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on Labor Markets - Supply, Demand, and Wages |
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Issue of 2024‒06‒10
twenty papers chosen by |
| By: | Mancino, M. Antonella; Morales, Leonardo Fabio; Salazar, Diego F. |
| Abstract: | We evaluate the returns to signaling occupation-specific skills using unique administrative data from a nationwide certification program in Colombia. The program certifies skills and issues three certificates: basic, intermediate, and advanced. We use regression discontinuity methods to compare workers' earnings around certificateassignment thresholds. Signaling advanced occupation-specific skills yields significant returns: 9.7%, on average, within two years of certification. Instead, we find no effects from signaling basic or intermediate occupation-specific skills. Our analysis reveals that the primary mechanism behind the observed income effects associated with the advanced certificate is the ability to signal occupation-specific skills to potential employers. |
| JEL: | J01 J31 J44 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:clefwp:294853&r= |
| By: | Alexander S. Kritikos (DIW Berlin, University of Potsdam, GLO Essen, IAB Nuremberg, CEPA); Mika Maliranta (University of Jyväskylä); Veera Nippala (University of Jyväskylä); Satu Nurmi (Statistics Finland) |
| Abstract: | We examine how the gender of business-owners is related to the wages paid to female relative to male employees working in their firms. Using Finnish register data and employing firm fixed effects, we find that the gender pay gap is – starting from a gender pay gap of 11 to 12 percent - two to three percentage-points lower for hourly wages in female-owned firms than in male-owned firms. Results are robust to how the wage is measured, as well as to various further robustness checks. More importantly, we find substantial differences between industries. While, for instance, in the manufacturing sector, the gender of the owner plays no role for the gender pay gap, in several service sector industries, like ICT or business services, no or a negligible gender pay gap can be found, but only when firms are led by female business owners. Businesses in male ownership maintain a gender pay gap of around 10 percent also in the latter industries. With increasing firm size, the influence of the gender of the owner, however, fades. In large firms, it seems that others – firm managers – determine wages and no differences in the pay gap are observed between male- and female-owned firms. |
| Keywords: | entrepreneurship, gender pay gap, discrimination, linked employer-employee data |
| JEL: | J16 J24 J31 J71 L26 M13 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:pot:cepadp:76&r= |
| By: | Bandiera, Oriana (London School of Economics); Kotia, Ananya (London School of Economics); Lindenlaub, Ilse (Yale University); Moser, Christian (Columbia University); Prat, Andrea (Columbia University) |
| Abstract: | Are labor markets in higher-income countries more meritocratic, in the sense that worker-job matching is based on skills rather than idiosyncratic attributes unrelated to productivity? If so, why? And what are the aggregate consequences? Using internationally comparable data on worker skills and job skill requirements of over 120, 000 individuals across 28 countries, we document that workers' skills better match their jobs' skill requirements in higher-income countries. To quantify the role of worker-job matching in development accounting, we build an equilibrium matching model that allows for cross-country differences in three fundamentals: (i) the endowments of multidimensional worker skills and job skill requirements, which determine match feasibility; (ii) technology, which determines the returns to matching; and (iii) idiosyncratic matching frictions, which capture the role of nonproductive worker and job traits in the matching process. The estimated model delivers two key insights. First, improvements in worker-job matching due to reduced matching frictions account for only a small share of cross-country income differences. Second, however, improved worker-job matching is crucial for unlocking the gains from economic development generated by adopting frontier endowments and technology. |
| Keywords: | skills, sorting, matching, multidimensional heterogeneity, development accounting, wage inequality, gender, migration |
| JEL: | C78 E24 J24 J31 O11 O12 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16938&r= |
| By: | Gabriele Ciminelli; Antton Haramboure; Lea Samek; Cyrille Schwellnus; Allison Shrivastava; Tara Sinclair |
| Abstract: | Employment has recovered strongly from the COVID-19 pandemic despite large structural changes in labour markets, such as the widespread adoption of digital business models and remote work. We analyse whether the pandemic has been associated with labour reallocation across occupations and triggered mismatches between occupational labour demand and supply using novel data on employers’ job postings and jobseekers’ clicks across 19 countries from the online job site Indeed. Findings indicate that, on average across countries, the pandemic triggered large and persistent reallocation of postings and clicks across occupations. Occupational mismatch initially increased but was back to pre-pandemic levels at the end of 2022 as employers and workers adjusted to structural changes. The adjustment was substantially slower in countries that resorted to short-time work schemes to preserve employment during the pandemic. |
| Keywords: | covid-19 pandemic, occupational mismatch, reallocation |
| JEL: | E24 J23 J24 G18 |
| Date: | 2024–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaac:35-en&r= |
| By: | Yi Ji; Myrto Oikonomou; Carlo Pizzinelli; Mr. Ippei Shibata; Ms. Marina Mendes Tavares |
| Abstract: | This paper examines the impact of changes in commuting time on welfare and labor supply in the aftermath of the COVID-19 pandemic. Utilizing data from the American Time Use Survey, we observe a shift in commuting time and working hours across occupations with varying ability of telework after the pandemic. We develop a household model of labor supply that accounts for commuting time, and we characterize how changes in commuting time impact individuals' and spouses' labor supply. We calibrate the model to the data. Our findings reveal that the observed post-pandemic decline in commuting time yields significant welfare gains: between 1.5 to 4.5 percent of consumption equivalents for households where at least one spouse experiences reduced commuting. |
| Keywords: | Commuting time; Working from home; Labor Supply; Welfare Gains |
| Date: | 2024–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2024/094&r= |
| By: | Eunseong Ma (Yonsei University) |
| Abstract: | Approximately half of U.S. employees adhere to the constraints of the traditional 40-hour work week. This study examines implications of this standardized work schedule. To this end, a novel heterogeneous-agent model is developed, incorporating a wage penalty function faced by households when working fewer hours than a specific threshold. The calibrated model captures the salient features of the empirical distribution of hours worked, with a notable spike at the 40-hour mark. The study reveals the 40-hour work week as a critical determinant of both micro and macro labor supply elasticities. It yields a small micro elasticity with heterogeneity across households, while the macro elasticity is larger, making the extensive margin more influential. Moreover, the 40-hour work week plays a significant role in shaping earnings inequality over the business cycle. Ultimately, this paper uncovers the vulnerability of households constrained by this work schedule to the adverse effects of business cycle fluctuations. |
| Keywords: | 40-hour work week, labor supply elasticity, wage penalty function, welfare effect of business cycles |
| JEL: | E24 E32 J21 J22 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:yon:wpaper:2024rwp-225&r= |
| By: | Kudlyak, Marianna (Federal Reserve Bank of San Francisco) |
| Abstract: | In employment relationships, a wage is an installment payment on an implicit long-term agreement between a worker and a firm. The price of labor that impacts firm's hiring decisions, instead, reflects the hiring wage as well as the impact of economic conditions at the time of hiring on future wages. Measured by the labor's user cost, the price of labor is substantially more pro-cyclical than the new-hire wage or the average wage. The strong procyclicality of the price of labor calls for other forces for cyclical labor demand to explain employment fluctuations. |
| Keywords: | user cost of labor, wages, cyclicality, wage rigidity, unemployment |
| JEL: | E24 E32 J30 J41 J63 J64 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16888&r= |
| By: | Jacobsen, Joyce P. (Wesleyan University); Khamis, Melanie (Wesleyan University); Yuksel, Mutlu (Dalhousie University) |
| Abstract: | Can the demographic trends of increased life expectancy and decreasing birth rates, along with the labor market patterns of returns to human capital investment and changes in real hourly earnings, account for changes in women's and men's lifetime earnings? Using a Vector Error Correction Model to analyze annual US CPS data from 1964 to 2019, we find patterns linking these factors and demonstrating that they have significant roles to women's lifetime earnings but not to men's. These findings are consistent with the convergence of gender earning gap has occurred mainly due to women's responses to changing demographic and socioeconomic factors. |
| Keywords: | life expectancy, lifetime earnings, human capital investment, VECM |
| JEL: | J3 J16 J24 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16936&r= |
| By: | Athey, Susan (Stanford University); Simon, Lisa (Revelio Labs); Skans, Oskar (Dep. of Economics, Uppsala University); Johan Vikström, Johan (IFAU; Dep. of Economics, Uppsala University); Yakymovych, Yaroslav (Institute for Housing and Urban Research, Uppsala University) |
| Abstract: | Using generalized random forests and rich Swedish administrative data, we show that the earnings effects of job displacement due to establishment closures are highly heterogeneous. We find as much heterogeneity within as across closing establishments, and within as across worker types defined by age and schooling. We display the potential of market-based policy interventions by showing that much of the heterogeneity across establishments is shared within markets. Several results suggest that the effect heterogeneity disfavors already vulnerable workers. Thus, targeted policy interventions may be justified to a larger extent than suggested by estimated average earnings effects. |
| Keywords: | Plant closures; heterogeneous effects; GRF; |
| JEL: | C45 J21 J31 J65 |
| Date: | 2024–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2024_010&r= |
| By: | Kunal Sen |
| Abstract: | We examine the nature of labour market inequality in Indonesia and India, using a common conceptual approach drawing from the job ladder framework. In the framework, we differentiate between self-employment and wage-informal and between formal, upper tier informal, and lower tier informal jobs. We find that both countries have a large proportion of workers in lower tier jobs, though the importance of wage-employment is larger in Indonesia. There are more workers in formal wage-employment in Indonesia than India. |
| Keywords: | job ladder, Labour market, Inequality, Informality, Indonesia, India |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2024-29&r= |
| By: | Goldring, Thomas (Georgia State University); Jacob, Brian A. (University of Michigan); Kreisman, Daniel (Georgia State University); Ricks, Michael D. (University of Nebraska-Lincoln) |
| Abstract: | In 2015, Michigan increased it Career and Technical Education (CTE) funding and changed its funding formula to reimburse programsbased student progression through program curricula. Although this change nearly doubled program completion rates, student enrollment and persistence were unaffected; instead, administrators accelerated student progress by reorganizing course curricula around notches in the new funding formula. As a result of response heterogeneity, 30% of the funding increase is transferred away from high-poverty districts to more affluent ones, underscoring how supply-side responses to loopholes shape the incidence of public services. |
| Keywords: | career and technical education, school funding, loopholes |
| JEL: | I21 J24 I24 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16943&r= |
| By: | Alexander Moog |
| Abstract: | Internal migration is an essential aspect to study labor mobility. I exploit the German statutory minimum wage introduction in 2015 to estimate its push and pull effects on internal migration using a 2% sample of administrative data. In a conditional fixed effects Poisson difference-in-differences framework with a continuous treatment, I find that the minimum wage introduction leads to an increase in the out-migration of low-skilled workers with migrant background by 25% with an increasing tendency over time from districts where a high share of workers are subject to the minimum wage (high-bite districts). In contrast the migration decision of native-born low-skilled workers is not affected by the policy. However, both native-born low-skilled workers and those with a migrant background do relocate across establishments, leaving high-bite districts as their workplace. In addition, I find an increase for unemployed individuals with a migrant background in out-migrating from high-bite districts. These results emphasize the importance of considering the effects on geographical labor mobility when implementing and analyzing policies that affect the determinants of internal migration. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.19590&r= |
| By: | Richiardi, Matteo; Leonie, Westhoff; Caterina, Astarita; Ekkehard, Ernst; Clare, Fenwick; Neysan, Khabirpour; Lorenzo, Pelizzari |
| Abstract: | We study the effects of digital transformation in the EU on individual employment outcomes, wage growth, and income inequality, during the decade 2010-2019. Our results allow us to formulate a “conveyor-belt†hypothesis, whereas digital skills are important for finding a job, but less so for retaining it. The ability of out-of-work individuals with higher digital skills to jump back on the labour market is reduced for those with higher education, suggesting a faster depreciation of their digital skills. A similar effect, although of limited size, is found for earning growth: out-of-work individuals with higher digital skills are not only more likely to find a job, but experience higher earning growth, compared to their peers with lower digital skills. Our results point to a vulnerability of workers “left behind†from the digital transformation and the labour market. The overall effects on inequality are, however, limited. |
| Date: | 2024–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:ese:cempwp:cempa5-24&r= |
| By: | Remicio-Tovar, Paula Alejandra (Universidad de los Andes) |
| Abstract: | This study analyzes the labor supply behavior of female Uber driver-partners in Bogota, Colombia, in response to the 2017 teacher’s strike. Using the Triple Differences approach, I compare men’s and women’s time worked and payment before and during the strike. I also compare the results based on their experience, and I find that the driver’s expertise significantly determined the extent of the strike’s effect. During the strike, both general and experienced female drivers worked 10.68 and 17.69 minutes more than men, respectively. The demographics of female Uber drivers suggest that the primary mechanisms behind the impact could have been the low dynamic ride prices and the change in their relative cost of time due to the teachers’ strike rather than increased childcare responsibilities. I use the concept of loss aversion and the income-targeting model to suggest that with the experience, female drivers tend to set a target income and are more averse than men to achieving outcomes below that benchmark. Thus, due to the strike’s negative effect on their income, they took advantage of the flexibility offered by Uber to soften the strike’s impact by working more between 4 a.m. and 10 a.m. |
| Keywords: | Uber; Female labor supply; Teachers’ strike. |
| JEL: | J13 J16 J22 J46 |
| Date: | 2024–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:021132&r= |
| By: | Sascha Keil; Walter Paternesi Meloni |
| Abstract: | Over the past decades, models of circular and cumulative causation, based on the endogenous relations between prices, exports, and labour productivity, have lost prominence in explaining economic dynamics. We argue that, in the absence of counterbalancing mechanisms, the combination of price-sensitive exports and the triggering effect of exports on productivity can enable feedback loops and can significantly shape macroeconomic reality in the short-to-medium run. We apply an adapted export-led model of cumulative causation to 10 major countries belonging the Euro area, a region characterized by divergent wage growth trajectories reflected in divergent export competitiveness and lack of equilibrating mechanisms. Specifically, the model is tested for the period 1995–2020 employing a country-level system of equations (3SLS-ARDL). Our findings indicate that for the majority of the countries examined, this feedback mechanism – comprising price-sensitive exports and export demand affecting productivity growth – exacerbates macroeconomic disparities in terms of labour productivity. While nominal wages act as a potential trigger through their impact on price competitiveness, they also serve as a central factor that retards the feedback mechanism due to the Verdoorn effect of wage-induced demand. Overall, our results affirm the significance of price-induced and export-led theories of cumulative causation while also delineating its limitations, particularly regarding price competitiveness-oriented export-led growth strategies. |
| Keywords: | international trade, export, competitiveness, unit labour cost, wages, productivity, european imbalances |
| JEL: | F16 F41 J30 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:imk:fmmpap:103-2024&r= |
| By: | Marini, Andrea |
| Abstract: | In this paper I investigate the retirement-consumption puzzle in Italy for the period 2010-2016, using SHIW data. In order to address the endogeneity of the retirement decision, I estimate the effect of retirement by exploiting the exogeneity of pension eligibility in an instrumental variable approach; the IV regression is then applied in a regression discontinuity design where only households close to the eligibility point are considered. The eligibility-instrument is found to be a strong predictor of the retirement decision, and the estimated non-durable consumption drop is equal to 12.3%. When households are distinguished according to the gender of the household head, female-led households are found to undergo a consumption decline that is more than double that estimated for households with male heads. The data and the literature on the subject indicate that this large difference is likely related to the gender pay-gap that translates into a gender pension-gap. Moreover, the consumption decline appears to be concentrated in households in the lower part of the wealth distribution. Nonetheless, households in the lowest wealth quintile, do not show a significant consumption decline. The data suggests that this might be due to the impossibility for these households to further reduce their consumption at retirement, as they are mostly composed of essential expenditures. JEL Classification: E2, E21, E24, J26, C01 |
| Keywords: | expenditures, household economics, inequality, instrumental variable regression, regression discontinuity design |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20242936&r= |
| By: | Leonardo Ciambezi; Mattia Guerini; Mauro Napoletano; Andrea Roventini |
| Abstract: | In this work, we develop a macroeconomic agent-based model to study the role of demand and supply factors in the determination of inflation dynamics. The model is characterized by local interactions of heterogeneous firms and households in the labor and goods markets. Imperfect information implies that market selection is imperfect, as it does not depend only on relative prices but also on firm size. We show that our model is able to generate realistic inflation dynamics, as well as a non-linear Phillips curve in line with the empirical evidence. We then find that the traditional demand-led explanation of inflation stemming from a tight labor market only holds when markets are competitive and efficient. Finally, we study the response of inflation to shocks impacting on consumption, labor productivity or energy costs. The results show that only demand shocks lead to wage-led inflation surges. Productivity shocks are entirely passed-through to prices without affecting the income distribution. Energy shocks, instead, induce sellers' inflation after changes in both firms' cost structure and profit margins. This is in line with the recent empirical evidence for the Euro Area. |
| Keywords: | Inflation, agent-based models, market structure, mark-up rates, sellers' inflation |
| Date: | 2024–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2024/15&r= |
| By: | Kasy, Maximilian (University of Oxford) |
| Abstract: | Most definitions of algorithmic bias and fairness encode decisionmaker interests, such as profits, rather than the interests of disadvantaged groups (e.g., racial minorities): Bias is defined as a deviation from profit maximization. Future research should instead focus on the causal effect of automated decisions on the distribution of welfare, both across and within groups. The literature emphasizes some apparent contradictions between different notions of fairness, and between fairness and profits. These contradictions vanish, however, when profits are maximized. Existing work involves conceptual slippages between statistical notions of bias and misclassification errors, economic notions of profit, and normative notions of bias and fairness. Notions of bias nonetheless carry some interest within the welfare paradigm that I advocate for, if we understand bias and discrimination as mechanisms and potential points of intervention. |
| Keywords: | AI, algorithmic bias, inequality, machine learning, discrimination |
| JEL: | J7 O3 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16944&r= |
| By: | Justine Hervé (Stevens Institute of Technology); Subha Mani (Fordham University, the Population Studies Center, University of Pennsylvania, IZA and GLO); Jere Behrman (University of Pennsylvania); Ramanan Laxminarayan (One Health Trust and Princeton University) |
| Abstract: | Food coma, also known as postprandial somnolence, is a commonly cited reason for experiencing reduced alertness during mid-afternoon worldwide. By using exogenous variation in the timing of tests and, hence, by extension, plausibly exogenous variation in the temporal distance between an individual’s last meal and the time of test, we examine the causal impact of postprandial somnolence on cognitive capacities. Analyzing novel time use data on ~ 4, 600 Indian adolescents and young adults, we find that testing within an hour after a meal reduces test-takers’ scores on English, native language, math, and Raven’s tests by 8, 8, 8, and 16 percent, respectively, compared to test-takers who took the tests more than an hour after their meal. We further find that the negative effect of postprandial somnolence on cognition operates through increased feelings of fatigue and depletion of cognitive resources that become more pronounced while dealing with more challenging test questions. |
| Keywords: | Post-meal fatigue, Cognitive skills, Low-stakes tests, India, Adolescents |
| JEL: | I12 I18 I21 J24 |
| Date: | 2024–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:24-011&r= |
| By: | Pintu Parui (School of Economics, XIM University); Klaus Prettner (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | We propose a generalized R&D-based economic growth model that incorporates i) endogenous human capital accumulation in terms of education and health, ii) endogenous population growth, and iii) the public provision of healthcare and basic science. The government taxes households to pay for healthcare personnel and basic scientists. Since these employees are not anymore available for applied science and for final goods production, important tradeoffs with respect to government spending emerge for economic growth and welfare. We show that increasing public spending, particularly on basic science, leads to faster economic growth in the medium run and tends to raise welfare when compared to actual levels of spending in Organisation for Economic Co-operation and Development (OECD) countries. Our results highlight the difficult tradeoffs associated with public expenditures for healthcare and basic science and emphasize the important role of policymakers in ensuring adequate overall public funding. |
| Keywords: | R&D-Based Growth, Basic Science, Public Healthcare, Children's Health, Education, Fertility, Intertemporal Tradeoffs |
| JEL: | H41 J24 O31 O32 O41 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp365&r= |