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on Labor Markets - Supply, Demand, and Wages |
| By: | Böckerman, Petri (University of Jyväskylä); Juuti, Toni (LABORE Labour Institute for Economic Research); Kosonen, Tuomas (Labour Institute for Economic Research); Keränen, Henri (VATT, Helsinki) |
| Abstract: | We examine a subminimum wage policy in the Finnish retail trade sector during 1993–1998 that allowed firms to pay subminimum wages to newly hired workers under the age of 25. This quasi-experiment enables us to compare wages for new hires in retail trade with those in similar industries. Despite the ongoing recession, the policy was adopted by firms sparingly, with most eligible workers being hired at the standard minimum wage. We propose that wage norm at the standard minimum wage creating indirect costs for firms paying subminimum wage would be the mechanism why the take-up of subminimum wage by firms remained low. We provide empirical evidence supporting this mechanism, most notably the excess mass at the standard minimum wage in the wage distribution of eligible workers. Many firms that paid the subminimum wage also reverted back to paying the standard minimum wages for subsequent hires. |
| Keywords: | minimum wages, subminimum wage, wage determination, fairness, employment, firms |
| JEL: | J31 J38 D22 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17453 |
| By: | Häfner, Samuel (University of St. Gallen); Haeusle, Niklas (University of Leipzig); Koeniger, Winfried (University of St. Gallen); Braun, Alexander (University of St. Gallen) |
| Abstract: | We develop a model in which large risk-neutral firms and individual risk-averse consumers compete to employ heterogeneous workers by posting compensation menus. Production takes time, and we analyze how screening motives interact with the desire to smooth consumption. There is a unique symmetric separating equilibrium that is also efficient. In equilibrium, the extent to which the compensation scheme delays payment until the production quality becomes known depends on whether, and to which extent, the consumers are financially constrained. We discuss how our model relates to the design of compensation schemes in current online peer-to-peer markets. |
| Keywords: | adverse selection, self selection, peer-to-peer markets, labor markets, capital market imperfections |
| JEL: | D15 D82 D86 E24 J33 M52 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17449 |
| By: | Bosworth, Steven J. (University of Reading); Della Giusta, Marina (University of Turin) |
| Abstract: | What explains the persistent under-representation of women at the top organizations within high status occupations? The phenomenon has been documented across countries and neither the closing and reversal of education gaps nor family policies appear effective in closing the gaps. We offer an explanation for the persistence of under-representation based on the mutually reinforcing dynamics resulting from returns to organizational prestige at top organizations (The Matthew Effect) and gender stereotypes in hiring arising from the imperfectly observable ability of workers (The Larry Effect). Our model predicts that when organizational prestige is important and complementary to ability in production, fewer women will be found and hired at higher status organizations, there will be a wage premium for both women and men when they move to them but a greater proportion of men will succeed in doing so, regardless of ability. An aggregate level gender wage gap is thus generated from between-organization wage differences and segregation of women and men to lower- and higher-status organizations respectively. We test the predictions of the model in academia where recognized measures of prestige exist and Matthew effects are well documented. We make use of an employer-employee administrative panel comprising the universe of UK academics and find evidence consistent with the model's predictions: persistence of women's under-representation in higher status organizations and a wage premium for moving of about 3 percent for both women and men. |
| Keywords: | prestige, stereotypes, discrimination |
| JEL: | C78 J31 J70 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17460 |
| By: | Mertens, Matthias (MIT); Schoefer, Benjamin (University of California, Berkeley) |
| Abstract: | We document and dissect a new stylized fact about firm growth: the shift from labor to intermediate inputs. This shift occurs in input quantities, cost and output shares, and output elasticities. We establish this fact using German firm-level data and replicate it in administrative firm data from 11 additional countries. We also document these patterns in micro-aggregated industry data for 20 European countries (and, with respect to industry cost shares, for the US). We rationalize this novel regularity within a parsimonious model featuring (i) an elasticity of substitution between intermediates and labor that exceeds unity, and (ii) an increasing shadow price of labor relative to intermediates, due to monopsony power over labor or labor adjustment costs. The shift from labor to intermediates accounts for one half to one third of the decline in the labor share in growing firms (the remainder is due to wage markdowns and markups) and rationalizes most of the labor share decline ingrowing industries. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17461 |
| By: | Luria, Michal; Scherer, Matthew U.; Thakur, Dhanaraj; Aboulafia, Ariana; Claypool, Henry; Negrón, Wilneida |
| Abstract: | Companies have incorporated hiring technologies, including AI-powered assessments and other automated employment decision systems (AEDSs), into various stages of the hiring process across a wide range of industries. While proponents argue that these technologies can aid in identifying suitable candidates and reducing bias, researchers and advocates have identified multiple ethical and legal risks that these technologies present, including discriminatory impacts on members of marginalized groups. This study examines some of the impacts of modern computer-based assessments (“digitized assessments”) — the kinds of assessments commonly used by employers as part of their hiring processes — on disabled job applicants. |
| Date: | 2024–11–20 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:r9kz7 |
| By: | Jason A. Aimone; Sheryl Ball; Esha Dwibedi; Jeremy J. Jackson; James E. West |
| Abstract: | We combine societal-level institutional measures from 51 countries between 1996 and 2017 with individual decision-making outcome data from 1, 126 laboratory experiments in six meta-analyses to evaluate the effects of within-country institutional change on pro-social and Nash behavior. We find that government effectiveness and regulatory freedom positively correlate with pro-social behavior. We find that freedom from each of the following components of regulation; interest rate controls, binding minimum wages, worker dismissal protections, conscription, and administrative requirements; are correlated with prosocial behavior and are inversely correlated with Nash behavior. These results suggest the importance of considering spillover effects in pro-social behavior when designing government policy. |
| JEL: | C91 H1 P5 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33129 |
| By: | Th\'eo Durandard; Alexis Ghersengorin |
| Abstract: | We study the robust regulation of labour contracts in moral hazard problems. A firm offers a contract to incentivise production by an agent protected by limited liability. A regulator chooses the set of permissible contracts to (i) improve efficiency and (ii) protect the worker. The regulator ignores the agent's productive actions and the firm's costs and evaluates regulation by its worst-case regret. The regret-minimising regulation imposes a linear minimum wage, allowing all contracts above this linear threshold. The slope of the minimum contract balances the worker's protection - by ensuring they receive a minimal share of the production - and the necessary flexibility for incentive provision. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.04841 |