|
on Labor Markets - Supply, Demand, and Wages |
| By: | Pelek, Selin (Galatasaray University Economic Research Center) |
| Abstract: | In this paper, we investigate the effect of the minimum wage on the entire wage distribution. More specifically, we address the issue of wage inequality by taking into account the potential distributional outcomes of the minimum wage legislation. We decompose the wage differences and the changes in the wage inequality before and after the sizeable minimum wage increase in 2004 following the methodology introduced by DiNardo, Fortin and Lemieux (1996). We use a non-parametric reweighting approach to decompose the effects of the minimum wage increase as well as other factors that may have changed the wage distribution. Our main findings confirm that the minimum wage has played the pivotal role in reducing wage inequality for both men and women wage earners between 2003 and 2005. |
| Keywords: | Minimum wage; wage inequality; counterfactual distributions |
| JEL: | J31 J38 |
| Date: | 2013–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:ris:giamwp:2013_008&r=lma |
| By: | Tamar Khitarishvili |
| Abstract: | This paper evaluates the gender wage gap among wage workers along the wage distribution in Georgia between 2004 and 2011, based on the recentered influence function (RIF) decomposition approach developed in Firpo, Fortin, and Lemieux (2009). We find that the gender wage gap decreases along the wage distribution, from 0.64 log points to 0.54 log points. Endowment differences explain between 22 percent and 61 percent of the observed gender wage gap, with the explained proportion declining as we move to the top of the distribution. The primary contributors are the differences in the work hours, industrial composition, and employment in the state sector. A substantial portion of the gap, however, remains unexplained, and can be attributed to the differences in returns, especially in the industrial premia. The gender wage gap consistently declined between 2004 and 2011. However, the gap remains large, with women earning 45 percent less than men in 2011. The reduction in the gender wage gap between 2004 and 2007, and the switch from a glass-ceiling shape for the gender gap distribution to a sticky-floor shape, was driven by the rising returns in the state sector for men at the bottom, and by women at the top of the wage distribution. Between 2009 and 2011, the decline in the gender wage gap can be explained by the decrease in men's working hours, which was larger than the decrease in women's working hours. We assess the robustness of our findings using the statistical matching decomposition method developed in Nopo (2008) in order to address the possibility that the high degree of industrial segregation may bias our results. The Nopo decomposition results enrich our understanding of the factors that underlie the gender wage gap but do not alter our key findings, and in fact support their robustness. |
| Keywords: | Gender Wage Gap, Decomposition Methods, Wage Distribution, Transition Economies, Georgia, Glass Ceiling Effect, Sticky Floor Effect |
| JEL: | J16 J31 P2 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_768&r=lma |
| By: | Addison, John T. (University of South Carolina); Teixeira, Paulino (University of Coimbra); Evers, Katalin (Institute for Employment Research (IAB), Nuremberg); Bellmann, Lutz (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | This study provides updated evidence on the union contract differential in Germany using establishment-wide wage data and two estimation strategies. It provides pairwise estimates of the union differential based on separate samples of collective bargaining leavers and joiners vis-à-vis the corresponding counterfactual groups. It is reported that average wages increase by 3 to 3.5 percent after entering into a collective agreement and decrease by 3 to 4 percent after abandoning a collective agreement. Excluding establishments that experience mass layoffs little influences these net findings, although such establishments record wage losses – statistically insignificant for joiners but up to 10 percent in the case of leavers, as compared with the counterfactuals. The backdrop to these new indicative estimates, which are properly conditioned on establishment size and industry affiliation, inter al., is one of wage stagnation and continuing union decline. |
| Keywords: | average wages, union contract premium, collective bargaining transitions, difference-in-differences, matching, Germany |
| JEL: | J31 J51 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7474&r=lma |
| By: | Lars Kunze; Nicolai Suppa |
| Abstract: | We document the importance of non-pecuniary aspects in employment relationships by showing that labour supply elasticities differ significantly among individuals’ job characteristics. Factor analysis indicates the relevance of four characteristics: autonomy, workload, variety and job security. Using a discrete choice model of family labour supply on the basis of Australian data, we show that income elasticities are significantly higher among individuals with “good” characteristics (e.g. a securer job) whereas wage elasticities are significantly lower. This result holds for both men and women. Our main hypothesis are derived within the ‘new approach to consumer theory proposed by Lancaster. |
| Keywords: | Labour supply; Discrete choice model; Job characteristics |
| JEL: | J22 J28 J32 C25 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0418&r=lma |
| By: | Fuest, Clemens; Peichl, Andreas; Siegloch, Sebastian |
| Abstract: | Because of endogeneity problems very few studies have been able to identify the incidence of corporate taxes on wages. We circumvent these problems by using an 11-year panel of data on 11,441 German municipalities' tax rates, 8 percent of which change each year, linked to administrative matched employer-employee data. Consistent with our theoretical model, we find a negative effect of corporate taxation on wages: a 1 euro increase in tax liabilities yields a 77 cent decrease in the wage bill. The direct wage effect, arising in a collective bargaining context, dominates, while the conventional indirect wage effect through reduced investment is empirically small due to regional labor mobility. High and medium-skilled workers, who arguably extract higher rents in collective agreements, bear a larger share of the corporate tax burden. -- |
| Keywords: | business tax,wage incidence,administrative data,local taxation |
| JEL: | H2 H7 J3 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:13039&r=lma |
| By: | Hensvik, Lena (IFAU - Institute for Evaluation of Labour Market and Education Policy); Nordström Skans, Oskar (IFAU - Institute for Evaluation of Labour Market and Education Policy) |
| Abstract: | The paper studies how social job finding networks affect firms' selection of employees and the setting of entry wages. Our point of departure is the Montgomery (1991) model of employee referrals which suggests that it is optimal for firms to hire new workers through referrals from their most productive existing employees, as these employees are more likely to know others with high unobserved productivity. Empirically, we identify the networks through coworker links within a rich matched employer-employee data set with cognitive and non-cognitive test scores serving as predetermined indicators of individual productivity. The results corroborate the Montgomery model's key predictions regarding employee selection patterns and entry wages into skill intensive jobs. Incumbent workers of high aptitude are more likely to be linked to entering workers. Firms also acquire entrants with higher ability scores but lower schooling when hiring linked workers supporting the notion that firms use referrals of productive employees in order to attract workers with better qualities in dimensions that would be difficult to observe at the formal market. Furthermore, the abilities of incumbent workers are reflected in the starting wages of linked entrants, suggesting that firms use the ability-density of social networks when setting entry wages. Overall the results suggest that firms use social networks as a signal of worker productivity, and that workers therefore benefit from the quality of their social ties. |
| Keywords: | Referrals; wage inequality; employer learning; cognitive skills |
| JEL: | J24 J31 J64 M51 Z13 |
| Date: | 2013–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2013_015&r=lma |
| By: | Cappellari, Lorenzo; Jenkins, Stephen P. |
| Abstract: | We provide new evidence about earnings and labour market volatility in Britain over the period 19922008, and for women as well as men. (Most research about volatility refers to earnings volatility for US men.) We show that earnings volatility declined slightly for both men and women over the period but the changes are not statistically significant. When we look at labour market volatility, i.e. including in the calculations individuals with zero earnings as well as employees with positive earnings, there is a marked and statistically significant decline for both women and men, with the fall greater for men. Using variance decompositions, we show that the fall in labour market volatility is largely accounted for by changes in employment attachment rates. Labour market volatility trends in Britain, and what contributes to them, differ from their US counterparts in several respects. |
| Date: | 2013–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2013-10&r=lma |
| By: | Kao-Lee Liaw; Lei Xu |
| Abstract: | This research attempts to figure out whether the wage distributions of Canadian wage earners have been moving towards or away from the flowing three ideals in the early part of the 21th century. First, there be a pattern of wage increase that is shared by a large majority of wage earners. Second, the historical gender inequality in wage be reduced. Third, there be a decrease in wage inequality for both males and females. We use the long-form records of the 2001 and 2006 population censuses to carry out our investigation. A nice feature of these records is that the values of income variables are not top-coded so that the true averages will not be understated and good insights into the situations of those with extremely high incomes can be obtained. We are disappointed by finding that the Canadian economy mostly drifted away from our three ideals, with the main exception being that for female wage earners the improvement in wage was fortunately shared by a large majority. We believe that an important reason for our disappointing finding is the progressive entrenchment of market fundamentalism in Canada. Incidentally, we have discovered that Statistics Canada did a good job in designing the 2006 census questionnaire so that the annoying choppiness that occurred to the 2000 wage distributions vanished in the 2005 wage distributions. |
| Keywords: | male and female wage distributions, gender inequality, wage inequality, Canada, long-form census records, market fundamentalism |
| JEL: | D31 H31 H24 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:qseprr:451&r=lma |
| By: | Ambra Poggi |
| Abstract: | In the recent discussion on productivity and how to foster it, the role of wage dispersion as determinant of workers productivity attracted much attention. But, what are the determinant of wage dispersion? In this paper, we analyze a very specific determinant of wage dispersion: job-to-job labor mobility. We focus on a geographically limited labor market and we represent the firms operating in such context as a “labor mobility network”. The latter can be formally defined as a binary directed graph where vertices indicate firms and links represent transfers of workers between firms. Some firms will be connected to each others, others will be disconnected. Since the firm’s position in the network (more or less central and close to other firms) is strictly connected with opportunities of knowledge transfers and good quality matches, its position could also be associated to intra-firm wage dispersion. Using 1990-2001 Veneto (a region of Italy) matched firm-worker data, we empirically test the existence of this association. We find the central positions in the network structure are positively associated with intra-firm wage dispersion. |
| Keywords: | wage dispersion, labor mobility, network |
| JEL: | J31 J62 L14 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wplabo:133&r=lma |
| By: | Noelia BERNAL; Frederic VERMEULEN |
| Abstract: | We analyze the impact of an increase in the legal retirement age on the effective retirement age in the Netherlands. We do this by means of a dynamic programming model for the retirement behavior of singles. The model is applied to new administrative data that contain very accurate and detailed information on individual incomes and occupational pension entitlements. Our model is able to capture the main patterns observed in the data. We observe that as individuals get older their labor supply declines considerably and this varies by health status. We simulate a soon to be implemented pension reform which aims at gradually increasing the legal retirement age from 65 to 67. The simulation results show a rather small impact on the effective retirement age. Individuals postpone their retirement by only 3 months on average, while differences across individuals mainly depend on their health status. |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces13.03&r=lma |
| By: | Aldaba, Rafaelita M. |
| Abstract: | The paper aims to examine how trade liberalization affects wage premium at the firm level. Using effective protection rate as trade proxy, the paper assumes that in the face of increasing competition, an import-substituting firm may decide to remain at the low value-added stage of the production process which requires relatively less skilled workers and suggests a decline in the wage premium. On the other hand, a firm may move away from the product whose protection rate has fallen and shift and expand toward a higher value-added activity. This would require relatively more skilled workers suggesting an increase in the wage premium. The main findings of the paper show that: First, trade liberalization lowers the wage premium. A firm responds to import competition by shifting to the manufacture of products with lower value added and importing intermediate inputs rather than producing these within the plant. Second, using ASEAN tariff rates as trade proxy, the same results are obtained, however, when ASEAN tariff is interacted with skill intensity, the results show that tariff reduction on skill-intensive products is associated with rising wage skill premium. Third, firm characteristics such as skill intensity, firm size, and capital labor ratio matter in assessing the impact of trade reform on the wage premium. Lastly, exports are associated with increasing wage premium at the firm level the higher their skill intensity. In the literature, greater openness is associated with skill-biased technological change with export-oriented and technology-intensive activities as channels. |
| Keywords: | trade liberalization, labor market, Philippines, Philippine manufacturing, wage skill premium |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:phd:dpaper:dp_2013-25&r=lma |
| By: | Steinar Strøm; Alessandra Venturini; Claudia Villosio |
| Abstract: | The paper wants to understand the assimilation pattern of foreign migrants in Italy. Three novelties characterize this study. First, the research compares the wage assimilation of international migrants with both internal migrants and local natives in Italy, a country with substantial internal and international migration. This comparison, never exploited before, provides indirect evidence for the role played by language and knowledge of social capital in the assimilation of foreign migrants relative to both natives and internal migrants. Second, we inquired into the possible causes of under-assimilation by controlling for the date of entry and migrant sector concentration. Third, we model new corrections of the selection bias due to return migration. The correction for the selection bias is introduced in the wage equation through a duration extension of the traditional Heckman correction term and alternatively through a hazard rate correction. The empirical test uses the Italian administrative dataset on dependent employment (WHIP), to estimate a fixed effect model for the weekly wages of males aged 18-45 with controls for selection in return migration and unobserved heterogeneity. The three groups of workers start their careers at the same wage level. But, as experience increases, the wage profiles of foreign nationals and natives, both internal migrants and locals, diverges which seems to hint at the importance of language and social capital. However, sector-by-sector analysis shows that in “migrant intense sectors†internal migrants and locals have the same wage profile as foreign workers. Positive selection in returns reinforces the view that the best leave because they have few career options. Thus under assimilation is caused more by community and job segregation than by a lack of language and social capital: alternatively it is the result of their interrelations. |
| Keywords: | Migration, Assimilation, Wage differential, Return Migration |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2013/30&r=lma |
| By: | Paul Gertler; James Heckman; Rodrigo Pinto; Arianna Zanolini; Christel Vermeersch; Susan Walker; Susan M. Chang; Sally Grantham-McGregor |
| Abstract: | We find large effects on the earnings of participants from a randomized intervention that gave psychosocial stimulation to stunted Jamaican toddlers living in poverty. The intervention consisted of one-hour weekly visits from community Jamaican health workers over a 2-year period that taught parenting skills and encouraged mothers to interact and play with their children in ways that would develop their children's cognitive and personality skills. We re-interviewed the study participants 20 years after the intervention. Stimulation increased the average earnings of participants by 42 percent. Treatment group earnings caught up to the earnings of a matched non-stunted comparison group. These findings show that psychosocial stimulation early in childhood in disadvantaged settings can have substantial effects on labor market outcomes and reduce later life inequality. |
| JEL: | I10 I20 I25 J20 O15 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19185&r=lma |
| By: | Joshua Congdon-Hohman (Department of Economics, College of the Holy Cross); Jonathan A. Lanning (Department of Economics, Bryn Mawr) |
| Abstract: | This study examines ways in which workers respond to implicit incentives. Specifically, we examine the extent to which workers shift their effort to activities that are measured and which have been previously rewarded in the labor market. To examine this question, we examine the changes in the performance measures of professional baseball players in the season prior to the opportunity to freely negotiate their contract (free agency). We will examine different eras in baseball to examine if we can identify changes in behavior in this pivotal year based on changes to the current premium outputs for each time period. |
| Keywords: | Agency theory, strategic performance, opportunistic behavior, baseball |
| JEL: | J24 J31 L83 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:hcx:wpaper:1304&r=lma |
| By: | Eichhorst, Werner (IZA); Hinte, Holger (IZA); Rinne, Ulf (IZA) |
| Abstract: | Youth unemployment has become a severe economic and societal problem in many European countries. This paper gives an overview of the current situation and assesses different policy options. It emphasizes the role of stronger intra-EU mobility of young workers, policies to make vocational training systems more effective and to adjust employment protection as well as activating labor market policies. However, short-term remedies are not available, despite the fact that the EU has announced massive European initiatives. Rather, European countries should take the opportunity of the crisis to implement forward-looking structural reforms. |
| Keywords: | youth unemployment, vocational training, Europe, fixed-term contracts |
| JEL: | J24 J64 J13 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp65&r=lma |
| By: | Craig Garthwaite; Tal Gross; Matthew J. Notowidigdo |
| Abstract: | We study the effect of public health insurance eligibility on labor supply by exploiting the largest public health insurance disenrollment in the history of the United States. In 2005, approximately 170,000 Tennessee residents abruptly lost public health insurance coverage. Using both across- and within-state variation in exposure to the disenrollment, we estimate large increases in labor supply, primarily along the extensive margin. The increased employment is concentrated among individuals working at least 20 hours per week and receiving private, employer-provided health insurance. We explore the dynamic effects of the disenrollment and find an immediate increase in job search behavior and a steady rise in both employment and health insurance coverage following the disenrollment. Our results suggest a significant degree of “employment lock” – workers employed primarily in order to secure private health insurance coverage. The results also suggest that the Affordable Care Act – which similarly affects adults not traditionally eligible for public health insurance – may cause large reductions in the labor supply of low-income adults. |
| JEL: | J20 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19220&r=lma |
| By: | André van Stel; Martin Carree; Emilio Congregado; Antonio Golpe |
| Abstract: | Many regional development policy initiatives assume that entrepreneurial activities promote economic growth. Empirical research has presented rationale for this argument showing that small firms create proportionally more new jobs than large ones. However, little research has been performed on the issue of net job generation at the urban level, particularly when self-employment is considered as an indicator of entrepreneurial activities. This paper investigates to what extent U.S. metropolitan areas in the 1969-2009 period characterized by relatively high rates of self-employment also have shown relatively high rates of subsequent total employment growth. The analysis corrects for the influence of sectoral composition, wage level, educational attainment, presence of research universities and size of the metropolitan area to measure the extent to which the number and quality of self-employed in a region contribute to total employment growth. It finds the relationship between self-employment rates and subsequent total employment growth to be positive on average during the forty-year period but to weaken over time. |
| Date: | 2013–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201306&r=lma |
| By: | Sommerfeld K.; Steffes S.; Fitzenberger B. (GSBE) |
| Abstract: | The effects of childbirth on future labor market outcomes are a key issue for policy discussion. This paper implements a dynamic treatment approach to estimate the effect of having the first child now versus later on future employment for the case of Germany, a country with a long maternity leave coverage. Effect heterogeneity is assessed by estimating ex post outcome regressions. Based on SOEP data, we provide estimates at a monthly frequency. The results show that there are very strong negative employment effects after childbirth. Although the employment loss is reduced over the first five years following childbirth, it does not level off to zero. The employment loss is lower for motherswith a university degree. It is especially high for medium-skilled mothers with long prebirthemployment experience. We find a significant reduction in the employment loss for more recent childbirths. |
| Keywords: | Semiparametric and Nonparametric Methods: General; Fertility; Family Planning; Child Care; Children; Youth; Time Allocation and Labor Supply; |
| JEL: | C14 J13 J22 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umagsb:2013031&r=lma |