Search

This paper studies the effect of public child care on mothers’ career trajectories. To this end, we combine county-level data on child care coverage with detailed individual-level information from the German social security records and exploit a set of German reforms leading to a substantial temporal and spatial variation in child care coverage for children under the age of three. We conduct an event study approach that investigates the labor market outcomes of mothers in the years around the birth of their first child. We thereby explore career trajectories, both in terms of quantity and quality of employment. We find that public child care improves maternal labor supply in the years immediately following childbirth. However, the results on quality-related outcomes suggest that the effect of child care provision does not reach far beyond pure employment effects. These results do not change for mothers with different ‘career costs of children’., CEPA Discussion Papers; 64

We consider a matching model of employment with wages that are flexible for new hires, but sticky within matches. We depart from standard treatments of sticky wages by allowing worker effort to respond to the wage being too high or low, rendering the effective wage (wage divided by output) more flexible. Shimer (2004), Pissarides (2009), and others have illustrated that employment in the Mortensen-Pissarides model does not depend on the degree of wage flexibility in existing matches. But this is not true in our model. If wages of matched workers are stuck too high in a recession, then firms will require they provide more effort. In turn, this lowers the value of additional labor, reducing new hiring.

This paper quantifies the roles of increases in the demand for skill-intensive output, the efficient scale of service production, and female labor supply in the growth of services. We extend the Buera and Kaboski (2012a,b) model to a two-person household, incorporating a joint decision on home and market production, and allow for skill and sectoral biased technology progress. The rising scale of services, the rising demand for skill-intensive output, and skill-biased technical change all play dominant roles. Furthermore, the extended model explains the majority of the increase in female labor supply, which also plays a role in services growth.

In this paper I investigate the nature of optimization frictions by studying the labor market of Danish students. This particular labor market is an interesting case study as it features a range of special institutional settings that affect students’ incentive to earn income and comparing outcomes across these setting effectively allow you to distinguish between different types of frictions. I find that the considered labor market is significantly affected by optimizations frictions, which masks the bunching at kink points normally associated with a positive labor supply elasticity under standard theory. More concretely I find the dominate optimization friction to be individuals’ inattention about their earnings during the year, while real adjustment cost and gradual learning appears to be of less importance.

En el presente trabajo evaluamos el impacto de la extensión del régimen de asignaciones familiares argentino a monotributistas (pequeños trabajadores independientes formales) en 2016 sobre algunos indicadores vinculados al mercado laboral. Utilizando la metodología de diferencia en diferencias, encontramos que la reforma produjo un incremento estadísticamente significativo de 1,5 puntos porcentuales (pp.) en la participación laboral de los individuos con hijos que se traduce en un incremento de magnitud análoga en la probabilidad de ocupación. Este efecto asciende a 2,7 pp. entre las mujeres y no resulta significativo entre los hombres. No encontramos evidencia robusta de impacto sobre el promedio de horas trabajadas de los individuos elegibles., Facultad de Ciencias Económicas

In this paper, we use a 1998 reform in the federal funding of local home-based care for the elderly in Norway to examine the eff ects of formal care expansion on the labor supply decisions and mobility of middle-aged children. Our main finding is a consistent and signi cant negative impact of formal care expansion on work absences longer than 2 weeks for the adult daughters of single elderly parents. This eff ect is particularly strong for daughters with no siblings, and this group is also more likely to exceed earnings thresholds after the reform. We find no impacts of the reform on daughter's mobility or parental health, and no e ffects on adult sons. Our results provide evidence of substitution between formal home-based care and informal care for the group that is most likely to respond to the parent's need for care - adult daughters with no siblings to share the burden of parental care. These results also highlight the importance of labor market institutions that provide flexibility in enabling women to balance home and work responsibilities.

The paper studies factors that contribute to student's work study decision while attending postsecondary institutions using SLID and YITS data. It further tests that how the work decision can affect their future employment outcomes.

To understand which firms take-up short-time work and which workers they enroll in this program, we provide a model which shows that short-time work may save jobs in firms hit by strong negative revenue shocks, but not in less severely-hit firms, where hours worked are reduced, without saving jobs. Using detailed data on the administration of the program covering the universe of French establishments in the 2008-2009 Great Recession, we find that short-time work did indeed save jobs and increase hours of work in firms faced with large negative shocks. These firms have been able to recover rapidly in the aftermath of the Recession thanks to short-time work. We also provide evidence of large windfall effects which significantly increased the cost of the policy per job saved; yet we also find that short-time work remains more cost-efficient at saving jobs than wage subsidies.

We develop a theory that focuses on the general equilibrium and long-run macroeconomic consequences of trends in job utility. Given secular increases in job utility, work hours per capita can remain approximately constant over time even if the income effect of higher wages on labor supply exceeds the substitution effect. In addition, secular improvements in job utility can be substantial relative to welfare gains from ordinary technological progress. These two implications are connected by an equation flowing from optimal hours choices: improvements in job utility that have a significant effect on labor supply tend to have large welfare effects.

The added worker effect states that unemployment of a household member leads to an increase in labour supply of another household member. This paper investigates whether there is such an effect in a developing country. We use a rich data set for urban Ethiopia. We first give a brief description of who is unemployed within the household and find that they are mostly related to the household head. Men are not more likely to be unemployed than women once we control for being family in law. The eldest remaining sons in the household are more likely to be unemployed, but this may be due to a selection bias. The oldest remaining unemployed have no higher job aspirations than their younger brothers, suggesting that if older brothers have more entitlements, waiting in unemployment for a good job is not one of them. We carry out two separate analyses to investigate the added worker effect. First we analyse the effect using actual labour supply and find no evidence for an added worker effect once we take unobserved individual effects into account. We then investigate whether there is an added worker effect using desired labour market participation and find that there is none. The combined evidence indicates that there is no added worker effect. This suggests that households have other ways to cope with unemployment and is consistent with results from previous analysis which shows that the use of savings (by selling assets) and consumption smoothing are important mechanisms to cope with unemployment.

Rank-order relative-performance evaluation, in which pay, promotion, symbolic awards, and educational achievement depend on the rank of individuals in the distribution of performance, is ubiquitous. Whenever organizations use rank-order relative-performance evaluation, people receive feedback about their rank. Using a real-effort experiment, we aim to discover whether people respond to the specific rank that they achieve. In particular, we leverage random variation in the allocation of rank among subjects who exerted the same effort to obtain a causal estimate of the rank response function that describes how effort provision responds to the content of rank-order feedback. We find that the rank response function is U-shaped. Subjects exhibit “first-place loving” and “last-place loathing”: that is, subjects work hardest after being ranked first or last. We discuss implications of our findings for the optimal design of performance feedback policies, workplace organizational structures, and incentives schemes. Data and the supplementary web appendix are available at https://doi.org/10.1287/mnsc.2017.2907 . This paper was accepted by Uri Gneezy, behavioral economics.

Part-time work has been a major area of employment growth for women in the UK over recent decades. Almost half the women in employment now work part-time and two-thirds have worked part-time for some part of their working lives. Part-time employment is welcomed by many women as a means of maintaining labour market participation particularly during the childcare years. However many part-time jobs are low paid and offer little opportunity for career advancement. This leads to conflicting views of the role of part-time work: allowing a full-time career to be maintained or as a dead-end trap for women’s careers. This paper examines this issue using cohort data which follows women’s labour market involvement up to age 42. The pathways followed through full-time employment, part-time employment and non-employment are found to be complex and highly varied. Using several estimation methods (pooled multinomial logits, dynamic random effects binary choice logits and selection-corrected random effects probits) on a 20-year panel we examine the relative roles of heterogeneity in characteristics and state dependence in explaining the choice of labour market state. Our major finding is that a woman’s labour market history reveals itself as the major determinant of subsequent labour market state, dominating the role of characteristics. Part-time work serves two different functions. Women whose past history involves full-time work even in conjunction with spells of part-time work or non-employment, revert to full-time work. Women whose labour market history combines spells in part-time work with non-employment are unlikely subsequently to take up full-time work.

Population aging and the burden it imposes on state finances is one of the major economic challenges governments around the world face. Responses are formulated in terms of either increasing employment (for example by raising the retirement age) or increasing productivity (investment in education). This paper brings together these two responses in a unified framework and shows how the individual’s education and retirement decisions are affected by population aging – caused either by a fall in the population growth rate, or an increase in life expectancy - and the budget balancing mechanism of the public pension systems. We discuss how a budget balancing mechanism can be informed by fairness considerations and we show that early retirement can be the result of the application of Musgrave’s rule in response to a fall in fertility.

The UK's Equal Opportunities Commission has recently drawn attention to the 'hidden brain drain' when women working part-time are employed in jobs below their level of educational attainment and/or previous experience. These inferences were based on self-reporting. We give an objective and quantitative analysis of the nature of occupational change as women make the transition between full-time and part-time work. In order to analyse down-grading we construct an occupational classification which supports a ranking of occupations by the average level of qualification of those employed there on a full-time basis. We note that the incidence (and by implication the availability) of part-time work differs across occupations, and that occupational concentration is more acute for part-time work. Using a large sample of panel observations over the period 1991-2001 we show that women moving from full-to part-time work are approximately twice as likely to move down as up the occupational ladder, while those moving from part-time back to full-time work are twice as likely to be moving up than down the ranking. These effects are particularly marked when a change of employer is involved. Not all women are equally at risk of downgrading. It is particularly likely among women in management positions; over one-third of women in managerial or high-skilled clerical/administrative jobs downgrade when they move into part-time employment. But women in some occupations with higher specific skill requirements and where employees may have a stronger sense of vocation, notably teaching and nursing, are much less likely to experience downgrading. Nonetheless, 20% of teachers and nurses who change employer and switch into part-time work move downwards. These findings indicate a loss of economic efficiency through the underutilisation of the skills of many of the women who work part-time.

This paper assesses whether the results of child achievement tests affect maternal employment and the child-care choices of mothers with prekindergarten children. To test this hypothesis, it first incorporates into Bernal and Keane’s (2010) model the mother’s imperfect knowledge of the child’s cognitive ability endowment and possible mechanisms through which the mother may learn the child’s endowment. Then it uses a quasi-structural approach to form approximations to the mother’s employment and child-care decision rules and jointly estimate them with the child cognitive development production function and wage equation. Using a sample of single mothers from the NLSY79, it finds evidence that maternal employment and child-care decisions are sensitive to past achievement scores. In particular, a mother whose child has taken the Peabody Picture Vocabulary Test before entering kindergarten and whose child’s standardized test score is above a certain threshold intends to use child care more and work more part-time hours immediately after observing the child’s performance on the achievement test.

Using longitudinal data for the period 1968-2005 for a sample of male household heads, we determine the prevalence of disability during the working years and examine how the extent of disability affects a range of outcomes, including earnings, income, and consumption. We have seven main findings. First, disability rates are high. We divide the disabled along two dimensions based on the persistence and severity of their work-limiting condition. We estimate that a person reaching age 56 has a 53 percent chance of having been disabled at least once during his working years, and a 19 percent chance that he has begun a chronic and severe disability. Second, the economic consequences of disability are frequently profound. Ten years after disability onset, a person with a chronic and severe disability on average experiences a 68 percent decline in earnings, a 32 percent decline in after-tax income, a 22 percent decline in food and housing consumption and a 21 percent decline in food consumption. Third, the various economic consequences differ sharply across disability groups. The outcome declines for those with a chronic and severe disability are often more than twice as large as those for the average disabled. Fourth, our findings show the partial and incomplete roles that individual savings, family support and social insurance play in reducing the consumption drop that follows disability. Only about half of this most disabled group reports receiving Social Security Disability Insurance or Supplemental Security Income. Fifth, we find a noticeable fall in earnings and income prior to the onset of a reported disability. Consumption also falls somewhat, suggesting that future disability is partially but incompletely predictable in the short run. Sixth, time use and detailed consumption data further indicate that disability is associated with a decline in well- being. Seventh, the quantities we have estimated, combined with elasticities from the literature, allow us to examine the optimality of current compensation for the disabled. We find that the current compensation for our most disabled group appears to be lower than is optimal.

Most structural models for labour supply ignore the possibility of involuntary unemployment which may lead to biased behavioural responses. This may have important policy implications. We estimate a structural model for labour supply without and with involuntary unemployment for the Netherlands, using data for the period 2006-2009. We estimate both models for four groups separately: singles without children, single parents, couples without children and couples with children. We use information on job search behaviour to estimate the determinants of involuntary unemployment. We find that average labour supply elasticities are only slightly lower in the model with involuntary unemployment than in the model without involuntary unemploy- ment. The main reason for this small bias is the relatively small share of individuals who are involuntary unemployed in the period 2006-2009. A simulation of tax-benefit reforms confirms that the upward bias in average labour supply responses is limited in the model without involuntary unemployment. Only for subgroups with a high risk of being involuntary unemployed, such as lower educated individuals and immigrants, we find a relatively large upward bias in labour supply elasticities in the model without involuntary unemployment.

This paper develops a unified model of dual and unitary job holding based on a Stone-Geary utility function. The model incorporates both constrained and unconstrained labor supply. Panel data methods are adapted to accommodate unobserved heterogeneity and multinomial selection into six mutually exclusive labor supply regimes. We estimate the wage and income elasticities arising from selection and unobserved heterogeneity as well as from the Stone-Geary Slutsky equations. The labor supply model is estimated with data from the British Household Panel Survey 1991–2008. Among dual job holders, our study finds that the Stone-Geary income and wage elasticities are much larger for labor supply to the second job compared with the main job. When the effects of selection and unobserved heterogeneity are taken account of, the magnitudes of these elasticities on the second job tend to be significantly reduced.

It has been long recognized that cash plays a critical role in fueling street crime due to its liquidity and transactional anonymity. In poor neighborhoods where street offenses are concentrated, a significant source of circulating cash stems from public assistance or welfare payments. In the 1990s, the Federal government mandated individual states to convert the delivery of their welfare benefits from paper checks to an Electronic Benefit Transfer (EBT) system, whereby recipients received and expended their funds through debit cards. In this paper, we examine whether the reduction in the circulation of cash on the streets associated with EBT implementation had an effect on crime. To address this question, we exploit the variation in the timing of the EBT implementation across Missouri counties. Our results indicate that the EBT program had a negative and significant effect on the overall crime rate as well as burglary, assault, and larceny. According to our point estimates, the overall crime rate decreased by 9.8 percent in response to the EBT program. We also find a negative effect on arrests, especially those associated with non-drug offenses. EBT implementation had no effect on rape, a crime that is unlikely to be motivated by the acquisition of cash. Interestingly, the significant drop in crime in the United States over several decades has coincided with a period of steady decline in the proportion of financial transactions involving cash. In that sense, our findings serve as a fresh contribution to the important debate surrounding the factors underpinning the great American crime decline.

Paid parental leave schemes have been shown to increase women’s employment rates but de-crease their wages in case of extended leave durations. In view of these potential trade-offs, many countries are discussing the optimal design of parental leave policies. We analyze the impact of a major parental leave reform on mothers’ long-term earnings. The 2007 German parental leave re-form replaced a means-tested benefit with a more generous earnings-related benefit that is grant-ed for a shorter period of time. Additionally, a “daddy quota” of two months was introduced. To identify the causal effect of this policy on long-run earnings of mothers, we use a difference-in-difference approach that compares labor market outcomes of mothers who gave birth just before and right after the reform and nets out seasonal effects by including the year before. Using admin-istrative social security data, we confirm previous findings and show that the average duration of employment interruptions increased for high-income mothers. Nevertheless, we find a positive long-run effect on earnings for mothers in this group. This effect cannot be explained by changes in working hours, observed characteristics, changes in employer stability or fertility patterns. De-scriptive evidence suggests that the stronger involvement of fathers, incentivized by the “daddy months”, could have facilitated mothers’ re-entry into the labor market and thereby increased earnings. For mothers with low prior-to-birth earnings, however, we do not find any beneficial labor market effects of this parental leave reform., CEPA Discussion Papers, 16

The time household members in industrialized countries spend on housework and shopping is substantial, amounting on average to about half as much time as is spent on paid employment. Women bear the brunt of this burden, a difference that is driven in part by the gender differential in wages. Efforts to reduce the gender wage gap and alter gendered norms of behavior should reduce the gender bias in household production time and reduce inefficiency in home production. Policymakers should also note the impact of tax policy on housework time and consider ways to reduce the distortions caused by sales and income taxes.

We use a micro-macro simulation model to evaluate the effects of labor income tax policies in South Africa. The country is characterized by a high unemployment rate while employment in the informal sector is relatively low. Our approach is based on the aggregation of the preferences of individuals who choose among (i) working in the formal sector,(ii) working in the informal sector, and (iii) not working. We quantify the effects of different tax policies on the individual's labor supply choices (formal/informal employment, work/leisure) and at the macro level (GDP, equilibrium wages, size of the informal sector, and unemployment rate). We further analyze the effects in terms of income distribution, poverty and inequality. We find that the introduction of a negative income tax system reduces inequality and poverty but, at the same time, discourages people from participating in the labor market and working in the formal sector and, consequently worsens the equitye efficiency trade-off. We find however that the equity-efficiency trade-off can be improved by introducing (i) a (revenue-neutral) tax system which combines a sufficiently high at rate (25%) and lump-sum transfer paid only to formal workers; (ii) an expansionary policy (a reduction in total taxes or an increase in public expenditures). Interestingly, even though they increase the informal sector, these reforms reduce inequality and poverty through a reduction in the level of unemployment.

As the policy debate on entrepreneurship increasingly centers on firm growth in terms of job creation, it is important to better understand which variables influence the first hiring decision and which ones influence the subsequent survival as an employer. Using the German Socio-economic Panel (SOEP), we analyze what role individual characteristics of entrepreneurs play in sustainable job creation. While human and social capital variables positively influence the hiring decision and the survival as an employer in the same direction, we show that none of the personality traits affect the two outcomes in the same way. Some traits are only relevant for survival as an employer but do not influence the hiring decision, other traits even unfold a revolving door effect, in the sense that employers tend to fail due to the same characteristics that positively influenced their hiring decision., CEPA Discussion Papers, 13

This paper aims to explain why the division of domestic labor within couples differs according to their marital status. We analyze the evolution of the gender division of labor in France using time-use surveys (1985, 1999 and 2009). In 1985 and in 1998, married women were performing a larger share of domestic labor than cohabiting women. In 1985 this gap is explained by differences in the observed characteristics of married and cohabiting couples, whereas by the late 1990s cohabiting couples were opting for an organization that was less unequal than that of married couples, all else being equal. In 2009, the average share of domestic labor performed by women was about the same whether they were cohabiting or married (72% and 73.5%), but it was significantly lower for women in civil union, which was introduced in 1999 (65.1%). The self-selection process of couples regarding their gender ideology might explain this result: the civil partnership attracts more egalitarian couples.

Expanding public or publicly subsidized childcare has been a top social policy priority in many industrialized countries. It is supposed to increase fertility, promote children’s development and enhance mothers’ labor market attachment. In this paper, we analyze the causal effect of one of the largest expansions of subsidized childcare for children up to three years among industrialized countries on the employment of mothers in Germany. Identification is based on spatial and temporal variation in the expansion of publicly subsidized childcare triggered by two comprehensive childcare policy reforms. The empirical analysis is based on the German Microcensus that is matched to county level data on childcare availability. Based on our preferred specification which includes time and county fixed effects we find that an increase in childcare slots by one percentage point increases mothers’ labor market participation rate by 0.2 percentage points. The overall increase in employment is explained by the rise in part-time employment with relatively long hours (20-35 hours per week). We do not find a change in full-time employment or lower part-time employment that is causally related to the childcare expansion. The effect is almost entirely driven by mothers with medium-level qualifications. Mothers with low education levels do not profit from this reform calling for a stronger policy focus on particularly disadvantaged groups in coming years.

The paper extends a static discrete-choice labor supply model by adding participation and hours constraints. We identify restrictions by survey information on the eligibility and search activities of individuals as well as actual and desired hours. This provides for a more robust identification of preferences and constraints. Both, preferences and restrictions are allowed to vary by and are related through observed and unobserved characteristics. We distinguish various restrictions mechanisms: labor demand rationing, working hours norms varying across occupations, and insufficient public childcare on the supply side of the market. The effect of these mechanisms is simulated by relaxing different constraints at a time. We apply the empirical frame- work to evaluate an in-work benefit for low-paid parents in the German institutional context. The benefit is supposed to increase work incentives for secondary earners. Based on the structural model we are able to disentangle behavioral reactions into the pure incentive effect and the limiting impact of constraints at the intensive and extensive margin. We find that the in-work benefit for parents substantially increases working hours of mothers of young children, especially when they have a low education. Simulating the effects of restrictions shows their substantial impact on employment of mothers with young children.

In 2015, Germany introduced a statutory hourly minimum wage that was not only universally binding but also set at a relatively high level. We discuss the short-run effects of this new minimum wage on a wide set of socio-economic outcomes, such as employment and working hours, earnings and wage inequality, dependent and self-employment, as well as reservation wages and satisfaction. We also discuss difficulties in the implementation of the minimum wage and the measurement of its effects related to non-compliance and suitability of data sources. Two years after the minimum wage introduction, the following conclusions can be drawn: while hourly wages increased for low-wage earners, some small negative employment effects are also identifiable. The effects on aspired goals, such as poverty and inequality reduction, have not materialized in the short run. Instead, a tendency to reduce working hours is found, which alleviates the desired positive impact on monthly income. Additionally, the level of non-compliance was substantial in the short run, thus drawing attention to problems when implementing such a wide-reaching policy.

In this paper, we exploit plausibly exogenous changes in exchange rates across home countries over time and panel data to identify the causal impact of exchange rate fluctuations on Australian immigrants' labour market outcomes. We present new and robust evidence that, unlike immigrants in the US, those in Australia as a whole do not reduce their yearly labour market outcomes when the local currency appreciates. While female immigrants don't adjust their labour activities, male immigrants reduce their weekly labour supply and hence earn less when the Australian dollar appreciates. This work also highlights the importance of controlling for individual heterogeneity as well as gender when modelling the labour market behaviour of immigrants.

A widespread finding among studies from the US and the UK is that maternal employment is correlated with an increased risk of child overweight, even in a causal manner, whereas studies from other countries obtain less conclusive results. As evidence for Germany is still scarce, the purpose of this study is to identify the effect of maternal employment on childhood overweight in Germany using two sets of representative micro data. We further explore potential underlying mechanisms that might explain this relationship. In order to address the selection into maternal full-time employment, we use an instrumental variable strategy exploiting the number of younger siblings in the household as an instrument. While the OLS models suggest that maternal full-time employment is related to a 5 percentage point higher probability of the child to be overweight, IV estimates indicate a 25 percentage points higher overweight probability due to maternal full-time employment. Exploring various possible pathways, we find that maternal full-time employment promotes unhealthy dietary and activity behavior which might explain the positive effect of maternal employment on child overweight to some extent. Although there are limitations to our IV approach, several sensitivity analyses confirm the robustness of our findings.

We investigate the consequences of experiencing an acute health shock, namely the first onset of myocardial infarction, stroke or cancer, on the labour supply of older workers in Europe. Despite its policy relevance to social security sustainability, the question has not yet been empirically addressed in the European context. We combine data from the English Longitudinal Study of Ageing and the Survey of Health, Ageing and Retirement in Europe and cover sixteen European countries, representative of different institutional settings, in the years spanning from 2002 to 2013. The empirical strategy builds on the availability of an extremely rich set of health and labour market information as well as of panel data. To remove the potential confounding bias, a selection on observables strategy is adopted, while the longitudinal dimension of data allows controlling for time invariant unobservables. Implementation is based on a combination of stratification and propensity score matching methods. Results reveal that experiencing an acute health shock on average doubles the risk of an older worker leaving the labour market, and is accompanied by a deterioration in physical functioning and mental health, as well as by a reduction in perceived life expectancy. Men's labour market response appears driven by the onset of impairment acting as a barrier to work. In the case of women, preferences for leisure and financial constraints seem to play a prominent role. Heterogeneity in behavioural responses across countries – with the largest labour supply reductions observed in the Nordic and Eastern countries, and England – are suggestive of a relevant role played by social security generosity.

Not enough is known about the responsiveness of individuals, in particular those who work under different incentives, to changes in marginal tax rates. We ask whether changes in tax rates are less distortionary for workers engaged in a contest. To examine this potential rationale for a more progressive tax code, we first model the effort decisions of workers faced with progressive taxation under tournaments and piece rates. Because of the difficulty identifying any distortion that may be induced by the tax code in naturally occurring data, we then report on the results of a real-effort experiment based on this model. Consistent with a behavioral approach to public finance, we find that competitive tournament workers are less sensitive and hint, in our discussion, at the possible welfare benefits of progressive taxation in tournament economies.

We randomly vary religious identity salience in laboratory subjects to test how identity salience contributes to six hypothesized links from prior literature between religious identity and economic behavior. We find that religious identity salience makes Protestants increase contributions to public goods. Catholics decrease contributions to public goods, expect others to contribute less to public goods, and become less risk averse. Jews more strongly reciprocate as an employee in a bilateral labor market gift-exchange game. We find no evidence of religious identity salience effects on disutility of work effort, discount rates, or generosity in a dictator game.

Purpose – The purpose of this paper is to explore the impact of a particular low marginal-cost employee benefit on employees’ intended retention and performance. By utilizing a unique data set constructed by surveying full-time faculty and staff members at a public university in the USA, the authors study the impact of this employee benefit on faculty and staff performance and retention. Design/methodology/approach – The authors focus on the impact of reduction in dependent college tuition at various levels on employees’ intentions to work harder and stay at their current job by using both OLS and ordered probit models. The authors also simulate the direct opportunity cost (reduction in revenue) in dollars and as a percent of total budgeted revenue to facilitate administrative decision making. Findings – The results provide evidence that for institutions where employee retention and productivity are a priority, maximizing or offering dependent college tuition waiver may be a relatively low-cost benefit to increase retention and productivity. In addition, the amount of the tuition waiver, number of dependents and annual salary are statistically significant predictors of intended increased productivity and intent to stay employed at the current institution. Originality/value – Employee retention and productivity is a challenge for all organizations. Although pay, benefits and organizational culture tend to be key indicators of job satisfaction, little attention is given to specific types of benefits. This study is the first comprehensive attempt to explore the relationship between the impact of this low-cost employee benefit and employee performance and retention in a higher education institution in the USA.

In this article, the author estimates the causal effect of the wage level on the recruitment rate in establishments. During the 1990s, the wage setting for certified teachers in Norway was completely centralized, with a state-paid wage premium of about 10% at some schools with severe recruitment problems. The empirical approach exploits within-school variation in wage-premium eligibility and that actual teacher supply is empirically observed at schools with excess demand for teachers. In a difference-in-differences framework, the wage premium increases the recruitment rate by 6 to 7 percentage points. This finding is robust to model specification and indicates that the recruitment elasticity to the wage is equal to the separation elasticity in absolute terms. The implied short-run labor-supply elasticity for individual establishments is about 1.4. It is also evidence of a diminishing return to scale in recruitment activity, a central assumption in search-theoretic models of imperfect competition in the labor market.

Cet article a pour objet d’analyser, par un exercice de microsimulation dynamique, les transferts induits par un financement d’une partie des coûts de l’enseignement supérieur par des systèmes de prêt à remboursement contingent (PARC) plutôt que par l’impôt sur le revenu des ménages (IR, CSG) ou par des droits d’inscription couplés à des prêts étudiants classiques. Le calcul de la progressivité du financement se fait dans une perspective de cycle de vie, c’est-à-dire qu’il s’appuie sur l’ensemble du revenu des individus pendant leur vie active et non pas seulement sur leur revenu courant. Le modèle de carrière salariale repose sur l’estimation de trois équations : une équation d’activité, une équation d’emploi pour les actifs et une équation de revenu salarial annuel pour les personnes en emploi. Par rapport à la littérature existante, nous prenons en compte la mise en commun des ressources au niveau familial. Côté financement, nous simulons un impôt sur le revenu proportionnel de type CSG, un impôt sur le revenu progressif et familialisé (IR), un système de PARC et un système de prêt étudiant ordinaire. Nous montrons que les systèmes de PARC ne sont pas plus progressifs en cycle de vie qu’un financement par l’impôt sur le revenu. Malgré tout, ces systèmes ont une progressivité relativement élevée : dans notre simulation, ils l’emportent sur un mix IR-CSG.

The renewal of interest in macroeconomic theories of search frictions in the goods market requires a deeper understanding of the cyclical properties of the intensive margins in this market. We review the theoretical mechanisms that promote either procyclical or countercyclical movements in time spent searching for consumer goods and services, and then use the American Time Use Survey to measure shopping time through the Great Recession. Average time spent searching declined in the aggregate over the period 2008-2010 compared to 2005-2007, and the decline was largest for the unemployed who went from spending more to less time searching for goods than the employed. Cross-state regressions point towards a procyclicality of consumer search in the goods market. At the individual level, time allocated to different shopping activities is increasing in individual and household income. Overall, this body of evidence supports procyclical consumer search effort in the goods market and a conclusion that price comparisons cannot be a driver of business cycles.

We study the short-term impact of Connecticut's Jobs First welfare reform experiment on women's labor supply and welfare participation decisions. A nonparametric optimizing model is shown to restrict the set of counterfactual choices compatible with each woman's actual choice. These revealed preference restrictions yield informative bounds on the frequency of several intensive and extensive margin responses to the experiment. We find that welfare reform induced many women to work but led some others to reduce their earnings in order to receive assistance. The bounds on this latter “ opt-in” effect imply that intensive margin labor supply responses are nontrivial. (JEL H23, H75, I38, J16, J22)

This paper examines the effects of both permanent and temporary emigration on human capital formation and economic growth of the source regions. To achieve this end, this paper explores the Chinese provincial panel data from 1980 to 2005. First, the fixed effects model is employed to estimate the effect of emigration on school enrollment rates in the source regions. Relative to this aspect, we find that the magnitude (scale) of permanent emigrants (measured by the permanent emigration ratio) is conducive to the improvement of both middle and high schools enrollments. In contrast, the magnitude of temporary emigrants has a significantly positive effect on middle school enrollment but does not have a significant effect on high school enrollment. More interestingly, different educational attainments of temporary emigrants have different effects on school enrollment. Specifically, the share of temporary emigrants with high school education positively affects middle school enrollment, while the share of temporary emigrants with middle school education negatively affects high school enrollment. Second, the instrumental variable method is applied to estimate the effect of emigration on economic growth within the framework of system Generalized Method of Moments (GMM). The estimation results suggest that both permanent and temporary emigrations have a detrimental effect on the economic growth of the source regions. Our empirical tests provide some new evidence to the "brain drain" debate, which has recently received increasing attention.

We investigate the importance of various mechanisms by which child care policies can affect life-cycle patterns of employment and fertility among women, as well as long-run cognitive outcomes among children. A structural life-cycle model of employment, fertility, and child care use is estimated using Norwegian administrative data. The estimation exploits a large-scale child care reform, which provided generous cash transfers to mothers who did not use formal child care facilities. Combining with administrative data on national test scores, we examine the effects of mother's behavior on long-run cognitive outcomes of children, via estimating a cognitive ability production function that corrects for the endogeneity of inputs. We find that the child care reform generates sizable changes in employment and fertility decisions, especially among low-education women. This leads to lower reading scores among children, primarily as a result of mothers shifting away from formal care and becoming employed. Simulation results suggest that a partial reform, in which workers are ineligible for cash transfers, can generate a more balanced impact on the population. The implications of tax policy and maternity leave are also investigated.

In a laboratory experiment, we investigate the interaction of two prominent firm strategies to increase worker effort: team building and control. We compare a team-building treatment where subjects initially play a coordination game to gain common experience (CE) with an autarky treatment where subjects individually perform a task (NCE). In both treatments, subjects then play two-player control games where agents provide costly effort and principals can control to secure a minimum effort. CE agents always outperform NCE agents. Conditional on control, however, CE agents’ effort is crowded out more strongly, with the effect being most pronounced for agents who successfully coordinated in the team-building exercise. Differential reactions to control perceived as excessive is one explanation for our findings.

In recent years, the proportion of students facing a binding constraint on government student loans has grown. This has led to substantially increased use of private loans as a supplementary source of finance for households’ higher education investment. A critical aspect of the private market for student loans is that loan terms must reflect students’ risk of default. College investment will therefore differ from a world in which government student loans, whose terms are not sensitive to credit risk, are expanded to no longer bind. Moreover, beyond simply crowding out private lending, expansions of the government student loan program will feed back into default risk on private loans. The goal of this paper is to provide a quantitative assessment of the likely effects of the private market for student loans on college enrollment. We build a model of college investment that reflects uninsured idiosyncratic risk and a well-defined life-cycle that is consistent with observed borrowing and default behavior across family income and college preparedness. We find that higher government borrowing limits increase college investment but lead to more default in the private market for student loans, while tuition subsides increase college investment and reduce default rates in the private market. Consequently, higher limits on government student loans have small negative welfare effects, while tuition subsidies increase aggregate welfare.

This paper examines the simulated labour supply responses to the personal tax and transfer policy changes introduced in New Zealand in 2010, and the implications for revenue and income distribution. The main changes examined are the increase in the GST rate from 12.5 to 15 per cent, along with reductions in personal income tax rates and increases in the main benefit payments and assistance to families with children, to compensate for the rise in GST. The simulated labour supply responses were obtained using the Treasury’s behavioural microsimulation model, TaxWell-B. The 2009/10 Household Economic Survey (HES) was used. The combined effect of all policy changes is to increase average labour supply slightly for all demographic groups. Labour force participation of sole parents is simulated to increase by 0.86 percentage points. In considering separate components, the change in income tax rates is found to have the largest effect on labour supply. This is not surprising given that it affected a large proportion of the population while the changes to the benefit system and assistance to families with children apply only to certain groups. The reforms are found to be approximately distribution neutral, in terms of the Gini inequality measure of after-tax income per adult equivalent person.

Workers in the US and other developed countries retire no later than a century ago and spend a significantly longer part of their life in school, implying that they stay less years in the work force. The facts of longer schooling and simultaneously shorter working life are seemingly hard to square with the rationality of the standard economic life cycle model. In this paper we propose a novel theory, based on health and aging, that explains these long-run trends. Workers optimally respond to a longer stay in a healthy state of high productivity by obtaining more education and supplying less labor. Better health increases productivity and amplifies the return on education. The health accelerator allows workers to finance educational efforts with less forgone labor supply than in the previous state of shorter healthy life expectancy. When both life-span and healthy life expectancy increase, the health effect is dominating and the working life gets shorter if the intertemporal elasticity of substitution for leisure is sufficiently small or the return on education is sufficiently large. We calibrate the model and show that it is able to predict the historical trends of schooling and retirement.

This study investigates whether individuals engage in prosocial behavior when it requires an investment of their time, but not money. In a laboratory experiment with rigorous anonymity arrangements, senders receive their payoff at the beginning. They may then engage in a tedious task to increase the earnings of exogenously disadvantaged recipients who otherwise receive no earnings. We find that senders are willing to sacrifice time to benefit recipients. Whether or not the recipient is present in the laboratory during the working time does not alter this decision. However, in a treatment variation some senders also display antisocial behavior.

Human capital embodies the knowledge, skills, health, and values that contribute to making people productive. These qualities, however, are hard to measure, and quantitative studies of human capital are typically based on the valuation of the lifetime income that a person generates in the labor market. This article surveys the theoretical and empirical literature that models a worker's life-cycle earnings and identifies appropriate discount rates to translate those cash flows into a certainty equivalent of wealth. We begin with an overview of a stylized model of human capital valuation with exogenous labor income. We then discuss extensions to this framework that study the underlying economic sources of labor income shocks, the choices that people make during their lives (such as about work, leisure, retirement, and investment in education), and the implications of these factors for human capital valuation and risk.

We study the effects of pension reform in a four-period OLG model for an open economy where hours worked by three active generations, education of the young, the retirement decision of older workers, and aggregate growth, are all endogenous. Within each generation we distinguish individuals with high, medium or low ability to build human capital. This extension allows to investigate also the effects of pension reform on the income and welfare levels of different ability groups. Particular attention goes to the income at old-age and the welfare level of low-ability individuals. Our simulation results prefer an intelligent pay-as-you-go pension system above a fully-funded private system. When it comes to promoting employment, human capital, growth, and aggregate welfare, positive effects in a pay-as-you-go system are the strongest when it includes a tight link between individual labor income (and contributions) and the pension, and when it attaches a high weight to labor income earned as an older worker to compute the pension assessment base. Such a regime does, however, imply welfare losses for the current low-ability generations, and rising inequality in welfare. Complementing or replacing this ‘intelligent’ pay-as-you-go system by basic and/or minimum pension components is negative for aggregate welfare, employment and growth. Better is to maintain the tight link between individual labor income and the pension also for low-ability individuals, but to strongly raise their replacement rate.

This study assesses the impact of changes in the parental leave income replacement rate on job continuity of new mothers' after childbearing. The Japanese government increased the parental leave income replacement rate from 0% to 25% in 1995 and from 25% to 40% in 2001, creating two natural experiments. I identify the causal effects of these reforms by comparing the changes in the regular employment of mothers who gave birth after the reforms and those who gave birth before the reforms. My results suggest that the two reforms had no significant effects on the job continuity of mothers who qualified for the reforms.

Traditional economic theory predicts that unfunded social security can be justified on the basis of its ability to efficiently finance retirement, and also for its ability to provide insurance against mortality risk and uninsurable shocks to labor income. In this paper, I demonstrate that the quantitative importance of the traditional roles of social security depends on how household labor supply responds to social security. I build a calibrated general-equilibrium model where social security has a large welfare-improving role, and I show that the distortionary effect on households' labor hours erases virtually all the welfare gains from social security. I also find that this result is robust within the range of labor supply elasticities usually encountered in the macroeconomic literature..

This paper provides empirical evidence of the existence of forward-looking asset-accumulation behavior among disability-insurance applicants, previously examined only in the theoretical literature. Using panel data from the RAND Health and Retirement Study, I show that rejected applicants for Social Security Disability Insurance (SSDI) possess significantly more assets than accepted applicants immediately prior to application and exhibit lower attachment to the labor force. These empirical results are consistent with the theoretical prediction in Diamond and Mirrlees (1978) and Golosov and Tsyvinski (2006) that certain individuals with high unwillingness to work maximize utility by planning in advance for their future disability insurance application. Because the existing empirical literature on disability insurance does not account for this intertemporal channel, it may underestimate the total work-disincentive effect of SSDI.

Workers in cooperatives are self-employed workers and, if they resemble employees in conventional workplaces, they care about the length of their working hours. In this paper, their choice of hours is characterized as a conventional labor supply decision and a familiar hours-wage relationship is derived. This is estimated using mill-year observations on the plywood co-ops in the Pacific Northwest. The results are compared with those from the work behavior of other self-employed workers and with working hours in capitalist plywood mills.