rss_2.0IZA Journal of Labor Economics FeedSciendo RSS Feed for IZA Journal of Labor Economics Journal of Labor Economics Feed of co-worker wage gains<abstract><title style='display:none'>Abstract</title><p>We address the presence, magnitude, and composition of wage gains related to former co-workers and discuss the mechanisms that could explain their existence. Using Hungarian linked employer–employee administrative data and proxying actual co-workership with overlapping work histories, we show that the overall wage gain attributable to former co-workers consists of multiple elements: a contact-specific, an individual-specific, a firm-specific and a match-specific component. Former co-workers, besides the direct effect of their presence, may funnel individuals into high-paying firms, enhance the sorting of good quality workers into firms, and may contribute to the creation of better employer–employee matches. By introducing and applying a wage-decomposition technique, we demonstrate that there are non-negligible differences between linked and market hires in all empirically separable wage elements. By focusing on specific scenarios, we provide additional empirical evidence in favor of employee referral and information transmission as the main drivers of co-worker gains.</p></abstract>ARTICLEtrue extension without representation? Evidence from a natural experiment in collective bargaining<abstract><title style='display:none'>Abstract</title><p>In many countries, collective bargaining coverage is enhanced by government-issued extensions that widen the reach of collective agreements beyond their signatory parties to all firms and workers in the sector. This paper analyzes the causal impact of extensions using a natural experiment in Portugal that resulted in a sharp and unanticipated decline in the extension probability of agreements. Our results, based on a regression discontinuity design, indicate that extensions had a negative impact on employment growth. This effect is concentrated among nonaffiliated firms, which may reflect the limited representativeness of employer associations.</p></abstract>ARTICLEtrue helps the unemployed? Workers’ receipt of public and private transfers<abstract><title style='display:none'>Abstract</title><p>I use longitudinal data from the Panel Study of Income Dynamics (PSID) to measure the extent to which an unemployment spell increases the likelihood that a worker receives a cash transfer from family. I examine the prevalence of cash transfers from family, the demographic distribution of unemployed receivers, and the variation between family supported and not family supported spells. I further investigate how this informal, private assistance relates to public transfers from Unemployment Insurance using state-by-year variation in the UI program. I find that unemployment increases the probability a worker receives financial assistance from their family, inclusive of all demographic subgroups, that family cash transfer receipt is growing over time, and is weakly related to UI availability.</p></abstract>ARTICLEtrue wages in monopsonistic labor markets<abstract><title style='display:none'>Abstract</title><p>Over the last 30 years, researchers have disputed the mixed evidence of the effect of the minimum wage on teenage employment in the United States. Whenever the minimum wage has positive or no effects on employment, they appeal to monopsony models to explain their results. However, very few of these studies have empirically tested whether their results are due to monopsonistic characteristics in the labor markets. In this article, I estimate the effects of the minimum wage for the United States under concentrated labor markets and low-mobility jobs (two variables that measure monopsony), identify heterogeneous effects among different scenarios derived from the monopsony model, and provide a plausible explanation of the mixed results about the minimum wage effects in the literature. My main findings indicate that minimum wages have an elasticity to teenage employment of −0.418 under perfect competition, which is, as expected, much higher than the usual results in the literature. If the monopsony variable is one standard deviation higher than the baseline, it implies a positive change in elasticity of 0.05. The minimum wage has a positive insignificant effect between 0.04 and 0.29 under full monopsonistic labor markets. The results are consistent among different specifications and in controlling for possible external shocks and omitted variables.</p></abstract>ARTICLEtrue Earning Losses of Smokers<abstract><title style='display:none'>Abstract</title><p>Using within-family variation from twins and siblings, I find that smokers earn approximately 16% less than nonsmokers. Possible explanations for this earning difference are addiction-related productivity declines and earning reductions from higher health insurance costs. To investigate further, I use variation in the provision of employer-supplied health insurance (ESHI) to examine the mechanism of whether the addiction or insurance component has a larger influence on earnings. While I generally observe a larger earning penalty for smokers with ESHI than smokers without ESHI, the earning difference is statistically indistinguishable from zero.</p></abstract>ARTICLEtrue protection legislation, labor courts, and effective firing costs<abstract><title style='display:none'>Abstract</title><p>In many countries, labor courts play a central role in the determination of firing costs by monitoring and supervising the procedures for dismissals, and, eventually, deciding severance payments mandated by the employment protection legislation (EPL). To get some insights about the impact of labor courts on effective firing costs, we explore a new database that contains information on labor courts’ intervention in firings before and after the implementation of significant EPL reforms modifying severance payments and procedures for dismissals. Our results suggest that labor court rulings on economic dismissals did not fully translate the reduction of firing costs mandated by the new EPL to effective firing costs.</p></abstract>ARTICLEtrue drifting apart: Heterogeneous outcomes of decentralizing public education<abstract><title style='display:none'>Abstract</title><p>Looking at the decentralized provision of public education in a middle-income country, this paper estimates the impact of local autonomy on service quality, finding large heterogeneity in the effect across different levels of local development. In the year 2002, Colombian municipalities were entrusted with autonomous management of their local public education based solely on a population threshold. I estimate the impact that autonomy has had on education performance across the territory, using a municipality and time fixed-effects model. I find a quality gap arising between highly developed and low-developed autonomous municipalities, in a trend that reinforces over time: the reform has induced regional inequality in education quality. I am able to support the hypothesis that autonomous and nonautonomous municipalities were on similar performance trends before decentralization was implemented, even when looking within different local development ranges. Based on the analysis of detailed municipal balance sheet data and administration indicators, I argue that local administration capacity represents the most likely explanation of why the autonomy-related discrepancies have been arising.</p></abstract>ARTICLEtrue preferences in choice of major<abstract><title style='display:none'>Abstract</title><p>The primary objective of this study is to examine the contribution of available information constrained by parents’ fields of study to the observed assortative preferences in their children’s choice of major. Comparable to panel models, we define within-family transmission functions with 1-to-2 matches (1 for each parent). Using the confidential major file of the 2011 National Household Survey from Canada, the results show that children’s choice of field of study exhibits significant assortative preferences isolated from ability sorting and unobserved differences across majors and other family characteristics. With some caution, we attribute this persisting assortative tendency to the information asymmetry across alternative majors built on by parents’ educational backgrounds within families.</p></abstract>ARTICLEtrue Cash Transfer Programs Can Both Stimulate and Slow Down Job Finding<abstract><title style='display:none'>Abstract</title><p>This article analyzes the behavioral effects of cash transfer programs when jobless people need to have access to a minimum consumption level. Our model reconciles recent evidence about negligible or favorable effects of cash transfers on job-finding rates and the more standard view of negative effects. When unemployment compensation, if any, is low enough, we argue that cash transfer programs can raise the hiring probability. Our framework is flexible enough to generate the standard conclusion as well. Looking specifically at unemployment compensation, its optimal level is generally higher than when a lower bound on consumption is ignored.</p></abstract>ARTICLEtrue vs Scraped Data: Comparing Time Series Properties of Web and Survey Vacancy Data<abstract><title style='display:none'>Abstract</title><p>This paper studies the relationship between a vacancy population obtained from web crawling and vacancies in the economy inferred by a National Statistics Office (NSO) using a traditional method. We compare the time series properties of samples obtained between 2007 and 2014 by Statistics Netherlands and by a web scraping company. We find that the web and NSO vacancy data present similar time series properties, suggesting that both time series are generated by the same underlying phenomenon: the real number of new vacancies in the economy. We conclude that, in our case study, web-sourced data are able to capture aggregate economic activity in the labor market.</p></abstract>ARTICLEtrue with an Unemployed Adult Child: Consumption, Income, and Savings Effects<abstract><title style='display:none'>Abstract</title><p>The risk of labor market, health, and asset-value shocks comprise profound retirement savings challenges for older workers. Parents, however, may experience added risk if their children experience adverse labor market shocks. Prior research has shown that parents support their children financially through an unemployment spell. In this paper, we also provide evidence of financial support from parents and investigate if this financial support is accompanied by adjustments to parental consumption, income, or savings behavior. With longitudinal data on mothers and children from the Panel Study of Income Dynamics, we use within-mother variation in behavior to identify the effect of a child’s labor market shock on parent outcomes. We find evidence of a decline in consumption, an increase in labor supply, and a decrease retirement savings, though the results are heterogenous among mothers. Our results point to aggregate inefficiencies and inequities that may result from family risk sharing.</p></abstract>ARTICLEtrue and the Role of Firm Composition Effects on Aggregate Wage Dynamics<abstract><title style='display:none'>Abstract</title><p>Aggregate wages display little cyclicality compared to what a standard model would predict. Wage rigidities are an obvious candidate, but the existing literature has emphasized the need to take into account the growing importance of worker composition effects, especially during downturns. This paper seeks to understand the role of firm heterogeneity for aggregate wage dynamics with reference to the Italian case. Using a newly available dataset based on social security records covering the universe of Italian employers between 1990 and 2015, we document that firm composition effects increasingly matter in explaining aggregate wage growth and largely reflect shifts of labor from low-paying to high-paying firms, especially in the most recent years. We find that changes in reallocation of workers across firms accounted for approximately one-fourth of aggregate wage growth during the crisis.</p></abstract>ARTICLEtrue the Irish Border to Estimate Minimum Wage Impacts in Northern Ireland<abstract><title style='display:none'>Abstract</title><p>This paper examines the impacts of the introduction of the UK National Minimum Wage (NMW) in 1999 and the introduction of the UK National Living Wage (NLW) in 2016 in Northern Ireland (NI) on employment and hours. NI is the only part of the UK with a land border where the NMW and NLW cover those working on one side of the border but not those working on the other side of the border (i.e., Republic of Ireland). This discontinuity in minimum wage coverage enables a research design that estimates the impacts of the NMW and NLW on employment and hours worked using difference-in-differences estimation. We find a small decrease in the employment rate of 22–59/64-year-olds in NI, of up to 2% points, in the year following the introduction of the NMW, but no impact on hours worked. We find no clear evidence that the introduction of the NLW impacted either employment or hours worked in NI.</p></abstract>ARTICLEtrue of work requirements for food assistance eligibility on disability claiming<abstract> <title style='display:none'>Abstract</title> <p>Between 2010 and 2017, 42 U.S. states added work requirements as a food assistance eligibility criterion for Able-Bodied Adults Without Dependents (ABAWDs). Another U.S. public assistance program, Supplemental Security Income (SSI), provides food assistance without a work requirement, along with cash transfers and health insurance. Therefore, individuals for whom working is difficult may be induced to opt out of the labor force and into SSI in order to maintain access to food assistance. This study is the first to examine whether work requirements associated with food assistance eligibility lead to an increase in SSI applications and receipts. Based on difference-in-differences and event study analyses of comprehensive administrative claims data from the Social Security Administration and survey data from the Current Population Survey, this study finds evidence of lagged effects on SSI applications overall, and reduced Supplementary Nutritional Assistance Program (SNAP) receipts followed by a delayed smaller increase in SSI receipts among individuals with self-reported disabilities. While most SSI applications induced by SNAP-related work requirements appear to be unsuccessful, a small, vulnerable population may move out of the workforce and into SSI in response to the implementation of work requirements.</p> </abstract>ARTICLEtrue impact of COVID-19 on the gender division of housework and childcare: Evidence from two waves of the pandemic in Italy<abstract> <title style='display:none'>Abstract</title> <p>The COVID-19 pandemic has had a dramatic impact on families’ lives because of the increased demands of housework and childcare. Much of the additional burden has been shouldered by women. Yet, the rise in remote working also has the potential to increase paternal involvement in family life and thus to reduce gender role inequalities. This effect depends on the working arrangements of each partner, whether working remotely, at their usual workplace, or ceasing work altogether. Using two waves of an ad-hoc survey conducted in April and November 2020, we show that the time spent by women in domestic activities did not depend on their partners’ working arrangements. Conversely, men spent fewer hours helping with housework and home schooling when their partners were at home. Although men who worked remotely or did not work at all devoted more time to household activities during the second wave of COVID-19, the increased time they spent at home did not seem to lead to a reallocation of couples’ time.</p> </abstract>ARTICLEtrue gender wage gap: evidence from South Korea<abstract> <title style='display:none'>Abstract</title> <p>Using microdata between 1998 and 2020, this study provides potential explanations for the gender wage gap in South Korea, which continues to be the largest among Organisation for Economic Co-operation and Development (OECD) countries. Although improvement in females’ relative measured labor market characteristics plays an important role in the reduction of the gender wage gap, these characteristics cannot explain a large part of the gap, and wage convergence between full-time male and female workers has slowed over the period. Indeed, the unexplained gender wage gap has become larger than the explained gender wage gap. This is confirmed when a decomposition of the gender wage gap is performed across the wage distribution. This study provides evidence of the existence of a glass ceiling. In addition, this study shows that, in South Korea, where conservative gender-related norms still persist, the effects of marriage and childbirth can help to account for a dramatic increase in the gender wage gap for female workers in their 30s and 40s.</p> </abstract>ARTICLEtrue traditional academic degrees: The labor market returns to occupational credentials in the United States<abstract> <title style='display:none'>Abstract</title> <p>Occupational credentials provide an additional—and, at times, alternative—path other than traditional academic degrees for individuals to increase productivity and demonstrate their abilities and qualifications to employers. In the United States, these credentials typically take the form of licenses and certifications. Although a critical part of the workforce landscape, the literature on the returns to credentials is inadequate, with prior research typically relying on Ordinary Least Squares (OLS) regressions which do not sufficiently control for selection. Using questions that identify credential receipt from the 2015 and 2016 United States’ Current Population Surveys, we construct an instrumental variable of local peer influence using the within-labor market credential rate of individuals sharing the same sociodemographic characteristics, while controlling for the same group's average wages and a suite of demographic and geographic controls. We use this instrument in a marginal treatment effects estimator, which allows for estimation of the average treatment effect and determines the direction of selection, and we estimate the effects of credentials on labor market outcomes. We find large, meaningful returns in the form of increased probability of individual employment, an effect which is concentrated primarily among women. The effect of having a credential on log wages is higher for those in the sub-baccalaureate labor market, suggesting the potential role of occupational credentials as an alternative path to marketable human capital and a signal of skills in the absence of a bachelor's degree.</p> </abstract>ARTICLEtrue at university and the social influence of peers<abstract> <title style='display:none'>Abstract</title> <p>This article studies peer effects on the decision to enroll at university. To determine the social influence of peers, we use a measure encompassing the two major dimensions of social influence in the classroom: the ability and capacity of peers to exchange information about study options. This paper uses French administrative data on the universe of first year applicants to a single university over seven consecutive cohorts. We exploit idiosyncratic variations in the proportion of peers advised to change their educational choice. We find that our variable of interest has a small but negative and significant effect on the individual decision to attend university and observe stronger peer effects among groups of students of similar gender or socio-economic background. We also find a weaker impact of the proportion of peers advised to change their educational choice on the individuals of higher level of academic ability.</p> </abstract>ARTICLEtrue effects of recreational cannabis access on labor markets: evidence from Colorado<abstract> <title style='display:none'>Abstract</title> <p>Recreational cannabis markets possibly increase labor demand through investments in facilities for growing, processing, and retail sales of cannabis, as well as through other industries such as manufacturing, leisure, and hospitality. However, this increase in labor demand may vary substantially across counties within a state as most states with legal recreational cannabis allow individual counties to ban commercial cannabis sales. Meanwhile, labor supply may change through positive and negative effects from cannabis use. Using county-level Colorado data from 2011 to 2018 and exploiting variation across counties in the existence and timing of the start of dispensary sales, we test for changes in the unemployment rate, employment, and wages, overall and by industry subsector. Consistent with an increase in labor demand, we estimate that the sale of recreational cannabis through dispensaries is associated with a 0.7 percentage point decrease in the unemployment rate with no effect on the size of the labor force. We also find a 4.5% increase in the number of employees, with the strongest effects found in manufacturing. We find no effect on wages. Given the lack of a reduction in labor force participation or wages, negative effects on labor supply are likely limited, in line with the existing literature. The decrease in unemployment, coupled with an increase in the number of employees, indicates that labor demand effects likely dominate effects on labor supply. Our results suggest that policymakers considering recreational access to cannabis should anticipate a possible increase in employment.</p> </abstract>ARTICLEtrue unequal impact of raising the retirement age: Employment response and program substitution<abstract> <title style='display:none'>Abstract</title> <p>Using high-frequency Italian administrative data, the author studies the heterogeneous effects of a reform raising the normal retirement age (NRA) from 60 years to 65 years for private-sector male employees. The analysis, based on a difference-in-differences (DD) method, shows that the NRA raise reduces pension benefit claims but does not lead to a one-to-one increase in the employment rate since workers also apply for more disability and unemployment benefits. Moreover, most of them simply retire without any benefit. The extent of the effects varies substantially across socio-economic groups, as individuals with poorer health, with lower occupational grades and lower pay levels are the most constrained by the reform, experiencing the highest delay in pension claims, increase in employment, and inactivity. All in all, this paper shows that raising the NRA could have unintended effects as it affects more negatively the most vulnerable in the labor market.</p> </abstract>ARTICLEtrue