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Job Tasks, Computer Use, and the Decreasing Part-Time Pay Penalty for Women in the UK

April 23, 2014 Comments off

Job Tasks, Computer Use, and the Decreasing Part-Time Pay Penalty for Women in the UK (PDF)
Source: Institute for the Study of Labor

Using data from the UK Skills Surveys, we show that the part-time pay penalty for female workers within low- and medium-skilled occupations decreased significantly over the period 1997-2006. The convergence in computer use between part-time and full-time workers within these occupations explains a large share of the decrease in the part-time pay penalty. However, the lower part-time pay penalty is also related to lower wage returns to reading and writing which are performed more intensively by full-time workers. Conversely, the increasing returns to influencing has increased the part-time pay penalty despite the convergence in the influencing task input between part-time and full-time workers. The relative changes in the input and prices of computer use and job tasks together explain more than 50 percent of the decrease in the part-time pay penalty.

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UN Interventions: The Role of Geography

April 21, 2014 Comments off

UN Interventions: The Role of Geography (PDF)
Source: Institute for the Study of Labor

This paper argues that UN military interventions are geographically biased. For every 1,000 kilometers of distance from the three Western permanent UNSC members (France, UK, US), the probability of a UN military intervention decreases by 4 percent. We are able to rule out several alternative explanations for the distance finding, such as differences by continent, colonial origin, bilateral trade relationships, foreign aid flows, political regime forms, or the characteristics of the Cold War. We do not observe this geographical bias for non-military interventions and find evidence that practical considerations could be important factors for UNSC decisions to intervene militarily.

Does Secular Education Impact Religiosity, Electoral Participation and the Propensity to Vote for Islamic Parties? Evidence from an Education Reform in a Muslim Country

April 6, 2014 Comments off

Does Secular Education Impact Religiosity, Electoral Participation and the Propensity to Vote for Islamic Parties? Evidence from an Education Reform in a Muslim Country (PDF)
Source: Institute for the Study of Labor

Using a unique survey of adults in Turkey, we find that an increase in educational attainment, due to an exogenous secular education reform, decreases women’s propensity to identify themselves as religious, lowers their tendency to wear a religious head cover (head scarf, turban or burka) and increases the tendency for modernity. Education reduces women’s propensity to vote for Islamic parties. There is no statistically significant impact of education on men’s religiosity or their tendency to vote for Islamic parties and education does not influence the propensity to cast a vote in national elections for men or women. The impact of education on religiosity and voting preference is not working through migration, residential location or labor force participation.

Can US Coordination Failure Explain Why Americans Work So Much More than Europeans?

April 4, 2014 Comments off

Can US Coordination Failure Explain Why Americans Work So Much More than Europeans? (PDF)
Source: Institute for the Study of Labor

Prescott (2004) argues that Europeans work much less than Americans because of higher taxes and that they would gain significantly by charging US taxes and working as much as Americans. I argue that the opposite may be true and that Americans work more than Europeans due to a coordination failure. Studies show that utility falls with other people’s income, a negative externality that is internalized in Europe through laws on the minimum amount of vacation time (and maximum hours of work), something unthinkable in the US. Thus, Americans may be stuck in an “overworking trap” and would gain by working less. A simple model and data on work time are used to obtain an estimate of the US welfare gain from reducing its work time to Europe’s level. On the other hand, if neither EU nor US work time is optimal, then the sign of the EU-to-US welfare difference is positive (ambiguous) if EU work time is greater (smaller) than the optimum, while simulations show that even in the latter case, EU welfare is greater than US welfare if, relative to the optimum, the EU work ‘shortage’ is smaller than the US work ‘surplus’.

Unanticipated Effects of California’s Paid Family Leave Program

March 28, 2014 Comments off

Unanticipated Effects of California’s Paid Family Leave Program (PDF)
Source: Institute for the Study of Labor

We examine the effect of California Paid Family Leave (CPFL) on young women’s (less than 42 years of age) labor force participation and unemployment. CPFL enables workers to take at most six weeks of paid leave over a 12 month period in order to bond with new born or adopted children, or to care for sick family members or ailing parents. The policy benefits women, especially young women, since they are more prone to take such a leave. However, the effect of the policy on labor market outcomes is less clear. We apply difference-in-difference techniques to identify the effects of the CPFL legislation on young women’s labor force participation and unemployment. We find that the labor force participation rate, the unemployment rate, and the duration of unemployment among young women rose in California compared to states that did not adopt paid family leave. The latter two findings regarding higher young women’s unemployment and unemployment duration are unanticipated effects of the CPFL program. We utilize a unique placebo test to validate the robustness of these results.

Scraping By: Income and Program Participation After the Loss of Extended Unemployment Benefits

March 28, 2014 Comments off

Scraping By: Income and Program Participation After the Loss of Extended Unemployment Benefits (PDF)
Source: Institute for the Study of Labor

Despite unprecedented extensions of available unemployment insurance (UI) benefits during the “Great Recession” of 2007-09 and its aftermath, large numbers of recipients exhausted their maximum available UI benefits prior to finding new jobs. Using SIPP panel data and an event-study regression framework, we examine the household income patterns of individuals whose jobless spells outlast their UI benefits, comparing the periods following the 2001 and 2007-09 recessions. Job loss reduces household income roughly by half on average, and for UI recipients benefits replace just under half of this loss. Accordingly, when benefits end the household loses UI income equal to roughly one-quarter of total pre-separation household income (and about one-third of pre-exhaustion household income). Only a small portion of this loss is offset by increased income from food stamps and other safety net programs. The share of families with income below the poverty line nearly doubles. These patterns were generally similar following the 2001 and 2007-09 recessions and do not vary dramatically by household age or income prior to job loss.

Crime and Mental Wellbeing

March 27, 2014 Comments off

Crime and Mental Wellbeing (PDF)
Source: Institute for the Study of Labor

We provide empirical evidence of crime’s impact on the mental wellbeing of both victims and non-victims. We differentiate between the direct impact to victims and the indirect impact to society due to the fear of crime. The results show a decrease in mental wellbeing after violent crime victimization and that the violent crime rate has a negative impact on mental wellbeing of non-victims. Property crime victimization and property crime rates show no such comparable impact. Finally, we estimate that society-wide compensation due to increasing the crime rate by one victim is about 80 times more than the direct impact on the victim.

The Economics of Human Development and Social Mobility

March 21, 2014 Comments off

The Economics of Human Development and Social Mobility (PDF)
Source: Institute for the Study of Labor

This paper distills and extends recent research on the economics of human development and social mobility. It summarizes the evidence from diverse literatures on the importance of early life conditions in shaping multiple life skills and the evidence on critical and sensitive investment periods for shaping different skills. It presents economic models that rationalize the evidence and unify the treatment effect and family influence literatures. The evidence on the empirical and policy importance of credit constraints in forming skills is examined. There is little support for the claim that untargeted income transfer policies to poor families significantly boost child outcomes. Mentoring, parenting, and attachment are essential features of successful families and interventions to shape skills at all stages of childhood. The next wave of family studies will better capture the active role of the emerging autonomous child in learning and responding to the actions of parents, mentors and teachers.

The Miracle Drugs: Hormone Replacement Therapy and Labor Market Behavior of Middle-Aged Women

March 20, 2014 Comments off

The Miracle Drugs: Hormone Replacement Therapy and Labor Market Behavior of Middle-Aged Women (PDF)
Source: Institute for the Study of Labor

In an aging society, determining which factors contribute to the employment of older individuals is increasingly important. We examine the impact of medical innovations on the employment of middle-aged women focusing on the specific case of Hormone Replacement Therapy (HRT), a common treatment for the alleviation of negative menopausal symptoms. HRT medications were among the most popular prescriptions in the United States until 2002 when the Women’s Health Initiative Study – the largest randomized control trial on women ever undertaken – documented the health risks associated with their long term use. We exploit the release of these findings within a Fixed Effect Instrumental Variable framework to address the endogeneity in HRT use. Our results indicate substantial benefits of HRT use to the short-term employment of middle-aged women.

‘Can’t Get Enough’: Prejudice, Contact Jobs and the Racial Wage Gap in the US

March 18, 2014 Comments off

‘Can’t Get Enough’: Prejudice, Contact Jobs and the Racial Wage Gap in the US
Source: Institute for the Study of Labor

The wage gap between African-Americans and white Americans is substantial in the US and has slightly narrowed over the past 30 years. Today, blacks have almost achieved the same educational level as whites. There is reason to believe that discrimination driven by prejudice plays a part in explaining this residual wage gap. Whereas racial prejudice has substantially declined over the past 30 years, the wage differential has slightly converged overtime. This ‘prejudice puzzle’ raises other reasons in explaining the absence of convergence of this racial differential. In this paper, I assess the impact which of the boom of jobs in contact with customers has on blacks’ labor market earnings. I develop a search-matching model with bargaining to predict the negative impact which of the share of these contact jobs has on blacks’ earnings in the presence of customer discrimination. I test this model using the IPUMS, the General Social Survey and the Occupation Information Network. My estimates show that black men’s relative earnings are lower in areas where the proportions of prejudiced individuals and of contact jobs are high. I also estimate that the decreased exposure to racial prejudice is associated with a higher convergence of the residual gap, whereas the expansion of contact jobs partly explains the persistence of the gap.

Tariffs, Social Status, and Gender in India

March 14, 2014 Comments off

Tariffs, Social Status, and Gender in India (PDF)
Source: Institute for the Study of Labor

This paper shows that trade policy can have significant intergenerational distributional effects across gender and social strata. We compare women and births in rural Indian districts more or less exposed to tariff cuts. For low socioeconomic status women, tariff cuts increase the likelihood of a female birth and these daughters are less likely to die during infancy and childhood. On the contrary, high-status women are less likely to give birth to girls and their daughters have higher mortality rates when more exposed to tariff declines. Consistent with the fertility-sex ratio trade-off in high son preference societies, fertility increases for low-status women and decreases for high-status women. An exploration of the mechanisms suggests that the labor market returns for low-status women (relative to men) and high-status men (relative to women) have increased in response to trade liberalization. Thus, altered expectations about future returns from daughters relative to sons seem to have caused families to change the sex-composition of and health investments in their children.

Euroskepticism in the Crisis: More Mood than Economy

March 13, 2014 Comments off

Euroskepticism in the Crisis: More Mood than Economy
Source: Institute for the Study of Labor

Before the Great Recession, rising income inequality within the European Union member states has been considered to be one driver for an increasing Euroskepticism. Using rich data on attitudes towards European integration from the Eurobarometer (EB) surveys, we revisit the issue by analyzing the relation between macroeconomic indicators, socio-economic background variables, individual attitudes and the level of Euroskepticism within the 27 EU member states for the period 2006 to 2011. Our analysis shows that Euroskepticism has increased by on third during the financial crisis, while income inequality on average stayed stable. We find that the increase in Euroskepticism is mostly due to “mood:” the fear of losing cultural identity and financial expectations and by large unrelated to economic background variables like income inequality. We find evidence that negative financial expectations are positively related to Euroskepticism in Western European countries and negatively related to Euroskepticism in Eastern European countries. That suggests that financially pessimistic people in Western Europe might interpret European integration as a threat to their financial situation, while Eastern European people might view it as a chance to improve their economic situation.

How Do E-Verify Mandates Affect Unauthorized Immigrant Workers?

March 11, 2014 Comments off

How Do E-Verify Mandates Affect Unauthorized Immigrant Workers? (PDF)
Source: Institute for the Study of Labor

A number of states have adopted laws that require employers to use the federal government’s E-Verify program to check workers’ eligibility to work legally in the United States. Using data from the Current Population Survey, this study examines whether such laws affect labor market outcomes among Mexican immigrants who are likely to be unauthorized. We find evidence that E-Verify mandates reduce average hourly earnings among likely unauthorized male Mexican immigrants while increasing labor force participation and employment among likely unauthorized female Mexican immigrants. In contrast, the mandates appear to lead to better labor market outcomes among workers likely to compete with unauthorized immigrants. Employment and earnings rise among male Mexican immigrants who are naturalized citizens in states that adopt E-Verify mandates, and earnings rise among U.S.-born Hispanic men.

The Effect of Renewable Energy Development on Carbon Emission Reduction: An Empirical Analysis for the EU-15 Countries

March 7, 2014 Comments off

The Effect of Renewable Energy Development on Carbon Emission Reduction: An Empirical Analysis for the EU-15 Countries (PDF)
Source: Institute for the Study of Labor

The increased concerns about climate change have made renewable energy sources an important topic of research. Several scholars have applied different methodologies to examine the relationships between energy consumption and economic growth of individual and groups of countries and to analyze the environmental effects of energy policies. Previous studies have analyzed carbon emission savings, using renewable energy usage as an individual source or in combination with traditional sources of energy (e.g., hybrid plants) in connection with lifecycle analysis methods. It is shown that after a certain period, economic growth leads to the promotion of environmental quality. However, econometric modelling critiques have opposed the results of these studies. One reason is that the effectiveness of governance-related parameters has previously been neglected. In this research, we analyze the impact of renewable energy development on carbon emission reduction. We estimate a model to evaluate the effectiveness of renewable energy development, technological innovation, and market regulations in carbon emission reduction. The empirical results are based on a panel data estimation using the EU-15 countries data observed from 1995 to 2010. The elasticities of CO2 emissions are estimated, in order to evaluate the effectiveness of each parameter. The findings show that the effects of a negative climate change could be mitigated by governance-related parameters instead of economic development.

A Comparison of Growth Percentile and Value-Added Models of Teacher Performance

March 5, 2014 Comments off

A Comparison of Growth Percentile and Value-Added Models of Teacher Performance (PDF)
Source: Institute for the Study of Labor

School districts and state departments of education frequently must choose between a variety of methods to estimating teacher quality. This paper examines under what circumstances the decision between estimators of teacher quality is important. We examine estimates derived from growth percentile measures and estimates derived from commonly used value-added estimators. Using simulated data, we examine how well the estimators can rank teachers and avoid misclassification errors under a variety of assignment scenarios of teachers to students. We find that growth percentile measures perform worse than value-added measures that control for prior year student test scores and control for teacher fixed effects when assignment of students to teachers is nonrandom. In addition, using actual data from a large diverse anonymous state, we find evidence that growth percentile measures are less correlated with value-added measures with teacher fixed effects when there is evidence of nonrandom grouping of students in schools. This evidence suggests that the choice between estimators is most consequential under nonrandom assignment of teachers to students, and that value-added measures controlling for teacher fixed effects may be better suited to estimating teacher quality in this case.

The Divorce Revolution and Generalized Trust: Evidence from the United States 1973-2010

March 4, 2014 Comments off

The Divorce Revolution and Generalized Trust: Evidence from the United States 1973-2010 (PDF)
Source: Institute for the Study of Labor

This paper examines the effect of exposure to a culture of easier divorce as a minor on generalized trust using the General Social Survey from 1973-2010. The easier divorce culture is defined as the introduction of no-fault including unilateral divorce reforms across the US. According to the results, the divorce revolution seems to have had some effect on trust levels across the US. While there are no discernible effects for the whole sample of men, there are statistically significant effects for women with an additional year of exposure being associated with a 4 percentage point lower generalized trust in the states with easy divorce culture compared to states with fault based divorce culture. An analysis by sub-group of women indicates that married and divorced/separated women have significantly lower levels of trust associated with exposure to easy divorce culture as a child. The findings are in agreement with the predictions of previous literature regarding no-fault divorce reforms reducing the security offered by marriage, in particular for women.

Union Organizing Decisions in a Deteriorating Environment: The Composition of Representation Elections and the Decline in Turnout

March 1, 2014 Comments off

Union Organizing Decisions in a Deteriorating Environment: The Composition of Representation Elections and the Decline in Turnout (PDF)
Source: Institute for the Study of Labor

It is well known that the organizing environment for labor unions in the U.S. has deteriorated dramatically over a long period of time, contributing to the sharp decline in the private sector union membership rate and resulting in many fewer representation elections being held. What is less well known is that, since the late 1990s, average turnout in the representation elections that are held has dropped substantially. These facts are related. I develop a model of union decision making regarding selection of targets for organizing through the NLRB election process with the clear implication that a deteriorating organizing environment will lead to systematic change in the composition of elections held. The model implies that a deteriorating environment will lead unions not only to contest fewer elections but also to focus on larger potential bargaining units and on elections where they have a larger probability of winning. A standard rational-voter model implies that these changes in composition will lead to lower turnout. I investigate the implications of these models empirically using data on turnout in over 140,000 NLRB certification elections held between 1973 and 2009. The results are consistent with the model and suggest that changes in composition account for about one-fifth of the decline in turnout between 1999 and 2009.

Does Money Make People Right-Wing and Inegalitarian? A Longitudinal Study of Lottery Winners

February 18, 2014 Comments off

Does Money Make People Right-Wing and Inegalitarian? A Longitudinal Study of Lottery Winners
Source: Institute for the Study of Labor

The causes of people’s political attitudes are largely unknown. We study this issue by exploiting longitudinal data on lottery winners. Comparing people before and after a lottery windfall, we show that winners tend to switch towards support for a right-wing political party and to become less egalitarian. The larger the win, the more people tilt to the right. This relationship is robust to (i) different ways of defining right-wing, (ii) a variety of estimation methods, and (iii) methods that condition on the person previously having voted left. It is strongest for males. Our findings are consistent with the view that voting is driven partly by human self-interest. Money apparently makes people more right-wing.

Are Sunk Costs Irrelevant? Evidence from Playing Time in the National Basketball Association

December 16, 2013 Comments off

Are Sunk Costs Irrelevant? Evidence from Playing Time in the National Basketball Association (PDF)
Source: Institute for the Study of Labor

The relevance of sunk costs in decision making is one of the major sources of disagreement between neoclassical economists and behavioral economists. We test the importance of sunk costs by examining the role of a player’s draft position on his playing time in the National Basketball Association. Specifically, we ask whether players taken as “lottery picks” or in the first round of the draft are treated differently from otherwise identical players who are chosen later. We build on previous studies in three ways. First, we study a time period that had a stronger contrast between the financial commitment to first and second-round draft picks. Second, we use a better measure of playing time by accounting fully for the time a player loses to injury, suspension, or other exogenous factor. Finally and most importantly, we use a more sophisticated methodology – regression discontinuity – to test for whether teams treat lottery picks or first-round picks differently from later picks. Our results find little or no impact of draft round or lottery status on playing time. Hence, our findings strongly support the neoclassical outlook.

Deployments, Combat Exposure, and Crime

December 11, 2013 Comments off

Deployments, Combat Exposure, and Crime
Source: Institute for the Study of Labor (via SSRN)

During the period 2001-2009, four combat brigades and the 3rd Armored Cavalry Regiment were based at Fort Carson, Colorado. These units were repeatedly deployed during the Iraq War, allowing us to measure the effect of arguably exogenous changes in troop levels on violent crime in El Paso County, where Fort Carson is located. Our results suggest that never-deployed units contributed to community violence in the form of assaults, murders, and robberies. In contrast, estimates of the relationship between the number of previously deployed units and violent crime are generally small and statistically insignificant. We conclude that soldiers returning from combat do not represent a special threat to public safety.

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