Labor Economics Commons^™

Partial Disability And Labor Market Adjustment: The Case Of Spain, José Ignacio Silva, Judit Vall

José Ignacio Silva

Although partially disabled individuals in Spain are allowed to combine disability benefits with a job, the empirical evidence shows that the employment rate of this group of individuals is very low because they have a much lower job finding and a higher job separation rates than nondisabled workers. Moreover, a decomposition analysis of the equilibrium employment rate shows that the differences in the job finding rates explain 85 percent of the disabled employment gap. To explain these facts, we construct a labor market model with search intensity and matching frictions to identify the incentives and disincentives to work in Spain …

Trust In Cohesive Communities, Felipe Balmaceda Assoc Prof., Juan Escobar Assistant Professor

Felipe Balmaceda

This paper studies which social networks maximize trust and welfare when agreements are implicitly enforced. We study a repeated trust game in which trading opportunities arise exogenously and a social network determines the information each player has. We show that cohesive communities, modeled as social networks of complete components, emerge as the optimal community design. Cohesive communities generate some degree of common knowledge of transpired play that allows players to coordinate their punishments and, as a result, yield relatively high equilibrium payoffs. We also show that when news swiftly travel through the network, Pareto efficient networks are minimally connected: the …

Optimal Task Assignments, Felipe Balmaceda Assoc Prof.

Felipe Balmaceda

This paper studies optimal task assignments in a risk neutral principal-agent model in which agents are compensated according to an aggregated performance measure. The main trade-off involved is one in which specialization allows the implementation of any possible effort profile, while multitasking constraint the set of implementable effort profiles. Yet, the implementation of any effort profile in this set is less expensive than that under specialization. The principal prefers multitasking to specialization except when tasks are complements and the output after success is small enough so that it is not second-best optimal to implement high effort in each task. This …

An Estimated Open-Economy Dsge Model With Search-And-Matching Frictions: The Case Of Hungary, Istvan Konya, Zoltán Jakab

Istvan Konya

This paper builds and estimates a mediumscale, small open economy DSGE model augmented with search-and-matching frictions in the labor market, and different wage setting behavior in new and existing jobs. The model is estimated using Hungarian data between 2001-2008. We find that: (i) the inclusion of matching frictions significantly improves the model’s empirical fit; (ii) the extent of new hires wage rigidity is quantitatively important for keymacro variables; (iii) labor market shocks do not play an important role in inflation dynamics, but the structure of the labor market influences the monetary transmission mechanism.

The Price Of Unobservability: Moral Hazard And Limited Liability, Felipe Balmaceda Assoc Prof.

Felipe Balmaceda

This article studies a principal-agent problem with discrete outcome and effort space. The principal and the agent are risk neutral and the latter is subject to limited liability. For a given monitoring technology, we consider the maximum possible ratio between the first best social welfare to the social welfare arising from the principal's optimal pay-for-performance contract (the price of unobservability). Our main results provide tight bounds for this price. Key parameters to these bounds are number of possible efforts, the likelihood ratio evaluated at the highest outcome, and the ratio between costs of the highest and the lowest efforts. The …

The Effects Of Immigration On Household Services, Labour Supply And Fertility, Agnese Romiti

Agnese Romiti

Fertility and female labour force participation are no longer negatively correlated in developed countries. Recently, the role of immigration has been put forward as a driving factor among others. Increased immigration affects supply and prices of household services, which are relevant for fertility and employment decisions. This paper analyses the effect of immigration on labour supply and fertility of native women in the UK, with a focus on the role of immigration on household services. Adopting an instrumental variable approach based on the country-specific past distribution of immigrants at regional level, I find that immigration increases female labour supply, without …

How Does Labour Market Structure Affect The Response Of Economies To Shocks?, Istvan Konya, Aurelijus Dabusinskas, Stephen Millard

Istvan Konya

The recent crisis in the Eurozone has led to much discussion about the structure of labour markets in different Eurozone economies. In particular, there has been much talk of the need for structural labour market reform in the Eurozone periphery. But, there are many aspects of labour market structure – eg, wage flexibility, flexibility in hiring and firing, benefits, etc – and it is not clear a priori which aspects really matter. In this paper, we analyse how cross-country differences in labour market characteristics – in particular, wage and employment rigidities – shape the response of different countries to a …

Assessing The Cost Of Discrimination, Madhavi Venkatesan

Madhavi Venkatesan

In economics, discrimination is modeled as a cost that individuals are willing to bear to limit contact or interaction with specific types or groups of individuals. As a result, discrimination is evaluated as though it were a rational behavior rather than a sub-optimal action that prevents the attainment of a more optimal social justice-based sustainable outcome. In my Spring 2015 Economics of Race (ECON 427) course we explored the contribution of economics with respect to the persistence of discrimination and specific to the manner in which the discipline has evaluated the cost and benefit of discrimination. The presentation includes both …

Women Managers And The Gender-Based Gap In Access To Education: Evidence From Firm-Level Data In Developing Countries, Mohammad Amin, Asif Islam

Mohammad Amin

A number of studies explore the differences in men and women’s labor market participation rates and wages. Some of these differences have been linked to gender disparities in education attainment and access. The present paper contributes to this literature by analyzing the relationship between the proclivity of a firm having a top woman manager and access to education among women relative to men in the country. We combine the literature on women’s careers in management, which has mostly focused on developed countries, with the development literature that has emphasized the importance of access to education. Using firm-level data for 73 …

Economic Growth And Wage Stagnation In Peru: 1998-2012, Carlos Urrutia, Peter Paz

Carlos Urrutia

In the last two decades, the Peruvian economy exhibited rapid growth. Moreover, the composition of the labor force improved in terms of education and experience, two variables which are typically associated to higher human capital. The average worker in 2012 had a higher level of education and was one and a half years older than in 1998, reflecting the impact of the demographic transition. However, the average real wage was roughly constant. We show that a decline in the wage premium for education, and to a minor extent for experience, is responsible for the lack of growth in the average …

Stagnant Structure Of Workforce Among Scheduled Tribes (Sts) In Andhra Pradesh, Venkatanarayana Motkuri

Venkatanarayana Motkuri Mr.

In the perspective of inclusive growth, generating and providing productive employment opportunities especially for the disadvantaged groups would enable and empower people belonging to these groups to contribute to the growth and benefit from it. In this context the paper presents a macro view of changes in the structure of the workforce of Scheduled Tribes in Andhra Pradesh its impact in the inclusive growth perspective. The analysis indicates that although there has been progress on many development indicators in the ST community in the state, they still lagged behind the ‘other’ social groups. Slow progress in expected change in structure …

Medical Care Spending And Labor Market Outcomes: Evidence From Workers' Compensation Reforms, David Powell, Seth Seabury

David Powell

This paper studies the effectiveness of medical care spending on improving labor outcomes. Injuries sustained at work represent large income and welfare losses to households and there is a significant policy interest in reducing these burdens. Workers' compensation program is a large government program which provides monetary and medical benefits to injured workers. Despite the potential importance of medical care in improving the health and labor productivity of injured workers, little research has addressed the relationship between medical care provided through workers' compensation and post-injury labor outcomes. This paper exploits the 2003-2004 California workers' compensation reforms which reduced medical care …

Does Labor Supply Respond To Transitory Income? Evidence From The Economic Stimulus Payments Of 2008, David Powell

David Powell

Tax policy is often used to encourage consumer spending in recessions and a growing literature finds evidence that households increase short-term spending in response to receipt of tax rebates. The literature has largely ignored the effect on labor supply as rebates may crowd out labor earnings and households may consume additional leisure. The responsiveness of labor supply to transitory income has been underexplored more broadly so it is difficult to predict this labor supply effect. I exploit the randomized timing of the 2008 economic stimulus payments to study the effects of transitory income on monthly household labor earnings. Rebates can …

Determinants Of Aggressiveness On The Soccer Pitch: Evidence From Fifa And Uefa Tournaments, Raul Caruso, Marco Di Domizio, David A. Savage

Raul Caruso

This paper examines the determinants of aggressiveness on the soccer pitch in 463 matches from FIFA (World Cup) and UEFA (Euro Cup) tournaments spanning from 1994 to 2012. We highlight the role of several measures of international rivalry between countries on the players’ aggressive behaviour

The Employment And Wage Impact Of Broadband Deployment In Canada, Olena Ivus, Matthew Boland

Olena Ivus

Hundreds of millions of dollars are spent by the Canadian federal and provincial governments to subsidize broadband deployment. This paper provides the first empirical assessment of the impact of broadband on employment and wage growth in Canada. Variation in elevation explains the regional difference in broadband coverage and is used as an instrument to estimate the causal effect. We find that the deployment of broadband in 1997-2011 promoted rural employment and wage growth in service industries. Goods industries were not impacted. The findings suggest that broadband helps service industry businesses overcome geographical barriers that have traditionally hampered rural growth.

Online Appendix For: Does Mandating Non-Discrimination In Hiring Practices Influence Women’S Employment? Evidence Using Firm-Level Data, Mohammad Amin, Asif Islam

Mohammad Amin

This is the online Appendix for the paper titled "Does Mandating Non-discrimination in Hiring Practices Influence Women’s Employment? Evidence Using Firm-level Data" that is forthcoming in Feminist Economics.

Checklists And Worker Behavior: A Field Experiment, Henry S. Schneider, C. Kirabo Jackson

Henry S Schneider

We analyze data from a field experiment in which an auto-repair firm provided checklists to mechanics and monitored their use. Revenue was 20 percent higher during the experiment, and the effect is equivalent to that of a 1.6 percentage point (10 percent) commission increase. Checklists appear to boost productivity by serving both as a memory aid and a monitoring technology. Despite the large benefits to the firm, mechanics did not use checklists without the firm directly monitoring their use. We show that a moral hazard can explain why mechanics do not otherwise adopt checklists.

International Migration And Development: Myths And Facts, Piyasiri Wickramasekara

PIYASIRI WICKRAMASEKARA

International migration has emerged as a priority issue on the global agenda in the two decades, especially in the context of its positive role for economic development. There is however, still considerable controversy and stereotyping on migration and migrants. Politicians, anti-immigration lobbyists and the media in Western countries propagate a number of unfounded myths about migration. It is claimed that there is massive migration from the South to the North in recent times. Increasing migration under irregular situations is believed to result in security threats demanding stringent border controls at destinations. Another longstanding myth is that migrants steal jobs from …

Wage Effects Of Non-Wage Labour Costs, María Cervini, José Ignacio Silva, Xavier Ramos

José Ignacio Silva

We study wage effects of two important elements of non-wage labour costs: firing costs and payroll taxes. We exploit a reform that introduced substantial reduction in these two provisions for unemployed workers aged less than thirty and over forty five years who got a permanent job. A matching model with heterogeneous workers predicts positive wage effects of reducing firing costs but ambiguous wage effects of reducing payroll taxes, for both new entrant and incumbent workers. Difference-in-differences estimates and simulation of the model show positive wage effects for both new entrant and incumbent workers. The reduction in firing costs accounts for …

Immigrant Assimilation And Male Racial Labor Market Inequality, Patrick Leon Mason

Patrick L. Mason

At the height of the US civil rights movement in the mid-1960s foreign-born persons were less than 1 percent of the African American population (Kent, 2006). Today, 16 percent of America’s African Diaspora workforce consists of first or second generation immigrants and 4 percent are Hispanic. African American immigrants experience racialized labor market assimilation, with intergenerational improvement, education, and exogamous heritage being important paths of labor market assimilation. After living in the US for 9 – 15 years, first generation black immigrants will have wage and workhours penalties at least as large as native African Americans. The immigration process selects …

Managers, Training, And Internal Labor Markets, Michael Raith, Guido Friebel

Michael Raith

We propose a theory that emphasizes the role of managers for the production and allocation of human capital in firms. Managers invest time to train junior employees, and acquire information about the juniors' abilities that is valuable for job assignments. This dual role of managers matters especially in the modern, multidivisional firm, whose internal labor market can be structured in two distinct ways. In a "silo" or traditional job ladder, junior workers remain in the same division; in a "lattice," they can also be assigned to another division. The prospect of losing a good worker to another division undermines a …

Female Vs. Male Top Manager Of Private Firms In Developing Countries: Implications For Country And Firm Characteristics, Mohammad Amin

Mohammad Amin

Gender disparity in various economic dimensions has prompted policy measures aimed at providing greater employment opportunities for women. However, greater employment may not solve the problem much if this is concentrated in low paying and vulnerable jobs such as jobs in informal sector. Hence, it becomes important to understand how women vs. men compare in high paying formal sector jobs such as top managers of private firms. Using data on private firms in 86 developing countries, this paper analyzes how firms with female vs. male managers differ in their structure and performance. Relationship between various country characteristics and the proportion …

Family Ties: Occupational Responses To Cope With A Household Income Shock, Maria Cesira Urzi Brancati

Maria Cesira Urzi Brancati

In this paper we analyse household members’ reactions in case of unforeseen negative income shocks due to a transition into unemployment and/or into income support. More specifically, we estimate the impact of an income loss suffered by one household member on the probability that another household member – not necessarily the wife - transit from out of the labour force into employment or into workforce. Since in a lifecycle setting the labour supply of secondary workers is also affected by credit constraints, we take into account financial wealth and liabilities as well as a measure of household illiquidity due to …

Human Capital Index Series, Vicente German-Soto

Vicente German-Soto

Database of Human Capital index for the Mexican States, 1960-2008.

Assessment Of The Impact Of Migration Of Health Professionals On The Labour Market And Health Sector Performance In Destination Countries, Piyasiri Wickramasekara

PIYASIRI WICKRAMASEKARA

This book represents a report prepared for the EU-ILO project on "Decent work across borders: a pilot

project for migrant health professionals and skilled workers", coordinated by the International Labour

Organization, ILO Country Office for the Philippines.

The Assessment of the impact of migration of health professionals on the labour market and health sector performance in destination countries is an attempt to understand the impact of the migration of health professionals on the labour market and performance and quality of health services in major countries of destination, particularly the United Kingdom. It focuses on two categories of health professionals: doctors …

Informal Workers And Their Rights, Srijit Mishra

Srijit Mishra

The four fundamental principles and rights at work are intrinsic and with a pragmatic relevance that also find resonance in the Constitution of India through its Fundamental Rights and Directive Principles. Our interpretation through a Rawlsian prism also adds to our understanding of these four fundamental principles. An evaluation of the Indian context points out that more than 90 per cent of the workforce is informal workers and that the proportion of informal workers is also increasing in the organised sector. Further, our analysis indicates shortcomings in the four fundamental principles. Their freedom to organise is limited as most work …

The Growth And Transformation Of The Temporary Job Market, Travis J. Begin

Travis J Begin

The temporary job market is likely to grow as the economy evolves. This descriptive analysis discusses from a labor supply and demand perspective the determinants of temporary employment, where it developed, who it pertains to, and in which industries and occupations it is utilized. In addition, statistical analysis provides an insight into the temporary employment form in international labor markets. This provides a framework to predict the future of temporary employment as the economy evolves.

Good Practices In Standard Setting For Domestic Worker Contracts, Piyasiri Wickramasekara

PIYASIRI WICKRAMASEKARA

The presentation discusses international good practices in model or standard employment contracts in protection of migrant domestic workers. International instruments negotiated by ILO and UN constituents are the best sources of good practices. It outlines the provisions in international instruments, particularly the ILO Convention on Domestic Workers, 2011 (No. 189). The author maintains that for maximum effectiveness, the model/standard contracts should be mutually recognized by countries of origin and destination, and duly enforced to ensure compliance by employers, and supplemented by other measures. The author concludes that there is a large unfinished agenda in ensuring decent work for domestic workers.

Declining Labour Use In Agriculture : A Case Of Rice Cultivation In Andhra Pradesh, Narasimha Reddy Duvvuri, Venkatanarayana Motkuri

Venkatanarayana Motkuri Mr.

The present paper examines the changing nature of labour use in rice cultivation in Andhra Pradesh. Rice production in India is, however, concentrated in a few pockets. A few states in India produce around two thirds of rice production. Andhra Pradesh is the third largest state in India with respect to rice production. In Andhra Pradesh too, rice is the single largest crops occupying around 30% of area cultivated. The state was one of frontrunners leading the Green Revolution, particularly in rice cultivation.

The study observed that there is a fast decline in labour use in respect of rice cultivation …

Immigration And African American Wages And Employment: Critically Appraising The Empirical Evidence, Patrick Leon Mason

Patrick L. Mason

This paper critically assesses the empirical evidence on the relationship between immigration and African American employment. Studies using various methodologies and data are reviewed: natural experiments, time series, and cross-sectional studies of local labor markets and intertemporal changes in the national labor market. We find that for African Americans as a whole, immigration may have little effect on mean wages and probability of employment. However, there is some evidence that immigration may have had an adverse impact on the labor market outcomes of African Americans belonging to low education-experience groups. However, even this modest conclusion must be qualified: the literature …