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Joshua D. Angrist
© 2014 Elsevier B.V. Individual outcomes are highly correlated with group average outcomes, a fact often interpreted as a causal peer effect. Without covariates, however, outcome-on-outcome peer effects are vacuous, either unity or, if the average is defined as a leave-out mean, determined by a generic intraclass correlation coefficient. When pre-determined peer characteristics are introduced as covariates in a model linking individual outcomes with group averages, the question of whether peer effects or social spillovers exist is econometrically identical to that of whether a 2SLS estimator using group dummies to instrument individual characteristics differs from OLS estimates of the effect of these characteristics. The interpretation of results from models that rely solely on chance variation in peer groups is therefore complicated by bias from weak instruments. With systematic variation in group composition, the weak IV issue falls away, but the resulting 2SLS estimates can be expected to exceed the corresponding OLS estimates as a result of measurement error and for other reasons unrelated to social effects. Research designs that manipulate peer characteristics in a manner unrelated to individual characteristics provide the most compelling evidence on the nature of social spillovers. As an empirical matter, designs of this sort have mostly uncovered little in the way of socially significant causal effects.
Louis N. Christofides | Alexandros Polycarpou | Konstantinos Vrachimis
We consider and attempt to understand the gender wage gap across 26 European countries, using 2007 data from the European Union Statistics on Income and Living Conditions. 4 4European Commission, Eurostat, cross-sectional EU-SILC UDB 2007 - version 1 of March 2009. Eurostat has no responsibility for the results and conclusions of this paper.The size of the gender wage gap varies considerably across countries, definitions of the gap, and selection-correction mechanisms. Most of the gap cannot be explained by the characteristics available in this data set. Quantile regressions show that, in a number of countries, the wage gap is wider at the top ('glass ceilings') and/or at the bottom of the wage distribution ('sticky floors'). We find larger mean/median gender gaps and more evidence of glass ceilings for full-time full-year employees, suggesting more female disadvantage in 'better' jobs. These features may be related to country-specific policies that cannot be evaluated at the individual-country level, at a point in time. We use the cross-country variation in the unexplained wage gaps of this larger-than-usual sample of states to explore the influence of (i) country policies that reconcile work and family life and (ii) their wage-setting institutions. We find that country policies and institutions are related to features of their unexplained gender wage gaps in systematic, quantitatively important, ways. © 2013 Elsevier B.V.
Stijn Baert | Bart Cockx | Dieter Verhaest
This study investigates whether young unemployed graduates who accept a job below their level of education accelerate or delay the transition into a job that matches their level of education. We adopt the Timing of Events approach to identify this dynamic treatment effect using monthly calendar data from a representative sample of Flemish (Belgian) youth who started searching for a job right after leaving formal education. We find that overeducation is a trap. By accepting a job for which one is overeducated rather than only accepting adequate job matches, monthly transition rates into adequate employment fall by 51-98%, depending on the elapsed unemployment duration. These findings challenge the career mobility thesis and imply that the short-term benefits of policies that generate quick transitions into employment must be traded-off against the long-term costs of an inadequate job match. © 2013 Elsevier B.V.
Ari Hyytinen | Pekka Ilmakunnas | Otto Toivanen
The returns to entrepreneurship are monetary and non-monetary. We offer new evidence on these returns using a large sample of male twins. Our within-twin analysis suggests that OLS estimates are downwards, and panel data estimates upwards biased. The within-twin estimates imply that entrepreneurs earn a negative earnings premium. Our within-twin analysis of non-monetary returns shows that entrepreneurs work longer hours and have greater responsibilities, but also have a greater control over their work. © 2012 Elsevier B.V.
Ghazala Azmat | Barbara Petrongolo
© 2014 Elsevier B.V. We discuss the contribution of the experimental literature to the understanding of both traditional and previously unexplored dimensions of gender differences and discuss their bearings on labor market outcomes. Experiments have offered new findings on gender discrimination, and while they have identified a bias against hiring women in some labor market segments, the discrimination detected in field experiments is less pervasive than that implied by the regression approach. Experiments have also offered new insights into gender differences in preferences: women appear to gain less from negotiation, have lower preferences than men for risk and competition, and may be more sensitive to social cues. These gender differences in preferences also have implications in group settings, whereby the gender composition of a group affects team decisions and performance. Most of the evidence on gender traits comes from the lab, and key open questions remain as to the source of gender preferences-nature versus nurture, or their interaction-and their role, if any, in the workplace.
Ho Fai Chan | Bruno S. Frey | Jana Gallus | Benno Torgler
© 2014 Elsevier B.V. Despite the social importance of awards, they have been largely disregarded by academic research in economics. This paper investigates whether receiving prestigious academic awards-the John Bates Clark Medal and the Fellowship of the Econometric Society-is associated with higher subsequent research productivity and status compared to a synthetic control group of non-recipient scholars with similar previous research performance. Our results suggest statistically significant positive publication and citation differences after award receipt.
John Haltiwanger | Stefano Scarpetta | Helena Schweiger
Somewhat surprisingly, cross-country empirical evidence (at least in the cross section) does not seem to support the predictions of standard models that economies with stricter regulations on hiring and firing should have a lower pace of job reallocation. One problem in exploring these issues empirically has been the difficulty of comparing countries on the basis of harmonized measures of job reallocation. A related problem is that there may be unobserved measurement errors or other factors accounting for differences in job reallocation across countries. This paper overcomes these challenges by using harmonized measures of job creation and destruction in a sample of 16 industrial and emerging economies, exploiting the country, industry and firm size dimensions. The analysis of variance in the paper shows that firm size effects are a dominant factor in accounting for the variation in the pace of job reallocation across country, industry and size cells. However, even after controlling for industry and size effects there remain significant differences in job flows across countries that could reflect differences in labor market regulations. We use the harmonized data to explore this hypothesis with a difference-in-difference approach. We find strong and robust evidence that stringent hiring and firing regulations tend to reduce the pace of job reallocation. © 2013 Elsevier B.V.
Susanne Neckermann | Reto Cueni | Bruno S. Frey
© 2014 Elsevier B.V. Social incentives like employee awards are widespread in the corporate sector and may be important instruments for solving agency problems. To date, we have little understanding of their effect on behavior. Unique panel data from the call center of a Fortune 500 financial services provider allow us to estimate the impact of awards on performance. Winning an award for voluntary work behaviors significantly increases subsequent core call center performance. The effect is short-lived, mainly driven by underperforming agents, and is reflected mostly in dimensions of the job that are hard to observe. We discuss various theories that could explain the effect.
John T. Addison | McKinley L. Blackburn | Chad D. Cotti
Do seemingly large minimum-wage increases in an environment of deep recession produce clearer evidence of disemployment than is often observed in the modern minimum wage literature? This paper uses three data sets to examine the employment effects of the most recent increases in the U.S. minimum wage. We focus on two high-risk groups - restaurant-and-bar employees and teenagers - for the years 2005-2010. Although the evidence for a general disemployment effect is not uniform, estimates do suggest the presence of a negative minimum wage effect in states hardest hit by the recession. © 2013 Elsevier B.V.
Petri Böckerman | Jari Vainiomäki
We use twin data matched to register-based individual information on earnings and employment to examine the effect of height on life-time labor market outcomes. The use of twin data allows us to remove otherwise unobserved ability and other differences. The twin pair difference estimates from instrumental variable estimation for genetically identical twins reveal a significant height-wage premium for women but not for men. This result implies that cognitive ability explains the effect of height on life-time earnings for men. Additional findings using capital income as the outcome variable suggest that discrimination against short persons may play a role for women. © 2013 Elsevier B.V.
Michael Lechner | Conny Wunsch
Based on new, exceptionally informative and large German linked employer-employee administrative data, we investigate the question whether the omission of important control variables in matching estimation leads to biased impact estimates of typical active labor market programs for the unemployed. Such biases would lead to false policy conclusions about the cost-effectiveness of these expensive policies. Using newly developed Empirical Monte Carlo Study methods, we find that besides standard personal characteristics, information about the current unemployment spell, regional information, pre-treatment outcomes, and detailed short-term labor market histories remove most of the selection bias. © 2013 Elsevier B.V.
Yoonyoung Cho | Maddalena Honorati
This paper provides a review on the effectiveness of various entrepreneurship programs in developing countries. We adopt a meta regression analysis using 37 impact evaluation studies that were in the public domain by March 2012, and draw out several lessons on the design of the programs. We observe a wide variation in program effectiveness across different interventions depending on outcomes, types of beneficiaries, and country context. Overall, entrepreneurship programs have a positive and large impact for youth and on business knowledge and practice, but no immediate translation into business setup and expansion or increased income. At a disaggregate level by outcome groups, providing a package of training and financing is more effective for labor activities. Additionally, financing support appears more effective for women and business training for existing entrepreneurs than other interventions to improve business performance. © 2014 Elsevier B.V.
Bernhard Mahlberg | Inga Freund | Jesús Crespo Cuaresma | Alexia Prskawetz
Current demographic developments in industrialized countries and their consequences for workforce ageing challenge the sustainability of intergenerational transfers and economic growth. A shrinking share of the young workforce will have to support a growing share of elderly, non-working people. Therefore, the productivity of the workforce is central to a sustainable economic future. Using a new matched employer-employee panel dataset for Austrian firms for the period 2002-2005, we study the relationship between the age structure of employees, labour productivity and wages. These data allow us to account, simultaneously, for both socio-demographic characteristics of employees and firm heterogeneity, in order to explain labour productivity and earnings. Our results indicate that firm productivity is not negatively related to the share of older employees it employs. We also find no evidence for overpayment of older employees. Our results do not show any association between wages and the share of older employees. Furthermore, we find a negative relationship between the share of young employees and labour productivity as well as wages, which is more prevalent in the industry and construction sector. © 2012 Elsevier B.V.
Christian Göbel | Thomas Zwick
In this study, we investigate the relation between five specific human resource measures for old employees (SMOE) and the relative productivity of old employees. Despite the fact that the share of old employees increases in most developed countries and many establishments apply specific measures for old employees, this is the first large scale study on this topic. We find that the relative productivity contributions of old workers are significantly higher in establishments that provide either specific equipment of work places or age-specific jobs for old workers. In establishments that apply mixed-age working teams the relative productivity contributions of old and of young employees are significantly higher than in establishments without this measure. Working time reductions and specific training for old employees are not associated with higher relative productivity of these employees. Our results suggest that the application of SMOE can contribute to the explanation for two recent findings, the only modest decline of the relative productivity contributions of old workers and the high variance for estimates of age-productivity profiles. © 2012 Elsevier B.V.
Slobodan Djajić | Alexandra Vinogradova
Numerous studies suggest that illegal immigration in the form of bonded labor is becoming an increasingly important phenomenon. This paper develops a model of optimizing behavior of undocumented immigrants who are employed in the host country as bonded laborers while repaying their debts to human smugglers. The analysis relates the optimal duration of the repayment period and the migrant's consumption path to the stock of debt, the rate of interest charged by the smuggler and the levels of the bonded and free-market wages in the destination country. This provides a framework for examining the effectiveness of immigration controls, internal enforcement measures and deportation policies of the host country in deterring debt-bonded migration. © 2012 Elsevier B.V.
Heather Antecol | Deborah A. Cobb-Clark
This paper investigates the role of psychosocial traits in the occupational segregation of young workers entering the U.S. labor market. We find entry into male-dominated fields of study and male-dominated occupations are both related to the extent to which individuals have "masculine" traits and believe they are intelligent, while entry into male-dominated occupations is also related to the willingness to work hard, impulsivity, and the tendency to avoid problems. The nature of these relationships differs for men and women, however. Psychosocial traits (self-assessed intelligence and impulsivity) also influence movement into higher-paid occupations, but in ways that are similar for men and women. On balance, psychosocial traits provide an important, though incomplete, explanation for segregation in the fields that young men and women study as well as in the occupations in which they are employed. © 2012 Elsevier B.V.
Qing Li | Arthur Sweetman
International test scores are used to proxy the quality of source country educational outcomes and explain differences in the rate of return to schooling among immigrants in Canada. The average quality of educational outcomes in an immigrant's source country and the rate of return to schooling in the host country labor market are found to have a strong and positive association. However, in contrast to those who completed their education pre-immigration, immigrants who arrived at a young age are not influenced by this educational quality measure. Also, the results are not much affected when the source country's GDP per capita and other nation-level characteristics are used as control variables. Together, these observations reinforce the argument that the quality of educational outcomes has explanatory power for labor market outcomes. The effects are strongest for males and for females without children. © 2013 Elsevier B.V.
Ruxanda Berlinschi | Jeroen Schokkaert | Johan Swinnen
We analyze the impact of human capital formation through migration on performance by studying the impact of football players' migration to foreign clubs on their origin countries' international football performance. In our model, migration to foreign clubs allows players to improve their skills. Its impact on national team performance is positive and increasing with the difference in quality between foreign and home country clubs. To test this prediction, we have collected information on the club of employment of national team players for most countries in the world. We have constructed an original migration index, weighing each emigrant player by the quality of the foreign club employing him. We find strong and robust support for the theoretical prediction that migration of national team players improves international football performance, particularly for countries with lower quality football clubs. © 2013 Elsevier B.V.
Are employers willing to employ more older individuals, in particular older women? Higher employment among the older segments of the population will only materialize if firms are willing to employ them. Although several economists have started considering the demand side of the labour market for older individuals, few have considered its gender dimension properly; despite evidence that lifting the overall senior employment rate in the EU requires significantly raising that of women older than 50. In this paper, we posit that labour demand and employability depend to a large extent on how the age/gender composition of the workforce affects firm's profits. Using unique firm-level panel data we produce robust evidence on the causal effect of age/gender on productivity (value added per worker), total labour costs and gross profits. We take advantage of the panel structure of data and resort to first differences to deal with a potential time-invariant heterogeneity bias. Moreover, inspired by recent developments in the production function estimation literature, we also address the risk of simultaneity bias (endogeneity of firm's age-gender mix choices in the short run) by combining first differences with i) the structural approach suggested by Ackerberg, Caves and Frazer (2006), ii) alongside more traditional IV-GMM methods (Blundell and Bond, 1998) where lagged values of labour inputs are used as instruments. Results suggest no negative impact of rising shares of older men on firm's gross profits, but a large negative effect of larger shares of older women. Another interesting result is that the vast and highly feminized services industry does not seem to offer working conditions that mitigate older women's productivity and employability disadvantage, on the contrary. This is not good news for older women's employability and calls for policy interventions in the Belgian private economy aimed at combating women's decline of productivity with age and/or better adapting labour costs to age-gender productivity profiles. © 2012 Elsevier B.V.
Andrea Bassanini | Andrea Garnero
Exploiting a unique dataset including cross-country comparable hiring and separation rates by type of transition for 24 OECD countries, 23 business-sector industries and 13. years, we study the effect of dismissal regulations on different types of gross worker flows, defined as one-year transitions. We use both a difference-in-difference approach - in which the impact of regulations is identified by exploiting likely cross-industry differences in their impact - and standard time-series analysis - in which the effect of regulations is identified through regulatory changes over time. We find that the more restrictive the regulation, the smaller is the rate of within-industry job-to-job transitions, in particular towards permanent jobs. By contrast, we find no significant effect as regards separations involving an industry change or leading to non-employment. The extent of reinstatement in the case of unfair dismissal appears to be the most important regulatory determinant of gross worker flows. We also present a large battery of robustness checks that suggest that our findings are robust. © 2013 Elsevier B.V.
Randi Hjalmarsson | Matthew J. Lindquist
We use Swedish adoption data combined with police register data to study parent-son associations in crime. For adopted sons born in Sweden, we have access to the criminal records of both the adopting and biological parents. This allows us to assess the relative importance of pre-birth factors (genes, prenatal environment and perinatal conditions) and post-birth factors for generating parent-son associations in crime. When considering the extensive margin, we find that pre-birth and post-birth factors are both important determinants of sons' convictions and that mothers and fathers contribute equally through these two channels. At the intensive margin, pre-birth factors still matter, however post-birth factors appear to dominate. In particular, adopting mothers appear to matter most for the probability that sons will be convicted of multiple crimes and/or be sentenced to prison. We find little evidence of interaction effects between biological and adoptive parents' criminal convictions. Having more highly educated adoptive parents, however, does appear to mitigate the impact of biological parents' criminality. © 2012 Elsevier B.V.