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  • Articles  (165)
  • J31
  • Educación
  • Munich: Center for Economic Studies and Ifo Institute (CESifo)  (154)
  • La Paz: Institute for Advanced Development Studies (INESAD)
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  • Articles  (165)
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  • 1
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2020-03-25
    Description: The social and the private returns to education differ when education can increase productivity, and also be used to signal productivity. We show how instrumental variables can be used to separately identify and estimate the social and private returns to education within the employer learning framework of Farber and Gibbons [1996] and Altonji and Pierret [2001]. What an instrumental variable identifies depends crucially on whether the instrument is hidden from, or observed by, the employers. If the instrument is hidden then it identifies the private returns to education, but if the instrument is observed by employers then it identifies the social returns to education. Interestingly, however, among experienced workers the instrument identifies the social returns to education, regardless of whether or not it is hidden. We operationalize this approach using local variation in compulsory schooling laws across multiple cohorts in Norway. Our preferred estimates indicate that the social return to an additional year of education is 5%, and the private internal rate of return, aggregating the returns over the life-cycle, is 7.2%. Thus, 70% of the private returns to education can be attributed to education raising productivity and 30% to education signaling workers' ability.
    Keywords: J24 ; J31 ; D83 ; ddc:330 ; signaling ; human capital ; employer learning ; instruments
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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  • 2
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2020-03-25
    Description: Empirical findings suggest a positive correlation between inequality and social immobility, a phenomenon coined the Gatsby curve. However, complete explanations of the phenomenon have not yet been proposed. This paper answers two questions: What are Gatsby curves? When do they exist? We build a theoretical environment in which parental investment and education improve the economic prospects of children. Gatsbian economies and Gatsby curves are formally defined, and we characterize the conditions under which they will arise. We show that an economy may go from being Gatsbian to non-Gatsbian. Finally, we show that the better network of relations of those with high-paying jobs may also generate a Gatsbian economy.
    Keywords: D31 ; H52 ; J31 ; J62 ; ddc:330 ; intergenerational mobility ; income inequality ; education
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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  • 3
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2020-03-25
    Description: Labor market opportunities and wages may be unfair for various reasons, and how workers respond to different types of unfairness can have major economic consequences. Using an online labor platform, where workers engage in an individual task for a piece-rate wage, we investigate the causal effect of neutral and gender-discriminatory unfair chances on labor supply. We randomize workers into treatments where we control relative pay and chances to receive a low or a high wage. Chances can be fair, unfair based on an unspecified source, or unfair based on gender discrimination. Unequal pay reduces labor supply of low-wage workers, irrespective of whether the low wage is the result of fair or unfair chances. Importantly, the source of unfair chances matters. When a low wage is the result of gender-discriminatory chances, workers matched with a high-wage worker substantially reduce their labor supply compared to the case of equal low wages (-22%). This decrease is twice as large as those induced by low wages due to fair chances or unfair chances coming from an unspecified source. In addition, exploratory analysis suggests that in response to unequal pay, low-wage male workers reduce labor supply irrespective of the source of inequality, whereas low-wage female workers reduce labor supply only if unequal pay is due to gender-discriminatory chances. Our results concerning gender discrimination indicate a new reason for the lower labor supply of women, which is a prominent explanation for the gender gap in earnings.
    Keywords: D90 ; E24 ; J22 ; J31 ; J71 ; M50 ; ddc:330 ; labor supply ; wage inequality ; procedural fairness ; gender discrimination
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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  • 4
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-12-04
    Description: We present an equilibrium model with inter-linked frictional labour and marriage markets. Women’s flow value of being single is treated as given, and it captures returns from employment. Single unemployed men conduct a so-called constrained sequential job search, and can choose to improve their labour market returns as well as their marriage prospects by under-taking a costly ex-ante investment in schooling. We establish the existence of market equilibria where a fraction of men get educated, and show that this fraction decreases if women’s labour market returns increase. We also examine the robustness of such equilibria.
    Keywords: D83 ; I26 ; J12 ; J16 ; J31 ; ddc:330 ; frictional markets ; constrained search ; male returns to education
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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  • 5
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-08-22
    Description: Technological progress and trade potentially affect wages and employment. Technological progress can make jobs obsolete and trade can increase unemployment in import competing sectors. Empirical evidence suggests that both causes are important to explain recent labour market developments in many OECD countries. Both causes are often mentioned in tandem, but the relative contribution of each cause is less clear. This study presents a meta-analysis to shed light on the relative contribution of technological progress and trade in recent labour market developments and allows us to identify the winners and losers of automation and globalization. Using a sample of 77 studies and 1158 estimates, we find that both effects are important. Automation is beneficial at the firm level, and is more likely to displace low-skilled employment. Trade is more likely to benefit high-skilled employment and affects industry negatively. Somewhat surprisingly, given the consensus in the literature, automation has a positive effect for estimates considering the period before 1995, and trade a negative effect. We also find some evidence of publication biases.
    Keywords: F23 ; J31 ; J63 ; O11 ; ddc:330 ; labour markets ; technological progress ; trade ; meta-study
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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  • 6
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-12-04
    Description: Using an equilibrium model of inter-linked frictional labour and marriage markets, we establish the existence of male marriage premium within a given productivity group, as well as a clear ranking of premia across different groups. We find supporting evidence using Chinese data.
    Keywords: D83 ; J12 ; J16 ; J31 ; ddc:330 ; constrained sequential search ; marriage premium
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 7
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-12-04
    Description: We study the effects of a voluntary skill certification scheme in an online freelancing labour market. We show that obtaining skill certificates increases freelancers’ earnings. This effect is not driven by increased freelancer productivity but by decreased employer uncertainty. The increase in freelancer earnings is mostly realised through an increase in the value of the projects won rather than an increase in the number of projects won. Moreover, we find evidence for negative selection to completing skill certificates, which suggests that the freelancers who complete more skill certificates are in a more disadvantaged position in the labour market.
    Keywords: J21 ; J23 ; J24 ; J31 ; I20 ; ddc:330 ; signaling ; human capital ; skill validation ; skill certificates ; micro-credentials ; online freelancing ; platforms ; gig economy ; computer-based assessment
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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  • 8
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-12-04
    Description: This paper investigates how high school gender composition affects students’ participation in STEM at college. Using Danish administrative data, we exploit idiosyncratic within-school variation in gender composition. We find that having a larger proportion of female peers reduces women’s probability of enrolling in and graduating from STEM programs. Men’s STEM participation increases with more female peers present. In the long run, women exposed to more female peers are less likely to work in STEM occupations, earn less, and have more children. Our findings show that the school peer environment has lasting effects on occupational sorting, the gender wage gap, and fertility.
    Keywords: I21 ; J16 ; J31 ; ddc:330 ; gender ; peer effects ; STEM studies
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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  • 9
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-12-04
    Description: With the ensuing immigration reform in the US, the paper shows that targeted skilled immigration into the R&D sector that helps low-skilled labor is conducive for controlling inequality and raising wage. Skilled talent-led innovation could have spillover benefits for the unskilled sector while immigration into the production sector will always reduce wage, aggravating wage inequality. In essence, we infer: (i) if R&D inputs contributes only to skilled sector, wage inequality increases in general; (ii) for wage gap to decrease, R&D sector must produce inputs that goes into unskilled manufacturing sector; (iii) even with two types of specific R&D inputs entering into the skilled and unskilled sectors separately, unskilled labor is not always benefited by high skilled migrants into R&D-sector. Rather, it depends on the importance of migrants’ skill in R&D activities and intensity of inputs. Inclusive immigration policy requires inter-sectoral diffusion of ideas embedded in talented immigrants targeted for innovation. Empirical verification using a VAR regression model in the context of the USA confirms the conjectures, and the empirical results substantiates our policy-guided hypothesis that skilled immigration facilitates innovation with favorable impact on reducing wage-gap.
    Keywords: F22 ; J31 ; O15 ; ddc:330 ; H1B ; immigration ; innovation ; wage gap ; skill ; R&D ; policy ; RAISE Act ; VAR
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 10
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-12-04
    Description: This paper studies the relationship between changes in occupational employment, occupational wages, and rising overall wage inequality. Using long-running administrative panel data with detailed occupation codes, we first document that in all occupations, entrants and leavers earn lower wages than stayers. This empirical fact suggests substantial skill selection effects that are negative for growing occupations and positive for shrinking ones. We develop and estimate a model for prices paid per unit of skill in occupations, which incorporates occupation-specific skill accumulation over the career and endogenous switching across many occupations. Our results shed light on two important puzzles in prior literature. First, consistent with leading explanations for occupational employment changes, price and employment growth are positively related. Strong counteracting skill changes along the lines of our new empirical fact explain why occupational wages are unrelated to employment growth. Second, skill prices establish a long-suspected quantitative connection between occupational changes and the surge in wage inequality.
    Keywords: J21 ; J23 ; J24 ; J31 ; ddc:330 ; skill prices ; selection effects ; multidimensional skill accumulation ; occupational employment and wages ; administrative panel data ; wage inequality
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 11
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-04-08
    Description: Private information is at the heart of many economic activities. For decades, economists have assumed that individuals are willing to misreport private information if this maximizes their material payoff. We combine data from 90 experimental studies in economics, psychology and sociology, and show that, in fact, people lie surprisingly little. We then formalize a wide range of potential explanations for the observed behavior, identify testable predictions that can distinguish between the models and conduct new experiments to do so. Our empirical evidence suggests that a preference for being seen as honest and a preference for being honest are the main motivations for truth-telling.
    Description: This Version: March 2019
    Keywords: D03 ; D82 ; H26 ; I13 ; J31 ; ddc:330 ; private information ; honesty ; truth-telling ; lying ; meta study
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 12
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-06-22
    Description: This paper studies the price and employment response of firms to the introduction of a nation-wide minimum wage in Germany. In line with previous studies, the estimated employment effect is only modestly negative and statistically insignificant. In contrast, affected firms increased prices much more frequently. The price effect is prevalent across different sectors of the economy including manufacturing and is thus not limited to low wage industries. I document that speed and degree of price pass-through were high and firms rolled over the lion’s share of the costs generated by the minimum wage to their customers. Consistent with the role of price pass-through, I find considerable heterogeneity in firms’ responses to the minimum wage depending on their own business expectations, product market competition, and local labor market conditions.
    Keywords: J38 ; J08 ; E31 ; J31 ; ddc:330 ; price pass-through ; heterogeneity in minimum wage effects ; firm data ; Germany
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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  • 13
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-06-22
    Description: This paper establishes new evidence on the cyclical behaviour of household income risk in Great Britain and assesses the role of social insurance policy in mitigating against this risk. We address these issues using the British Household Panel Survey (1991-2008) by decomposing stochastic idiosyncratic income into its transitory, persistent and fixed components. We then estimate how income risk, measured by the variance and the skewness of the probability distribution of shocks to the persistent component, varies between expansions and contractions of the aggregate economy. We first find that the volatility and left-skewness of these shocks is a-cyclical and counter-cyclical respectively. The latter implies a higher probability of receiving large negative income shocks in contractions. We also find that while social insurance (tax-benefits) policy reduces the levels of both measures of risk as well as the counter-cyclicality of the asymmetry measure, the mitigation effects work mainly via benefits.
    Keywords: D31 ; E24 ; J31 ; ddc:330 ; household income risk ; social insurance policy ; aggregate fluctuations
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 14
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-06-22
    Description: We study optimal employment contracts for present-biased employees who can conduct on-the-job search. Presuming that firms cannot offer long-term contracts, we find that individuals who are naive about their present bias will actually be better off than sophisticated or time-consistent individuals. Moreover, they search more, which partially counteracts the inefficiencies caused by their present bias.
    Keywords: D21 ; D83 ; D90 ; J31 ; J32 ; ddc:330 ; present bias ; on-the-job search
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 15
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2020-03-25
    Description: To what extent can technological advances in the production of capital account for the recent, worldwide decline in the labor income share? We pose two challenges to the automation narrative: first, estimates of the elasticity of substitution (EOS) between capital and labor tend to fall below or around one, suggesting that a decline in the price of capital should not lead to a decline in the labor income share. Second, we illustrate that, despite technological improvements, the price of capital relative to output has remained roughly constant, worldwide. This poses a challenge to the view that cheaper capital has caused the displacement of workers. We show that a more nuanced approach, which takes seriously the composition of capital, ascribes a prominent role to the automation hypothesis. Though information and communications (ICT) capital is a small fraction of the capital stock, it is highly substitutable with labor, and its user cost declined sharply over the last few decades. A framework that distinguishes between ICT and non-ICT capital is empirically plausible and suggests that automation accounts for more than one quarter of the global decline in the labor share, even if the aggregate EOS is substantially less than unity.
    Keywords: E25 ; E22 ; J24 ; J31 ; O33 ; ddc:330 ; technological change ; labor share ; ICT
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 16
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2020-03-25
    Description: This paper empirically investigates the long-run effects of major health improvements on income growth in the United States. To isolate exogenous changes in health, the econometric model uses quasi-experimental variation in cardiovascular disease mortality across states over time. The results show that there is a causal link between health and income per person, and they provide novel evidence that health dynamics shape life-cycle incomes. Compared to previous generations, life-cycle income profiles slope more strongly at the beginning and at the end of work life, such that age becomes a more prominent determinant of income dynamics. The channels for this transformation include better health, higher educational attainment, and changing labor supply.
    Keywords: I15 ; J11 ; J24 ; J31 ; O40 ; ddc:330 ; age ; mortality ; life expectancy ; productivity ; education ; labor supply
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 17
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2020-03-25
    Description: Electricity is a general purpose technology and the catalyst for the second industrial revolution. Developing countries are currently making huge investments in electrification, with a view to achieving structural change. What does history say about its impact on the structure of employment? We use U.S. Census data from 1910 to 1940 and measure electrification with the length of higher-voltage electricity lines. Instrumenting for electrification using hydroelectric potential, we find that the average expansion of high-voltage transmission lines between 1910 and 1940 increased the share of operatives in a county by 3.3 percentage points and decreased the share of farmers by 2.1 percentage points. Electrification can explain 50.5% of the total increase in operatives, and 18.1% of the total decrease in farmers between 1910 and 1940. At the industry level, electrification drove 15.7% of the decline in the share of agricultural employment and 28.4% of the increase in the share of manufacturing employment between 1910 and 1940. Electrification was thus a key driver of structural transformation in the U.S. economy.
    Keywords: E25 ; E22 ; J24 ; J31 ; N32 ; N72 ; O33 ; ddc:330 ; technological change ; electrification ; structural change
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 18
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-07-14
    Description: Comparing cohorts born between 1951 and 1994, we document and interpret changes in the wage differential among graduates from secondary education with a vocational and a general curriculum.. The wage gap initially increased and then decreased. We find that these changes cannot be attributed to simple compositional shifts in the economy, but instead relate to important changes in worker allocation to firms that are heterogeneous in wage policies: the demise of assortative matching between workers and firms that worked out favourably for vocational graduates.
    Keywords: J31 ; I26 ; ddc:330 ; returns to education ; vocational wage gap
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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  • 19
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-11-27
    Description: I study the optimal taxation of robots and labor income. In the model, robots substitute for routine labor and complement non-routine labor. I show that while it is optimal to distort robot adoption, robots may be either taxed or subsidized. The robot tax exploits general-equilibrium effects to compress the wage distribution. Wage compression reduces income-tax distortions of labor supply, thereby raising welfare. In the calibrated model, the optimal robot tax for the US is positive and generates small welfare gains. As the price of robots falls, inequality rises but the robot tax and its welfare impact become negligible.
    Keywords: D31 ; D33 ; D50 ; H21 ; H23 ; H24 ; H25 ; J24 ; J31 ; O33 ; ddc:330 ; optimal taxation ; input taxation ; production efficiency ; technological change ; robots ; inequality ; general equilibrium ; multidimensional heterogeneity
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 20
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-11-27
    Description: We study how job seekers respond to wage announcements by assigning wages randomly to pairs of otherwise similar vacancies in a large number of professions. High wage vacancies attract more interest, in contrast with much of the evidence based on observational data. Some applicants only show interest in the low wage vacancy even when they were exposed to both. Both findings are core predictions of theories of directed/competitive search where workers trade off the wage with the perceived competition for the job. A calibrated model with multiple applications and on-the-job search induces magnitudes broadly in line with the empirical findings.
    Keywords: J31 ; J63 ; J64 ; C93 ; ddc:330 ; online job search ; directed search ; wage competition ; field experiments
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 21
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-01-22
    Description: Using rich linked employer-employee data for (West) Germany between 1996 and 2014, we analyze the most important drivers of the recent rise in German wage dispersion and pin down the relative contribution of plant and worker characteristics. Moreover, we separately investigate the drivers of between-plant and within-plant wage dispersion. We also analyze the sources of the recent slowdown in German wage inequality and compare the results for West Germany to the ones for East Germany. We disentangle the relative contribution of each single variable to the rise in wage dispersion using recentered influence function (RIF) regressions. The most important drivers of wage dispersion are industry effects and the bargaining regime. The former predominantly works through the wage structure effect while, in the latter case, both the decline in collective bargaining coverage and the strong increase in wage dispersion within the group of covered plants have played a substantial role. While education has been another factor contributing to both between-plant and within-plant wage inequality, other candidate factors such as plant size, the exporting status, plant technology, and investment intensity are all of little if any direct quantitative importance for the increase in wage dispersion.
    Keywords: J31 ; J51 ; C21 ; F16 ; ddc:330 ; wage inequality ; decomposition ; RIF-regression ; linked employer-employee data
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 22
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2019-01-22
    Description: Using matched employer-employee-contract data for Portugal – a country with near-universal union coverage – we find evidence of a sizable effect of union affiliation on wages. Gelbach's (2016) decomposition procedure is next deployed to ascertain the contributions of worker, firm, match, and job-title heterogeneity to the union wage gap. Of these the most important is the firm fixed effect, followed at some distance by union workers gaining from elevated job titles and/or more generous promotion policies. For its part, unobserved worker quality plays only a very weak role, while there is even less suggestion that improved match quality bolsters the union premium.
    Keywords: J31 ; J33 ; J41 ; J51 ; J52 ; ddc:330 ; union density ; union wage gap ; worker/form/job-title fixed effects ; match quality ; Gelbach decomposition ; Portugal
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 23
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-04-12
    Description: We estimate the spatially differential effects of a nationally uniform minimum wage that was introduced in Germany in 2015. To this end, we use a micro data set covering the universe of employed and unemployed individuals in Germany from 2011 to 2016 and a difference‐in‐differences based identification strategy that controls for heterogeneity in pre‐treatment outcome trends. We find that the policy led to spatial wage convergence, in particular in the left tail of the distribution, without reducing relative employment in low‐wage regions within the first two years.
    Keywords: J31 ; J58 ; R12 ; ddc:330 ; difference-in-differences ; employment ; Germany ; minimum wage ; wage inequality
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 24
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-04-12
    Description: This paper investigates the influence of industrial relations on firm wage premia in Germany. OLS regressions for the firm effects from a two-way fixed effects decomposition of workers’ wages by Card, Heining, and Kline (2013) document that average premia are larger in firms bound by collective agreements and in firms with a works council, holding constant firm performance. RIF regressions show that premia are less dispersed among covered firms but more dispersed among firms with a works council. Hence, deunionization is the only among the suspects investigated that contributes to explaining the marked rise in the premia dispersion over time.
    Keywords: J31 ; J52 ; J53 ; ddc:330 ; firm wage premium ; industrial relations ; trade unions ; works councils ; bargaining power ; rent sharing ; wage inequality ; Germany
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 25
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-04-12
    Description: The growing finance wage premium is related to a modest net reallocation of skilled workers from non-finance sectors into finance in a broad sample of 24 countries over 35 years. The reallocation is higher when the finance wage premium grows faster than the contribution of the financial sector to the economy, which we proxy with the relative value added of finance. More innovative sectors and sectors exhibiting lower labor-transition costs face a higher reallocation of skilled workers. Yet, the growing finance wage premium is unrelated to sectoral or aggregate growth, to countries’ innovative capacity, to student enrollment in STEM degrees, and to the riskiness, efficiency, and competitiveness of banking sectors. Overall, the reallocation of skilled labor implied by a growing finance wage premium appears too modest to materially affect economic growth.
    Keywords: D72 ; G20 ; J23 ; J31 ; N20 ; ddc:330 ; finance wage premium ; skilled labor ; misallocation ; growth ; innovation ; banking sector.
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
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  • 26
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-04-12
    Description: Measured by trade in intermediate inputs, economic integration has increased between 2000 and 2014 between members of the European Union and even more with non-members. Integration is negatively related to economic size and positively to the number of years as a member. Germany is the largest hub in the production network and the centre of gravity has moved eastward. Older member states are increasingly exporting service inputs and new member states primary and manufacturing inputs. Wages are increasing faster in countries with low initial wages, indicating wage convergence as a result of production integration.
    Keywords: E10 ; F10 ; F60 ; J31 ; ddc:330 ; global value chains ; economic integration ; input-output models ; wage convergence
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  • 27
    Publication Date: 2018-08-16
    Description: We structurally estimate an equilibrium search model using German administrative data and use this for counterfactual analyses of a uniform minimum wage. The model with worker and firm heterogeneity does not restrict the sign of employment effects a priori and allows for different job offer arrival rates for the employed and the unemployed. We find that unemployment is a non-monotonic function of the minimum wage level. Effects differ strongly by labour market segment. Cross-segment variation of the estimated effects is mostly driven by firm productivity levels rather than by search frictions or the opportunity cost of employment.
    Keywords: J31 ; J51 ; J64 ; ddc:330 ; wages ; job durations ; work ; employment ; productivity ; structural estimation
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  • 28
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-07-14
    Description: With the ensuing immigration reform in the US, the paper shows that targeted skilled immigration into the R&D sector that helps low-skilled labor is conducive for controlling inequality and raising wage. Skilled talent-led innovation could have spillover benefits for the unskilled sector while immigration into the production sector will always reduce wage, aggravating wage inequality. In essence, we infer: (i) if R&D inputs contributes only to skilled sector, wage inequality increases in general; (ii) for wage gap to decrease, R&D sector must produce inputs that goes into unskilled manufacturing sector; (iii) even with two types of specific R&D inputs entering into the skilled and unskilled sectors separately, unskilled labor is not always benefited by high skilled migrants into R&D-sector. Rather, it depends on the importance of migrants’ skill in R&D activities and intensity of inputs. Inclusive immigration policy requires inter-sectoral diffusion of ideas embedded in talented immigrants targeted for innovation.
    Keywords: F22 ; J31 ; O15 ; ddc:330 ; HIB ; immigration ; innovation ; wage gap ; skill ; R&D ; policy ; RAISE Act
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  • 29
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-11-27
    Description: Using a multi-dimensional measure of occupational mismatch, we report distinct gender differences in match quality and changes in match quality over the course of careers. A substantial portion of the gender wage gap stems from match quality differences among more educated individuals. College-educated females are significantly more mismatched than males. Individuals with children and in more flexible occupations also tend to be more mismatched. Again, this is especially true of women. Cohort effects are also discernible: college-educated males of the younger cohort have lower match quality than the older cohort, even as the new generation of women is doing better.
    Keywords: J13 ; J16 ; J22 ; J23 ; J24 ; J31 ; J33 ; J38 ; ddc:330 ; multidimensional skills ; occupational mismatch ; match quality ; wages ; gender wage gap ; fertility ; fertility timing
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-11-27
    Description: This paper explores the relationship between the duration of a vacancy and the starting wage of a new job, using unusually informative data comprising detailed information on vacancies, the establishments posting the vacancies and the workers eventually filling the vacancies. We find that vacancy durations are negatively correlated with the starting wage and that this negative association is particularly strong with the establishment component of the starting wage. We also confirm previous findings that growing establishments fill their vacancies faster. To understand the relationship between establishment growth, vacancy filling and entry wages, we calibrate a model with directed search and ex-ante heterogeneous workers and firms. We find a strong tension between matching the sharp increase in vacancy filling for growing firms and the response of vacancy filling to firm-level wages. We discuss the implications of this finding as well as potential resolutions.
    Keywords: E24 ; J31 ; J63 ; ddc:330 ; vacancy posting ; vacancy duration ; recruiting ; search wages
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  • 31
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-11-27
    Description: Nonemployment is often posited as a worker’s outside option in wage setting models such as bargaining and wage posting. The value of this state is therefore a fundamental determinant of wages and, in turn, labor supply and job creation. We measure the effect of changes in the value of nonemployment on wages in existing jobs and among job switchers. Our quasi-experimental variation in nonemployment values arises from four large reforms of unemployment insurance (UI) benefit levels in Austria. We document that wages are insensitive to UI benefit levels: point estimates imply a wage response of less than $0.01 per $1.00 UI benefit increase, and we can reject sensitivities larger than 0.03. In contrast, a calibrated Nash bargaining model predicts a sensitivity of 0.39 – more than ten times larger. The empirical insensitivity holds even among workers with a priori low bargaining power, with low labor force attachment, with high predicted unemployment duration, among job switchers and recently unemployed workers, in areas of high unemployment, in firms with flexible pay policies, and when considering firm-level bargaining. The insensitivity of wages to the nonemployment value we document presents a puzzle to widely used wage setting protocols, and implies that nonemployment may not constitute workers’ relevant threat point. Our evidence supports wage-setting mechanisms that insulate wages from the value of nonemployment.
    Keywords: J31 ; J60 ; J65 ; ddc:330
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-11-27
    Description: This study estimates the effect of compulsory schooling on earnings. For identification, I exploit a German reform that extended the duration of secondary schooling in the 1960s. I find that hourly wages increase by 6%-8% per additional year of schooling. This result challenges prior findings for Germany of zero returns to schooling, obtained by using the same survey data and reform. I show that the earlier estimates suffer from unconsidered institutional details. A complementary analysis using social security records confirms significant effects on earnings, but yields no effects on employment and take-up of public transfers.
    Keywords: I21 ; I26 ; J31 ; ddc:330
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  • 33
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-11-27
    Description: In this paper, we estimate the urban wage premia (UWP) in Italy, with its economy characterized by the interplay between collective bargaining and spatial heterogeneity in the cost of living. We implement a reduced-form regression analysis using both nominal and real (in temporal and spatial terms) wages. Our dataset for the 2005-2015 period includes, for workers’ characteristics, unique administrative data provided by Italian Social Security Institute and, for the local CPI computation, housing prices collected by Italian Revenue Agency. For employees covered by collective bargaining, we find a zero UWP in nominal terms and a negative and non-negligible UWP in real terms (-5%). To capture the role played by centralized wage settings, we also consider various groups of self-employed workers, who are not covered by national labour agreements, while living in the same locations and enjoying the same amenities as employees. We find that the UWP for self-employed workers are up to 25 times greater than for employees. Moreover, sorting proves more notable in the case of self-employed workers, i.e. the larger UWP provide the higher incentives for high-skilled individuals and better firms to locate in cities. Our findings are confirmed on extending the analysis along the wage distribution.
    Keywords: R12 ; R31 ; J31 ; ddc:330 ; urban wage premium ; cost of living ; collective bargaining
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  • 34
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-11-27
    Description: Wages grow but also become more unequal as workers age. Using German administrative data, we largely attribute both life-cycle facts to one driving force: some workers progress in hierarchy to jobs with more responsibility, complexity, and independence. In short, they climb the career ladder. Climbing the career ladder explains 50% of wage growth and virtually all of rising wage dispersion. The increasing gender wage gap by age parallels a rising hierarchy gap. Our findings suggest that wage dynamics are shaped by the organization of production, which itself likely depends on technology, the skill set of the workforce, and labor market institutions.
    Keywords: D33 ; E24 ; J31 ; ddc:330 ; human capital ; life-cycle wage growth ; wage inequality ; careers
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  • 35
    Publication Date: 2018-11-27
    Description: We study the labor market outcomes of a deregulation reform in Germany that removed licensing requirements to become self-employed in some occupations. Using longitudinal social security data, we implement a matched difference-in-differences design with entropy balancing to account for observable characteristics and unobserved individual heterogeneity. The reform tripled the number of businesses within ten years and led to slower earnings growth and higher unemployment for incumbent workers in deregulated occupations. However, the reform effect seems rather small, which we attribute to the relatively low competitiveness of new businesses. Supporting this view, the reform did not lead to overall employment growth.
    Keywords: J31 ; J24 ; L11 ; ddc:330 ; deregulation ; entry barriers ; self-employment ; labor market outcomes ; entropy balancing ; matched difference-in-differences
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-01-17
    Description: This paper identifies globalization as a factor behind the rapid increase in executive compensation and inequality over the last few decades. Employing comprehensive data on top executives at major U.S. companies, we show that compensation is higher at more global firms. We find that pay responds not only to firm size and technology but also to exports conditional on other firm characteristics. Export shocks that are not related to the executive’s talent and actions also increase executive compensation, indicating that globalization is influencing compensation through pay-for-non-performance. Furthermore, this effect is asymmetric, with executive compensation increasing due to positive export shocks but not decreasing due to negative shocks. Finally, export shocks primarily affect discretionary forms of compensation of more powerful executives at firms with poor corporate governance, as one would expect if globalization has enhanced rent-capture opportunities. Overall, these results indicate that globalization has played a more central role in the rapid growth of executive compensation and U.S. inequality than previously thought, and that both higher returns to top talent and rent-capture are important parts of this story.
    Keywords: F16 ; F14 ; F66 ; M12 ; J31 ; ddc:330 ; inequality ; executive compensation ; globalization ; exports
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  • 37
    Publication Date: 2018-01-17
    Description: The authors compare a firm’s costs and benefits of providing apprenticeship training in Austria and Switzerland, using two original micro data sets. While both countries share a number of similarities, including an extensive vocational education and training (VET) system, and a common border, there are some important institutional differences. On average, a Swiss firm generates a net profit of 3400 Euro per apprentice and per year of training, while an Austrian firm incurs net costs of 4200 Euro. Applying matching models, we find that this difference is largely driven by a higher relative apprentice pay in Austria, which in turn is associated with collective bargaining agreements and competition with alternative school-based VET pathways. However, Austrian firms can still generate a return on their training investment, partly due to wage subsidies, but mostly by retaining a high share of apprentices as skilled workers, and thereby save on future hiring costs.
    Keywords: J24 ; J31 ; J44 ; ddc:330 ; apprenticeship training ; cost-benefit analysis ; initial VET ; hiring costs
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-08-09
    Description: Despite the increased attachment of women to the labour force in nearly all developed countries, a stubborn gender pay gap remains. This chapter provides a review of the economics literature on the gender wage gap, with an emphasis on developed countries. We begin with an overview of the trends in the gender differences in wages and employment rates. We then review methods used to decompose the gender wage gap and the results from such decompositions. We discuss how trends and differences in the gender wage gap across countries can be understood in light of non-random selection and human capital differences. We then review the evidence on demand-side factors used to explain the existing gender wage gap and then discuss occupational segregation. The chapter concludes with suggestions for further research.
    Keywords: J16 ; J24 ; J31 ; J71 ; ddc:330 ; wages ; gender wage gap ; wage differentials ; labor force participation ; discrimination ; human capital investment ; non-random selection ; developed countries
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  • 39
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-08-09
    Description: The empirical literature addressing links between the labor and the marriage markets is numerous and varied. Despite this, the theoretical (equilibrium) literature that explicitly links the two markets is less developed, particularly so with frictional markets. We build an equilibrium search model where married couples make joint decisions on home production and labor market participation. We then analyze the implications of our results for a frictional marriage market allowing us to consider the interaction between both markets. A worker´s bargaining position reflects their own productivity, and also the employment status and conditions of their spouse. We find that couples with very different productivities have different strategies regarding labor market participation. In symmetric couples, the partners behave symmetrically. Workers get better job offers when their spouses are employed, and in some equilibria a person may search for transitory jobs with the sole purpose of raising the long-term wages of their spouse. In some cases, firms unilaterally increase a worker’s wage in order to reduce turnover, by ensuring that the spouse stays at home. Whether firms follow that strategy or not may be a matter of multiple equilibria, depending on parameter values. All this provides an additional explanation for wage and search behavior heterogeneity of similar workers and/or couples.
    Keywords: D13 ; J12 ; J22 ; J31 ; ddc:330 ; labour market participation ; wage formation ; marriage market ; linked frictional markets
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-08-09
    Description: In this paper, we study the development and underlying drivers of skill premiums in Germany between 1980 and 2008. We show that the significant increase in the medium to low skill wage premiums since the late 1980s was almost exclusively concentrated among the group of workers aged 30 or below. Using a nested CES production function framework which allows for imperfect substitutability between young and old workers, we investigate whether changes in relative labor supplies could explain these patterns. Our model predicts the observed differential evolution of skill premiums very well. The estimates imply an elasticity of substitution between young and old workers of about 8, between medium- and low-skilled workers of 4 and between high-skilled and medium/low-skilled workers of 1.6. Using a cohort level analysis based on Microcensus data, we find that long-term demographic changes in the educational attainment of the native (West-)German population – in particular of the post baby boomer cohorts born after 1965 – are responsible for the surprising decline in the relative supply of medium-skilled workers which caused wage inequality at the lower part of the distribution to increase in recent decades. We further show that the role of (low-skilled) migration is limited in explaining the long-term changes in relative labor supplies.
    Keywords: J11 ; J21 ; J22 ; J31 ; ddc:330 ; cohorts ; baby boom ; labor supply ; labor demand ; skill-biased technological change ; wage distribution ; wage differentials
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  • 41
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-11-11
    Description: We investigate how individual risk preferences affect the likelihood of selecting the more able contestant within a two-player Tullock contest. Our theoretical model yields two main predictions: First, an increase in the risk aversion of a player worsens her odds unless she already has a sufficiently large advantage. Second, if the prize money is sufficiently large, a less able but less risk averse contestant can achieve an equal or even higher probability of winning than a more able but more risk averse opponent. In a laboratory experiment we confirm both, the non-monotonic impact and the compensating effect of risk aversion on winning probabilities. Our results suggest a novel explanation for the gender gap and the optimality of limited monetary incentives in selection contests.
    Keywords: C72 ; D72 ; J31 ; K41 ; M51 ; M52 ; ddc:330 ; selection contest ; risk aversion ; competitive balance ; gender gap
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-11-11
    Description: The large regional variation in minimum wage levels in the period 2002-08 in China implies that Chinese manufacturing firms experienced competitive shocks as a function of firm location and their low-wage employment share. We find that minimum wage hikes accelerate the input substitution from labor to capital, reduce employment growth and accelerate total factor productivity growth–particularly among the less productive firms under private Chinese or foreign ownership, but not among state-owned enterprises. The heterogeneous firm response to labor cost shocks can be explained by differences in management practices, and suggests that management quality and competitive pressure are complementary.
    Keywords: D24 ; G31 ; J24 ; J31 ; O14 ; ddc:330 ; firm productivity ; capital investment ; minimum wage policy
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  • 43
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-11-11
    Description: A well-established stylised fact is that employer provided job-related training raises productivity and wages. Using UK data, we further find that job-related training is positively related to subsidies aimed at reducing training costs for employers. We also find that there is a positive, albeit quantitatively small, relationship between wage inequality and training inequality in the UK. Motivated by the above, we explore whether policies to subsidise firms’ monetary cost of training can improve earnings for the lower skilled and reduce inequality. We achieve this by developing a dynamic general equilibrium model, featuring skilled and unskilled labour, capital-skill complementarity in production and an endogenous training allocation. Our results suggest that training subsidies for the unskilled have a significant impact on the labour income of unskilled workers. These subsides also increase earnings for skilled workers and raise aggregate income with implied lifetime multipliers exceeding unity. Finally, the positive spill over effects to skilled workers imply that training subsidies are not very effective in reducing inequality, measured as the distance between skilled and unskilled wages and incomes.
    Keywords: E24 ; J24 ; J31 ; ddc:330 ; job-related training ; wage and earning inequality ; training subsidies
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-06-08
    Description: This paper examines the relationship between idiosyncratic risk in labour income and fluctuations in aggregate labour market quantities for Great Britain. We use data from the British Household Panel Survey (BHPS) for 1991-2008 and from the BHPS sub-sample of Understanding Society for 2010-2014. We measure idiosyncratic risk in labour income by the relevant moments of the distributions of earnings, employment and wage shocks across individuals. Our main finding is that idiosyncratic risk increases during contractions in the labour market. Furthermore, we find evidence of insurance, both at the household level and in the form of public insurance. However, private and public insurance mechanisms against an increase in idiosyncratic risk are less e¤ective for households whose head does not hold a University degree.
    Keywords: D31 ; E24 ; J31 ; ddc:330 ; idiosyncratic income risk ; employment ; social insurance policy
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  • 45
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2018-01-17
    Description: Using employer-employee panel data, we provide novel facts on how real wages and working hours within jobs responded to the UK’s Great Recession. In contrast to previous studies, our data enables us to address the cyclical composition of jobs. We show that firms were able to respond to the Great Recession with substantial real wage cuts and by recruiting more part-time workers. A one percentage point increase in the unemployment rate led to an average decline in real hourly wages of 2.8 per cent for new hires and 2.6 per cent for job stayers. Hours of new hires in entry-level jobs were also substantially procyclical, while job-stayer hours were nearly constant. Our findings suggest that models assuming rigid labour costs of new hires are not helpful for understanding the behaviour of unemployment over the business cycle.
    Keywords: E24 ; E32 ; J31 ; ddc:330 ; wage rigidity ; Great Recession ; hours worked ; job-level analysis
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  • 46
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-06-08
    Description: Theoretical discussion on compensating mechanisms involving the Pareto criterion that address inequality rather than absolute welfare is non-existent in trade literature. In a simple HOS model we consider tax-transfer policies that keep the pre-trade degree of inequality unchanged between skilled and unskilled workers rather than the absolute income of the losing group. We discuss the problem of existence of such an inequality-neutral tax rate which generates a positive increment in the after tax skilled wage and unskilled wage. Such a mechanism exists and is independent of whether the tax is progressive or proportional. Thus the compensating mechanism that is available in this standard model is stronger than the conventional Pareto criterion.
    Keywords: F11 ; J31 ; D63 ; H20 ; H23 ; ddc:330 ; trade model ; wage inequality ; compensation mechanism ; tax policy
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  • 47
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-08-09
    Description: Almost all of the literature about the growth of income inequality and the relationship between skilled and unskilled wages approaches the issue from the production side of general equilibrium (skill-biased technical change, international trade). Here, we add a role for income-dependent demand interacted with factor intensities in production. We explore how income growth and trade liberalization inuence the demand for skilled labor when preferences are non-homothetic and income-elastic goods are more intensive in skilled labor, an empirical regularity documented in Caron, Fally and Markusen (2014). In one experiment, counterfactual simulations show that sectorneutral productivity growth, which generates shifts in consumption towards skill-intensive goods, leads to significant increases in the skill premium: in developing countries, a one percent increase in productivity leads to a 0.1 to 0.25 percent increase in the skill premium. In several countries, including China and India, simulations suggest that the historical growth experienced in the last 25 years may have led to an increase in the skill premium of more than 10%. In a second experiment, we show that trade cost reductions generate quantitatively very different outcomes once we account for non-homothetic preferences. These imply substantially less predicted net factor content of trade and allow for a shift in consumption patterns caused by trade-induced income growth. Overall, the negative effect of trade cost reductions on the skill premium predicted for developing countries under homothetic preferences (Stolper-Samuelson) is strongly mitigated, and sometimes reversed.
    Keywords: F10 ; O10 ; F16 ; J31 ; ddc:330 ; non-homothetic preferences ; skill premium ; per capita income ; internatonal trade
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-08-09
    Description: This paper explores the impact of undocumented as opposed to documented immigration in a model featuring search frictions and non-random hiring that is consistent with novel empirical evidence presented. In this framework, undocumented immigrants’ wages are the lowest of all workers due to their ineligibility for unemployment benefits and lower wage bargaining power. A rise in the share of immigrant workers leads to the creation of additional jobs, but also more job competition. The job creation effect is large for undocumented, while small and potentially negative for documented immigration. Model simulations show that the job creation effect of undocumented immigration is large enough to dominate the competition effect, resulting in gains in terms of both employment and wages for natives, which does not hold for documented immigration. Stricter immigration enforcement mutes job creation and raises the unemployment rate of all workers, having an even larger detrimental effect if it targets employed workers because this leads to a risk premium in their wages. Finally, I present empirical evidence that supports the qualitative predictions of the model.
    Keywords: J31 ; J61 ; J63 ; J64 ; ddc:330 ; wage gap ; migrant workers ; hiring ; employment
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-06-08
    Description: We quantify the effect of a minimum wage on compression throughout the earnings distribution. Using the case of Brazil, which experienced a large decrease in earnings inequality while its real minimum wage increased from 1996-2012, we document that the inequality decrease was bottom-driven yet widespread, with compression up to the 75th earnings percentile. We develop an equilibrium search model with heterogeneous firms and workers and find that effects of the minimum wage are consistent with the above facts, explaining 70 percent of the observed inequality decrease, with half of the decrease due to spillovers further up the earnings distribution.
    Keywords: E24 ; E61 ; J31 ; ddc:330 ; worker and firm heterogeneity ; minimum wage ; matched employer-employee data ; equilibrium search model
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  • 50
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-06-08
    Description: A wide class of models with On-the-Job Search (OJS) predicts that workers gradually select into better-paying jobs. We develop a simple methodology to test predictions implied by OJS using two sources of identification: (i) time-variation in job-finding rates and (ii) the time since the last lay-off. Conditional on the termination date of the job, job duration should be distributed uniformly. This methodology is applied to the NLSY 79. We find remarkably strong support for all implications. The standard deviation of the wage offer distribution is about 15%. OJS accounts for 30% of the experience profile, 9% of total wage dispersion and an average wage loss of 11% following a lay-off.
    Keywords: J31 ; J63 ; J64 ; ddc:330 ; on-the-job search ; wage dispersion ; job duration
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-06-08
    Description: We find that oil supply shocks decrease average real wages, particularly skilled wages, and increase wage dispersion across regions, particularly unskilled wage dispersion. In a model with spatial energy intensity differences and nontradables, labor demand shifts, while explaining the response of average wages to oil supply shocks, have counterfactual implications for the response of wage dispersion. Only an additional response in labor supply can explain this latter fact highlighting the importance of general equilibrium effects in a spatial context. We provide additional empirical evidence of regionally directed worker reallocation and housing prices consistent with our spatial model. Finally, we show that a calibrated version of our model can quantitatively match the estimated effects of oil supply shocks.
    Keywords: E24 ; J24 ; J31 ; J61 ; ddc:330 ; wage dispersion ; labor reallocation ; skill heterogeneity ; oil prices
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2017-03-09
    Description: We consider the effects of student ability, college quality, and the interaction between the two on academic outcomes and future earnings using data on two cohorts of college enrollees drawn from the NLSY-79 and the NLSY-97. We find that student sorting has increased modestly between cohorts, and that student ability and college quality strongly improve degree completion and earnings. These patterns imply that, on average, students benefit from “overmatch” of the sort generated by affirmative action in admissions. We find little evidence of match effects on degree completion at eight years or on STEM degree completion, but suggestive evidence of some complementarity between student ability and college quality in degree completion at four years and long-term earnings. Such complementarity implies a tradeoff between equity and efficiency for policies that move lower ability students to higher quality colleges.
    Keywords: J31 ; I24 ; ddc:330 ; college mismatch ; college quality
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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    Unknown
    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2016-02-23
    Description: One argument for increasing female representation in management is the anticipation that female managers are particularly beneficial for female employees through, e.g., role modeling or mentoring. Contrary to the expected positive association, we find that female wages are negatively associated with working directly for a female as opposed to male manager using a representative sample of matched employee-employer data from Sweden. However, dividing the sample by managerial position, and controlling for important sorting of employees, the negative association is found only among lower-level managers and not among high-level managers. We discuss decision-making power as one possible explanation for this heterogeneity.
    Keywords: J16 ; J31 ; J53 ; J71 ; ddc:330 ; gender of manager ; female wages ; immediate manager
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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    Unknown
    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2016-02-23
    Description: We extract estimation results on the Mincer earnings function from four earlier studies and add new results from a recent dataset. We analyse differences related to differences in earnings concepts, in sampling frame and differences among studies that cannot be explained. Jointly, the studies show a clear U-shaped development in the rate of return to education from 1962 to 2012, with a bottom in the 1980’s. We explain this from Tinbergens’s race between suppy and demand (schooling and technology) and suggest this may be a widespread international pattern. Returns to potential experience show no marked time trend.
    Keywords: I26 ; J24 ; J31 ; ddc:330 ; returns to education ; Mincer earnings equation ; race supply and demand
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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    Unknown
    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2016-02-23
    Description: How important is mastering information and communication technologies (ICT) in modern labor markets? We present the first evidence on this question, drawing on unique data that provide internationally comparable information on ICT skills in 19 countries. Our identification strategy relies on the idea that Internet access is important in the formation of ICT skills, and we implement instrumental-variable models that leverage exogenous variation in Internet availability across countries and across German municipalities. ICT skills are substantially rewarded in the labor market: returns are at 8 percent for a one-standard-deviation increase in ICT skills in the international analysis and are almost twice as large in Germany. Placebo estimations show that exogenous Internet availability cannot explain numeracy or literacy skills, suggesting that our identifying variation is independent of a person’s general ability. Our results further suggest that the proliferation of computers complements workers in executing abstract tasks that require ICT skills.
    Keywords: J31 ; L96 ; K23 ; ddc:330 ; ICT skills ; broadband ; earnings ; international comparisons
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2016-06-07
    Description: In this paper we investigate the effect of Head Start on long term education and labor market outcomes using data from the NLSY79. The contributions to the existing literature on the effectiveness of Head Start are threefold: (1) we are the first to examine distributional effects of Head Start on long term outcomes (2) we do not rely on quasi-experimental variation in Head Start participation but instead perform a nonparametric bounds analysis that relies on weak stochastic dominance assumptions and (3) we consider education and labor market outcomes observed for individuals in their early 30s. The results show that Head Start has a statistically significant positive effect on years of education, in particular for women, blacks and Hispanics. For wage income we also find evidence that Head Start has beneficial impacts, with effects located at the lower end of the distribution.
    Keywords: H52 ; I21 ; J13 ; J24 ; J31 ; ddc:330 ; Head Start ; early intervention ; long term outcomes ; partial identification
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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    Unknown
    Munich: Center for Economic Studies and Ifo Institute (CESifo)
    Publication Date: 2016-08-20
    Description: Using an originally constructed dataset that follows 30,000 Italian individuals from high school to the labor market, we analyze whether the gender composition of peers in high school affected their choice of college major, their academic performance and their labor market income. We exploit the within-school, cohort-by-cohort variation in the gender composition of high school classmates (peers), after controlling for school and teachers fixed effects. We find that male students graduating from classes with a large majority of male peers were more likely to choose “prevalently male” (PM) college majors (Economics, Business and Engineering). However, this impact was partially undone during college through attrition, worse academic performance and change in major. And in the long run it did not produce any difference in income or labor market outcomes. We do not find significant effects of the high school class gender composition on women. Our results are consistent with the fact that individuals are affected by the choice/pressure of the network of friends and with the observation that network size responds to class gender composition more for men than for women.
    Keywords: I21 ; J16 ; J24 ; J31 ; Z13 ; ddc:330 ; peer effects ; high school ; gender ; networks ; choice of college major ; academic performance ; wages
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
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