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on Labor Markets - Supply, Demand, and Wages |
| By: | Enghin Atalay; Sebastian Sotelo; Daniel I. Tannenbaum |
| Abstract: | We introduce new measurement tools to understand the sources of earnings differences across space. Based on the natural language employers use in job vacancy text, we develop granular measures of job tasks and of worker specialization. We find that jobs in larger commuting zones involve greater interpersonal interactions and have higher computer software requirements. Between 10 and 50 percent of task and technology variation between large and small commuting zones exists within occupations. Further, workers in larger markets are more specialized within occupations. Tasks, technologies, and worker specialization account for a substantial portion of the market size premium even within occupations. |
| JEL: | J20 J24 R12 R23 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30421&r= |
| By: | Peeters, Thomas (Erasmus University Rotterdam); van Ours, Jan C. (Erasmus University Rotterdam) |
| Abstract: | We investigate whether national borders within Europe hinder the assortative matching of workers to firms in a high skilled labor market. We characterize worker productivity as the ability to contribute to physical output and define firm productivity as the capacity to transform physical output into revenues. We rank workers and firms according to their individual productivity estimates and study the ensuing rank correlation to gauge the degree of assortative matching within and across countries. We find strong evidence for positive assortative matching at the national level, and even more so at the international level. This suggests national borders do not prevent workers and firm from pursuing profitable complementarities in production. |
| Keywords: | assortative matching, international worker mobility, football managers |
| JEL: | M51 J63 J24 Z22 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15521&r= |
| By: | Emmanuel Dhyne; Ayumu Ken Kikkawa; Toshiaki Komatsu; Magne Mogstad; Felix Tintelnot |
| Abstract: | We quantify and explain the firm responses and worker impacts of foreign demand shocks to domestic production networks. To capture that firms can be indirectly exposed to such shocks by buying from or selling to domestic firms that import or export, we use Belgian data with information on both domestic firm-to-firm sales and foreign trade transactions. Our estimates of firm responses suggest that Belgian firms pass on a large share of a foreign demand shock to their domestic suppliers, face upward-sloping labor supply curves, and have sizable fixed overhead costs in labor. Motivated and guided by these findings, we develop and estimate an equilibrium model that allows us to study how idiosyncratic and aggregate changes in foreign demand propagate through a small open economy and affect firms and workers. Our results suggest that the way the labor market is typically modeled in existing research on foreign demand shocks—with no fixed costs and perfectly elastic labor supply—would grossly understate the decline in real wages due to an increase in foreign tariffs. |
| JEL: | E1 F1 F12 J31 J42 L11 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30447&r= |
| By: | José A. Azar; Steven T. Berry; Ioana Marinescu |
| Abstract: | Job differentiation gives employers market power, allowing them to pay workers less than their marginal productivity. We estimate a differentiated jobs model using application data from Careerbuilder.com. We find direct evidence of substantial job differentiation. Without the use of instruments for wages, job applications appear very inelastic with respect to wages. Plausible instruments produce elastic firm-level application supply curves. Under some assumptions, the implied market level labor supply elasticity is 0.5, while the firm level labor elasticity is 4.8. This suggests that workers may produce 21% more than their wage level, consistent with significant monopsony power. |
| JEL: | J42 L13 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30365&r= |
| By: | Maciej Albinowski; Piotr Lewandowski |
| Abstract: | We study the age- and gender-specific labour market effects of two key modern technologies – Information and Communication Technologies (ICT), and robots – in 14 European countries between 2010-2018. To identify the causal effects of technology adoption, we utilize the variation of technology adoption between industries and apply the instrumental variables strategy proposed by Acemoglu and Restrepo (2020). We find that the adoption of ICT and robots increased the shares of young and prime-aged women in employment and wage bill of particular sectors, but reduced the shares of older women and prime-aged men. The negative effects were particularly pronounced for older women in cognitive occupations – who tend to have low ICT-related skills – and for young men in routine manual occupations who experienced substitution by robots. Between 2010 and 2018, the growth of ICT capital played a visibly larger role than robot adoption in explaining changes in labour market outcomes of demographic groups. |
| Keywords: | technological change, labour market outcomes, demographic groups, Europe |
| JEL: | J24 O33 J23 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:ibt:wpaper:wp042022&r= |
| By: | Gopi Shah Goda; Evan J. Soltas |
| Abstract: | We show that Covid-19 illnesses persistently reduce labor supply. Using an event study, we estimate that workers with week-long Covid-19 work absences are 7 percentage points less likely to be in the labor force one year later compared to otherwise-similar workers who do not miss a week of work for health reasons. Our estimates suggest Covid-19 illnesses have reduced the U.S. labor force by approximately 500,000 people (0.2 percent of adults) and imply an average forgone earnings per Covid-19 absence of at least $9,000, about 90 percent of which reflects lost labor supply beyond the initial absence week. |
| JEL: | I12 J17 J21 J22 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30435&r= |
| By: | Arindrajit Dube; Suresh Naidu; Adam D. Reich |
| Abstract: | We measure workers’ preferences for wages and non-wage amenities at America’s largest employer, Walmart, using targeted survey experiments. We find that workers have an economically significant willingness to pay for “dignity at work". Consistent with the presence of monopsony power, we estimate hypothetical quit elasticities similar to recent estimates from the literature. We document significant complementarities between wages and non-wage amenities, suggesting that measures of monopsony that do not account for amenities may be biased. We find that workers at low dignity jobs have higher quit elasticities, but lower bargaining elasticities, relative to workers at high dignity jobs. Finally, we use cross-state variation in the bite of Walmart’s 2014 corporate minimum wage to estimate the effects of the minimum wage on both workplace dignity and other amenities. We find no evidence that non-wage amenities are reduced in response to a higher minimum wage, consistent with wage-amenity complementarity and labor market power. |
| JEL: | J0 J3 J42 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30441&r= |
| By: | Winters, John V. (Iowa State University) |
| Abstract: | This study estimates effects of minimum wages on individual restaurant employment using the 2005-2019 Current Population Survey (CPS) and a two-way fixed effects regression model. I examine effects for teens and adults with less than an associate's degree for the entire U.S. and by metropolitan area status. The results indicate that minimum wages on average decrease restaurant employment for teens and increase restaurant employment for these adults, suggesting that minimum wages induce labor-labor substitution. However, this pattern is driven by metropolitan areas residents. The estimated coefficient for minimum wages on teen restaurant employment in non-metropolitan areas is not statistically significant. |
| Keywords: | minimum wages, restaurants, employment, teens |
| JEL: | J20 J30 R10 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15499&r= |
| By: | Dobbelaere, Sabien; Hirsch, Boris; Müller, Steffen; Neuschäffer, Georg |
| Abstract: | This paper examines how collective bargaining through unions and workplace codetermination through works councils shape labour market imperfections and how labour market imperfections matter for employer wage premia. Based on representative German plant data for the years 1999-2016, we document that employer monopsony involving below competitive wages is far more prevalent than the contrary worker monopoly. We further find a smaller prevalence and intensity of employer monopsony when unions or works councils are present and the opposite for worker monopoly. Finally, we document a close link between labour market imperfections and employer wage premia. The presence and intensity of employer monopsony are associated with a lower level and larger dispersion of premia, whereas more intense worker monopoly is accompanied by a higher level only. |
| Keywords: | collective wage agreements,employer monopsony,employer wage premia,worker monopoly,works councils |
| JEL: | D22 J31 J42 J50 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:202022&r= |
| By: | Lukas Tohoff (Bocconi University, Economics and Social Sciences); Mario Mechtel (Leuphana Universität Lüneburg, Institut für Volkswirtschaftslehre) |
| Abstract: | This paper analyses the Relative Age Effect (RAE) in German elite youth soccer academies. We examine the efficiency of talent selection and the returns to training. Our results indicate a strong effect of players’ birth dates on their probability of getting selected – and, thus, a waste of talent. Using data on 2,382 former elite youth players and their later market values, we find that clubs could generate 30.3 to 77.2% higher market values when eliminating the RAE. Our findings emphasize that distinguishing between current and potential performance levels is crucial for the efficient allocation of talent in sports and society |
| Keywords: | Relative age effect, market values, misallocation of talent, returns to training, selection of talent, elite youth soccer |
| JEL: | J24 Z22 M51 M53 I24 I26 D71 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:413&r= |
| By: | Lucia Russo; Jens-Christian Høj; Martin Borowiecki |
| Abstract: | This paper discusses key priorities and policy recommendations to accelerate Slovenia’s digital transformation. The government’s ambitious digitalisation strategy (Digital Slovenia 2030 Strategy) aims at putting Slovenia among the five most digitalised countries in Europe. Achieving this objective would foster productivity growth and help offsetting the negative effects of a declining labour force. While Slovenia performs well in several areas of the digital transformation, further efforts are needed to achieve the government’s ambitious objective. These include reducing the urban-rural gap in high-speed broadband access, supporting the digital transformation of businesses, fostering digital innovation, improving digital government, upgrading ICT-related skills and attracting foreign ICT specialists. |
| Keywords: | connectivity, digital transformation, labour market, productivity, skills, Slovenia |
| JEL: | I25 J24 L96 O33 O38 O43 O52 J31 |
| Date: | 2022–09–27 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1726-en&r= |
| By: | Freund, Richard (University of Oxford); Favara, Marta (University of Oxford); Porter, Catherine (Lancaster University); Behrman, Jere R. (University of Pennsylvania) |
| Abstract: | Many low- and middle-income countries have introduced Public Works Programmes (PWPs) to fight poverty. PWPs provide temporary cash-for-work opportunities to boost poor households' incomes and to provide better infrastructure to local communities. While PWPs do not target children directly, the increased demand for adult labour may affect children's development through increasing households' incomes and changing household members' time uses. This paper expands on a multidimensional literature showing the relationship between early life circumstances and learning outcomes and provides the first evidence that children from families who benefit from PWPs show increased foundational cognitive skills (FCS). We focus on four child FCS: inhibitory control, working memory, long-term memory, and implicit learning. Our results, based on unique tablet-based data collected as part of a 20- year longitudinal survey, show positive associations of family participation in the Productive Safety Net Programme (PSNP) in Ethiopia during childhood on long-term memory and implicit learning, with weaker evidence for working memory. These associations appear to be strongest for children whose households were still PSNP participants in the year of data collection. We find suggestive evidence that, the association with implicit learning may be operating through children's time reallocation away from unpaid labour responsibilities, while the association with long-term memory may be due to the programme's success in remediating nutritional deficits caused by early life rainfall shocks. Our results suggest that policy interventions such as PWPs may be able to mitigate the effects of early poverty on cognitive skills formation and thereby improve children's potential future outcomes. |
| Keywords: | foundational cognitive skills, Ethiopia, public works programmes, PSNP, skills development |
| JEL: | J24 I2 I1 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15551&r= |
| By: | Fiala, Nathan; Rose, Julian; Aryemo, Filder; Peters, Jörg |
| Abstract: | The economic consequences of COVID-19 lockdowns were significant for poor households in the Global South. In this crisis period, we investigate the very long-run impacts of a randomized cash grant in Uganda on three pre-specified outcomes, including a heterogeneity analysis by gender. In 2008, the program supported young adults through a one-time grant of 380 USD, labelled to invest in vocational training and tools to start a business. The program revealed considerable effects after four years, which vanished after nine years. We now find, 12 years after the intervention, during the COVID-19 pandemic, positive effects on income for the full sample, which are entirely driven by men. Treated men are also significantly more likely to be engaged in an income generating activity, though this does not translate into higher food security. We find no effects for women. Our findings of re-surfacing positive effects are important for the growing literature on long-run impacts of programming as we show that the timing of a follow-up matters. The presence of economic shocks should especially be taken into account when planning long-run follow-ups. |
| Keywords: | Cash transfers,long-run impacts,randomized controlled trials |
| JEL: | C93 J24 O12 H53 I38 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:961&r= |
| By: | Cevat Giray Aksoy; Jose Maria Barrero; Nicholas Bloom; Steven J. Davis; Mathias Dolls; Pablo Zarate |
| Abstract: | The pandemic triggered a large, lasting shift to work from home (WFH). To study this shift, we survey full-time workers who finished primary school in 27 countries as of mid 2021 and early 2022. Our cross-country comparisons control for age, gender, education, and industry and treat the U.S. mean as the baseline. We find, first, that WFH averages 1.5 days per week in our sample, ranging widely across countries. Second, employers plan an average of 0.7 WFH days per week after the pandemic, but workers want 1.7 days. Third, employees value the option to WFH 2-3 days per week at 5 percent of pay, on average, with higher valuations for women, people with children and those with longer commutes. Fourth, most employees were favorably surprised by their WFH productivity during the pandemic. Fifth, looking across individuals, employer plans for WFH levels after the pandemic rise strongly with WFH productivity surprises during the pandemic. Sixth, looking across countries, planned WFH levels rise with the cumulative stringency of government-mandated lockdowns during the pandemic. We draw on these results to explain the big shift to WFH and to consider some implications for workers, organization, cities, and the pace of innovation. |
| JEL: | D22 E24 J20 L23 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30446&r= |
| By: | Andrew Garin; Emilie Jackson; Dmitri Koustas |
| Abstract: | Rising self-employment rates in U.S. tax data that are absent in survey data have led to speculation that tax records capture a rise in new “gig” work that surveys miss. Drawing on the universe of Internal Revenue Service (IRS) tax returns, we show that trends in firm-reported payments to “gig” and other contract workers do not explain the rise in self-employment reported to the IRS; rather, that increase is driven by self-reported earnings of individuals in the EITC phase-in range. We isolate pure reporting responses from real labor supply responses by examining births of workers’ first children around an end-of-year cutoff for credit eligibility that creates exogenous variation in tax rates at the end of the tax year after labor supply decisions are already sunk. We find that exposing workers with sunk labor supply to negative marginal tax rates results in large increases in their propensity to self-report self-employment—only a small minority of which leads to bunching at kink-points. Consistent with pure strategic reporting behavior, we find no impact on reporting among taxpayers with no incentive to report additional income and no effects on firm-reported payments of any kind. Moreover, we find these reporting responses have grown over time as knowledge of tax incentives has become widespread. Quantitatively, our results suggest that as much as 59 percent of the growth in self-employment rates, and all counter-cyclicality, can be attributed to changes in reporting behavior that are independent of changes in the nature of work. Our findings suggest caution is warranted before deferring to administrative data over survey data when measuring labor market trends. |
| JEL: | H31 J21 H26 |
| Date: | 2022–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:278-en&r= |
| By: | Mertens, Matthias; Müller, Steffen; Neuschäffer, Georg |
| Abstract: | We present causal evidence on the rent-sharing elasticity of German manufacturing firms. We develop a new firm-level Bartik instrument for firm rents that combines the firms' predetermined energy input mix with national energy carrier price changes. Reduced-form evidence shows that higher energy prices depress wages. Instrumental variable estimation yields a rent-sharing elasticity of approximately 0.20. Rent-sharing induced by energy price variation is asymmetric and driven by energy price increases, implying that workers do not benefit from energy price reductions but are harmed by price increases. The rent-sharing elasticity is substantially larger in small (0.26) than in large (0.17) firms. |
| Keywords: | Bartik instrument,energy prices,rent-sharing,wage inequality |
| JEL: | C26 J30 P18 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:192022&r= |
| By: | Gustavo J. Bobonis; Aneta Bonikowska; Philip Oreopoulos; W. Craig Riddell; Steven P. Ryan |
| Abstract: | We study the long-run impacts of the Canada Self-Sufficiency Project (SSP) Plus program, which randomly offered intensive employment support services for up to three years to long-term welfare recipients eligible for temporary work subsidies. We examine whether this intervention – aiming to address both economic and psycho-social barriers faced by the poor in finding and retaining desirable employment – led to long-run changes in individuals’ socioeconomic trajectories. We link study participants to their federal tax and employer-employee matched records for up to 20 years after random assignment. The intensive services treatment led to a 20-27 percent increase in participants’ annual earnings over the 20-year period, or approximately 26,000 CAD in present discounted real 2010 terms. As possible mechanisms, individuals experience increases in full-time employment throughout the first decade post-intervention, a greater retention of jobs in higher paying firms, and an improvement in non-cognitive skills. |
| JEL: | I3 J22 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30405&r= |
| By: | Benjamin W. Arold |
| Abstract: | Anti-scientific attitudes can impose substantial costs on societies. Can schools be an important agent in mitigating the propagation of such attitudes? This paper investigates the effect of the content of science education on anti-scientific attitudes, knowledge, and choices. The analysis exploits staggered reforms that reduce or expand the coverage of evolution the ory in US state science education standards. I compare adjacent cohorts in models with state and cohort fixed effects and conduct fine-grained placebo tests to rule out scientific, religious and political confounders. There are three main results. First, expanded evolution coverage increases students’ knowledge about evolution. Second, the reforms translate into greater evolution belief in adulthood, but do not crowd out religiosity or affect political attitudes. Third, the reforms affect high-stakes life decisions, namely the probability of working in life sciences. |
| Keywords: | Evolution, religion, science education, human capital, beliefs, occupational choice |
| JEL: | I28 J24 P16 Z12 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_379&r= |
| By: | Chau, Nancy H. (Cornell University); Kanbur, Ravi (Cornell University); Soundararajan, Vidhya (Indian Institute of Technology, Bombay) |
| Abstract: | The issue of employer power is underemphasized in the development literature. The default model is usually one of competitive labor markets. This assumption matters for analysis and policy prescription. There is growing evidence that the competitive labor markets assump- tion is not valid for developing countries. Our objective in this paper is to review this evidence, to present theoretical and policy perspectives which follow from it, and to highlight areas for further research. |
| Keywords: | employer power, employment, developing countries |
| JEL: | J42 O15 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15514&r= |
| By: | Eyting, Markus |
| Abstract: | Identifying the cause of discrimination is crucial to design effective policies and to understand discrimination dynamics. Building on traditional models, this paper introduces a new explanation for discrimination: discrimination based on motivated reasoning. By systematically acquiring and processing information, individuals form motivated beliefs and consequentially discriminate based on these beliefs. Through a series of experiments, I show the existence of discrimination based on motivated reasoning and demonstrate important differences to statistical discrimination and taste-based discrimination. Finally, I demonstrate how this form of discrimination can be alleviated by limiting individuals' scope to interpret information. |
| Keywords: | discrimination,belief formation,motivated reasoning |
| JEL: | D90 J71 D83 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:356&r= |
| By: | Michael Ewens |
| Abstract: | Economic frictions pervade the founding, financing, growing, and exiting of high-growth entrepreneurial firms. This article considers one friction that currently affects a small, but important, set of entrepreneurs: racial and gender discrimination. I first collect facts from a large empirical literature that show clear gender and race gaps in participation and financing of startups. Female founders manage 16-25% of all startups, while Black entrepreneurs rarely exceed 3% of the startup population. Conditioning on startups that successfully raise external finance has little impact on these gaps. The complexity of the entrepreneurial process presents several opportunities for discrimination to manifest itself and produce this gap. The article details the major discrimination theories and the empirical methods used to test for their presence. It then provides an extensive review of a growing empirical literature in entrepreneurial finance that tests these models. The pattern of evidence reveals a nuanced and incomplete story about bias, information asymmetry, and differential treatment of underrepresented founders. The article ends with an extensive set of research ideas motivated by the gaps in the entrepreneurship literature and recent developments in theory and measurement of discrimination. |
| JEL: | G24 J7 L26 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30444&r= |
| By: | Sarah Cattan (Institute for Fiscal Studies); Kjell Salvanes (Norges Handelshøyskole); Emma Tominey (University of York) |
| Abstract: | Intergenerational persistence in studying for elite education is high across the world. We study the role that exposure to high school peers from elite educated families (`elite peers') plays in driving such a phenomenon in Norway. Using register data on ten cohorts of high school students and exploiting within school, between cohort variation, we identify the causal impact of elite peers on the probability of enrolling in elite education for students from different socioeconomic (SES) backgrounds. We show that exposure to elite peers in high school does drive enrolment into elite degree programmes, but the effect for low SES students is a third of the size than for high SES students. We explore mechanisms behind this pattern – finding that elite peers have a complex effect on students’ GPA which is a key part of the story. Elite peers increase the effort of both low and high SES students, but they also push the rank of other students down and trigger a change in teacher behaviour which disadvantages low SES students. To quantify the contribution of this mechanism, we perform a causal mediation analysis exploiting a lottery in the assessment system in Norway to instrument GPA. We find that the indirect effect of elite peers on enrolment through GPA explains just less than half of the total peer effect. Our concluding analysis shows that elite peers in high school raises intergenerational mobility for poor students, but increases persistence for rich students, thereby simultaneously facilitating first generation elite whilst contributing to the high intergenerational persistence at the top of the education and income distribution. |
| Keywords: | peers, elite university, subject choice, social mobility, teacher bias |
| JEL: | I24 J24 J62 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2022-028&r= |
| By: | Paul Gertler; Marco Gonzalez-Navarro; Tadeja Gracner; Alexander D. Rothenberg |
| Abstract: | This paper estimates the local welfare impacts of road maintenance investments. We instrument road quality exploiting Indonesia’s two-step budgeting process for allocating funding to local road authorities. Using comprehensive data on road quality from 1990-2007, we find that better roads help manufacturers create new jobs, enabling worker transitions out of informal employment, and increasing wages. In terms of cost of living, road quality reduces perishable food prices but also raises housing prices. We estimate the elasticity of household welfare with respect to road quality to be 0.16 and the benefit/cost ratio for road maintenance investments to be 2.8. |
| JEL: | J43 O18 R23 R42 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30454&r= |