productivity. For example, in case of firms with relatively high levels of productivity, enforcement has to be stricter than in the case with relatively low productivity firms. Taxing the more productive seems to be the optimal strategy. |
| Keywords: | heterogeneous firms, informal labor, wage, labor regulations, enforcement |
| JEL: | J21 J31 J50 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5978&r=lma |
| By: | Bodvarsson, Örn B. (St. Cloud State University); Sessions, John G. (University of Bath) |
| Abstract: | The traditional Becker/Arrow style model of discrimination depicts majority and minority and workers as perfectly substitutable inputs, implying that all workers have the same job assignment. The model is only appropriate for determining whether pay differences between, for example, whites and non-whites doing job assignment A are attributable to prejudice ('within-assignment discrimination'); It is inappropriate, however, for determining whether pay differences between whites in job assignment A and non-whites in job assignment B reflect discriminatory behaviour ('cross-assignment discrimination'). We test the model of such cross assignment discrimination developed by Bodvarsson and Sessions (2011) using data on Major League Baseball hitters and pitchers for four different seasons during the 1990s, a decade during which monopsony power fell. We find strong evidence of ceteris paribus racial pay differences between hitters and pitchers, as well as evidence that cross-assignment discrimination varies with labour market structure. |
| Keywords: | wage discrimination, complementarity, monopsony power |
| JEL: | J7 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5989&r=lma |
| By: | Luis Fernando Gamboa; Blanca Zuluaga |
| Abstract: | The aim of this paper is to provide an estimation and decomposition of the motherhood wage penalty in Colombia. Our empirical strategy is based on the matching procedure designed by Ñopo (2008) for the case of gender wage gaps. This is an alternative procedure to the well-known Blinder-Oaxaca decomposition method. The cross-section data of the Colombian Living Standard Survey allows us to decompose the wage gap in four components, according to the characteristics of mothers and non-mothers. We found that mothers earn, in average, 1:73% less than their counterparts without children and that this gap slightly decreases as the group includes older women. Taking into account that this procedure is sensitive to the set of variables included in the matching, several specifica- tions are tested. The main result of the paper is obtained when considering schooling as a matching variable. Once schooling is included, the unex-plained part of the gap considerably decreases and turns non significant.Thus, we do not find evidence of wage discrimination against mothers in the Colombian labor market. |
| Date: | 2011–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:008980&r=lma |
| By: | de Grip, Andries (ROA, Maastricht University); Sauermann, Jan (ROA, Maastricht University) |
| Abstract: | This paper analyses the effects of work-related training on worker productivity. To identify the causal effects from training, we combine a field experiment that randomly assigns workers to treatment and control groups with panel data on individual worker performance before and after training. We find that participation in the training programme leads to a 10 percent increase in performance. Moreover, we provide experimental evidence for externalities from treated workers on their untreated teammates: An increase of 10 percentage points in the share of treated peers leads to a performance increase of 0.51 percent. We provide evidence that the estimated effects are causal and not the result of employee selection into and out of training. Furthermore, we find that the performance increase is not due to lower quality provided by the worker. |
| Keywords: | training, field experiment, peer effects, productivity |
| JEL: | J24 M53 C93 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5976&r=lma |
| By: | Kuhn, Peter J. (University of California, Santa Barbara); Villeval, Marie Claire (CNRS, GATE) |
| Abstract: | Are women disproportionately attracted to work environments where cooperation rather than competition is rewarded? This paper reports the results of a real-effort experiment in which participants choose between an individual compensation scheme and a team-based payment scheme. We find that women are more likely than men to select team-based compensation in our baseline treatment, but women and men join teams with equal frequency when we add an efficiency advantage to team production. Using a simple structural discrete choice framework to reconcile these facts, we show that three elements can explain the observed patterns in the team-entry gender gap: (1) a gender gap in confidence in others (i.e. women are less pessimistic about their prospective teammates' relative ability), (2) a greater responsiveness among men to instrumental reasons for joining teams, and (3) a greater "pure" preference for working in a team environment among women. |
| Keywords: | gender, cooperation, self-selection, confidence, experiment |
| JEL: | C91 J16 J24 J31 M5 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5999&r=lma |
| By: | Lefebvre, Pierre (University of Québec at Montréal); Merrigan, Philip (University of Québec at Montréal); Michaud, Pierre-Carl (University of Québec at Montréal) |
| Abstract: | Using data from three waves of the General Social Survey on retirement and older workers (1994, 2002 and 2007), we document the evolution of retirement patterns over the last three decades. We combined the analysis of retirement ages of actual retirees with data on expected retirement ages of current workers to create a longer perspective on changes in retirement behaviour in Canada. We also investigate trends in work after retirement. Our findings are in line with findings from other countries. There is an upward trend in retirement ages which likely started around year 2000 for cohorts born after 1945. This trend contrasts with the slow decline in retirement ages observed prior to the end of the millennium. While the downward trend was likely due to factors such as the offering of early retirement programs in private firms, the upward trend is likely to be caused by a wider variety of sources, including better health, less pervasive defined benefit pensions and in general less generous pensions. |
| Keywords: | retirement, pensions, Canada |
| JEL: | J26 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5979&r=lma |
| By: | Fryer, Roland G.; Pager, Devah; Spenkuch, Jörg L. |
| Abstract: | The extent to which discrimination can explain racial wage gaps is one of the most divisive subjects in the social sciences. Using a newly available dataset, this paper develops a simple empirical test which, under plausible conditions, provides a lower bound on the extent of discrimination in the labor market. Taken at face value, our estimates imply that differential treatment accounts for at least one third of the black-white wage gap. We argue that the patterns in our data are consistent with a search-matching model in which employers statistically discriminate on the basis of race when hiring unemployed workers, but learn about their marginal product over time. However, we cannot rule out other forms of discrimination |
| Keywords: | discrimination; wage gaps; race |
| JEL: | J71 J01 J15 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33607&r=lma |
| By: | Bjerk, David (Claremont McKenna College) |
| Abstract: | This paper shows that while high school dropouts fare far worse on average than otherwise similar high school completers in early adulthood outcomes such as success in the labor market and future criminal activity, there are important differences within this group of dropouts. Notably, those who feel "pulled" out of school (i.e, they say they dropped out of school to work or take care of family) do similarly with respect to labor market and criminal outcomes in their early twenties to individuals with similar pre-dropout characteristics who complete high school. It is only those who feel they are more "pushed" out of school (i.e, they say they drop out for other reasons including expulsion, poor grades, moving, and not liking school) who do substantially worse than otherwise similar high school completers. These results suggest that any detrimental impacts from dropping out of school arise primarily when the drop out does not have a plan for how to use his time after dropping out. |
| Keywords: | dropouts, crime, wages, earnings, idleness |
| JEL: | J31 K42 I21 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5995&r=lma |
| By: | Susumu Imai (Queen`s University, Department of Economics); Derek Stacey (Queen`s University, Department of Economics); Casey Warman (Queen`s University, Department of Economics) |
| Abstract: | We examine the ability of male immigrants to transfer their occupational human capital using information from the O*NET and a unique dataset that includes both the last source country occupation and the first four years of occupations in Canada. We first augment a model of occupational choice and skill accumulation to derive predictions about the cross-border transferability of occupational human capital. We then test the empirical implications using the skill requirements of pre- and post-immigration occupations. We find that male immigrants to Canada were employed in source country occupations that required high levels of cognitive skills, but relied less intently on manual skills. Following immigration, they find initial employment in occupations that require the opposite. Regression analysis uncovers large returns to the quantitative skill requirements of Canadian occupations, but no returns to source country skill requirements. Finally, our empirical findings suggests that occupational skill gaps are detrimental to immigrants` earnings. |
| Keywords: | occupational mobility, skills, human capital, immigration |
| JEL: | J24 J31 J61 J71 J80 J62 D83 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1275&r=lma |
| By: | René Böheim (WIFO); Thomas Leoni (WIFO) |
| Abstract: | Sick workers in many countries receive sick pay during their illness-related absences from the workplace. In several countries, the social security system insures firms against their workers' sickness absences. However, this insurance may create moral hazard problems for firms, leading to the inefficient monitoring of absences or to an underinvestment in their prevention. In the present paper, we investigate firms' moral hazard problems in sickness absences by analysing a legislative change that took place in Austria in 2000. In September 2000, an insurance fund that refunded firms for the costs of their blue-collar workers' sickness absences was abolished (firms did not receive a similar refund for their white-collar workers' sickness absences). Before that time, small firms were fully refunded for the wage costs of blue-collar workers' sickness absences. Large firms, by contrast, were refunded only 70 percent of the wages paid to sick blue-collar workers. Using a difference-in-differences-in-differences approach, we estimate the causal impact of refunding firms for their workers' sickness absences. Our results indicate that the incidences of blue-collar workers' sicknesses dropped by approximately 8 percent and sickness absences were almost 11 percent shorter following the removal of the refund. Several robustness checks confirm these results. |
| Keywords: | Absenteeism Moral Hazard Sickness Insurance |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2011:i:400&r=lma |
| By: | González, Roberto (Universitat Autònoma de Barcelona); Sala, Hector (Universitat Autònoma de Barcelona) |
| Abstract: | This paper provides estimates for the Mercosur countries of the Frisch elasticity – i.e., the elasticity of substitution between worked hours and real wages holding constant the marginal utility of wealth. We find a strong heterogeneity, with estimated elasticities ranging from 12.8 in Argentina to -13.1 in Paraguay. Brazil and Uruguay are in between, both with negative values of -1.9 and -1.4, respectively. We argue that the existence of severe liquidity constraints is the main reason behind the negative estimates found in Brazil, Paraguay and Uruguay. The heterogeneity of these estimates is the outcome of differences in many relevant economic dimensions – ranging from sectorial specialization to welfare state provisions and labor market specificities – all of them crucially affecting the socioeconomic situation of individuals. The diversity of Frisch elasticities calls for the development of a cross-country (rather than a within-country) policy approach, since they crucially affect the dynamics of the business cycle and business cycle synchronization is a step prior to the design of macro-convergence policies in the Mercosur context. |
| Keywords: | Frisch elasticity, labor supply, liquidity constraints, Mercosur, life-cycle models, pseudo-panel (synthetic panel) |
| JEL: | J22 J82 D91 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5993&r=lma |
| By: | Tealdi, Cristina |
| Abstract: | Short-term employment contracts have been deployed rapidly across the European Union (EU) in the past two decades. Characterized by a high degree of flexibility, they were thought to be the solution to persistent labor market rigidities and high unemployment rates. The objective of this paper is to investigate both theoretically and empirically the effects of introducing short-term employment contracts to the labor market, and to draw conclusions regarding the change in welfare for different categories of people. Data from the Italian labor market show that workers hired on a short-term basis are mostly young, female, inexperienced, less educated, and poorly qualified. Short-term contracts, which are associated with lower wages, often come in sequences. Labor force participation has increased in particular among older workers. Such changes in labor force composition and transition patterns can be explained by a search model with workers heterogeneity and differentiated contracts. In steady state, a pooling equilibrium of less and more productive workers exists, when only permanent contracts are available. In the presence of short-term contracts, a separating equilibrium allocates less and more productive workers towards different career paths. Through model calibration it is possible to quantify the change in welfare for different categories of workers. Moreover, within a multi-state duration framework, the model is estimated with the Heckman and Singer non-parametric maximum likelihood (NPMLE) estimation procedure. One of the major findings is that inexperienced workers are worse off after the reforms. However, after the accumulation of some work experience, they have the opportunity to compensate for their losses, if they are more productive. Less productive workers, even though provided with higher chances to work, are the ones paying the cost of higher turnover and lower wages. |
| Keywords: | Labor Economics; Policy |
| JEL: | J08 J64 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33573&r=lma |
| By: | Kevin Lang; Jee-Yeon K. Lehmann |
| Abstract: | We review theories of race discrimination in the labor market. Taste-based models can generate wage and unemployment duration differentials when combined with either random or directed search even when strong prejudice is not widespread, but no existing model explains the unemployment rate differential. Models of statistical discrimination based on differential observability of productivity across races can explain the pattern and magnitudes of wage differentials but do not address employment and unemployment. At their current state of development, models of statistical discrimination based on rational stereotypes have little empirical content. It is plausible that models combining elements of the search models with statistical discrimination could fit the data. We suggest possible avenues to be pursued and comment briefly on the implication of existing theory for public policy. |
| JEL: | J31 J64 J71 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17450&r=lma |
| By: | Bruce Chapman (The Australian National University, Research School of Social Sciences (RSSS) - Economics Program; The Australian National University (ANU) - Crawford School of Economics and Government) |
| Abstract: | It is commonplace in Australian policy debate for groups presumed to be adversely affected by proposed policies to provide estimates of the undesirable consequences of change. A fashionable form relates to predictions of job losses for the group affected, usually accompanied by counter-claims made by the government of the day or other groups in favour of the policy. A highly public example of the above is the claim by the Minerals Council of Australia (MCA), based on work done in 2009 by Concept Economics (2009) that the then-planned Emissions Trading Scheme (ETS) would result in 23,510 fewer jobs in Australian mining than would otherwise be the case. A major background issue is that most economists would argue that any changes in the relative price of carbon-producing output must also be associated with offsetting increases in employment as a result of the higher level of activity in, for example, alternative energy production, and this is perhaps the critical point in the jobs debate concerning the consequences of policy reform. While we acknowledge this fact, the very large "job loss" figure might be a frighteningly large number for many observers, so we address the question: how many jobs is 23,510, really? Our research reports on findings using three different data series and methods to put into context the supposed jobs loss figure. The paper presents analyses of different data sets aimed at improving the understanding of, and putting into an aggregate economy context, the projected mining sector "job losses" as a result of the 2009 planned ETS. While the focus is on the ETS and mining, the illustrations apply to almost all public and political debate concerning the meaning of job loss projections from anticipated policy reform in an aggregate labour market context. It matters, for example, for the Murray Darling Basin Plan. We recognise that there are some weaknesses with respect to the data and methods used. Even so, a very clear and consistent message has come through. It is that the projected job losses from the ETS, particularly when considered over a 10 year time horizon, are in a statistical sense close to invisible with respect to employment and unemployment stocks, and trivial with respect to aggregate flows in the labour market. Also, it is apparently the case that with respect to mining sector employment the projected losses are a very small proportion of overall inflows to and outflows from mining. Further, it seems to be the case that those leaving mining periods of growth are not then entering a protracted period, and more likely any period at all, of unemployment. Our results should not be taken to mean that economic policy reform is costless to all employees who might be affected by sectoral changes in the labour market, and there remain clear roles for government to minimise the personal costs for those so disadvantaged. As well, the details of this research cannot be translated into precise analyses of the employment effects of the carbon price policy being developed by the current government. But the essential points concerning the size and meaning of mining sector employment effects should not be in dispute; the alleged "jobs losses" aspect of the climate change policy debate is not in any sense important to the overall discourse. |
| Keywords: | Mining employment, job flows, carbon pricing policies, unemployment |
| JEL: | E24 E27 E60 J20 J23 J60 Q48 Q54 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:crwfrp:1104&r=lma |
| By: | Shawn Ni (Department of Economics, University of Missouri-Columbia); Michael Podgursky (Department of Economics, University of Missouri-Columbia) |
| Abstract: | The rising costs and large unfunded liabilities of defined benefit (DB) teacher retirement systems raise questions about their efficacy and viability. Reform of teacher pension plans depends critically on reliable predictions of behavioral responses to alternative pension rules. We estimate an option-value model of individual teacher retirement using administrative data for Missouri teachers. The model fits the observed aggregate retirement behavior very well. We use the estimated structural parameters to simulate retirement behavior under alternative pension rules. Our simulations show that on net the enhancements of Missouri teacher pension benefits in the 1990's lowered the average retirement age for teachers. Conversion from the current DB plan to a defined contribution (DC) plan would have the opposite effect, and would dampen "spikes" in teacher retirement timing. The 1990's enhancements raised welfare for all teachers, however, the DC plan that we simulate has a mixed welfare impact, raising welfare for teachers near retirement but reducing it for teachers with less experience. |
| Keywords: | teacher pensions, school staffing, school finance |
| JEL: | H30 I22 J26 J38 |
| Date: | 2011–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:1111&r=lma |
| By: | Dessi, Roberta (Toulouse School of Economics (IDEI and GREMAQ), and CEPR); Rustichini, Aldo (University of Minnesota) |
| Abstract: | Standard economic models with complete information predict a positive, monotonic relationship between pay and performance. This prediction does not always hold in experimental tests: offering a small payment may result in lower performance than not offering any pay- ment. We test experimentally two main explanations that have been put forward for this result: the "incomplete contract" hypothesis views the payment rule as a signal given to subjects on purpose of the activity. The "informed principal" hypothesis views it as a signal concerning the characteristics of the agent or of the task. The incomplete contract view appears to oer the best overall explanation for our results. We also nd that high-powered monetary incentives do not "crowd out" intrinsic motivation, but may elicit "too much" eort when intrinsic motivation is very high. |
| Date: | 2011–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:24942&r=lma |