Is the division of labour limited by the extent of the market? Evidence from French cities

This paper provides supportive evidence to the notion that the division of labour is limited by the extent of the (local) market. We first propose a theoretical model. Its main prediction is that scarce specialists occupations are over-represented in large cities. Using census data for French cities, we find strong empirical support for this prediction.     

Noncognitive skills, occupational attainment, and relative wages

This paper examines whether men's and women's noncognitive skills influence their occupational attainment and, if so, whether this contributes to the disparity in their relative wages. We find that noncognitive skills have a substantial effect on the probability of employment in many, though not all, occupations in ways that differ by gender. Consequently, men and women with similar noncognitive skills enter occupations at very different rates. Women, however, have lower wages on average not because they work in different occupations than men do, but rather because they earn less than their male colleagues employed in the same occupation. On balance, women's noncognitive skills give them a slight wage advantage. Finally, we find that accounting for the endogeneity of occupational attainment more than halves the proportion of the overall gender wage gap that is unexplained.     

Why So Unhappy? The Effects of Unionization on Job Satisfaction*

Using linked employer–employee data we investigate the job satisfaction effect of union membership in Britain. We develop a model that simultaneously controls for the determinants of individual membership status and for the selection of employees into occupations according to union coverage. We find a negative association between membership and satisfaction. However, having accounted for selection effects, we find that the negative association is confined to non‐covered employees. This is consistent with ‘voice’ effects, whereby non‐covered members voice dissatisfaction to achieve union goals, and with the possibility that membership increases preferences for collective bargaining, thus lowering members’ satisfaction in non‐covered environments.     

Regulating Work: Measuring the Scope and Burden of Occupational Licensure Among Low‐ and Moderate‐Income Occupations in the United States

This study examines the scope and burden of occupational licensing laws in the United States for 102 low‐ and moderate‐income occupations. Findings indicate that the licences studied require of aspiring workers, on average, $US209 in fees, one exam, and about nine months of education and training, plus minimum grade and age levels. Data also indicate striking disparities in requirements within and between occupations and within and between states. These inconsistencies likely reflect not the relative public health and safety risks of occupations, but instead the lobbying prowess of practitioners in securing laws to shut out competition.     

Are graduates’ intrapreneurial skills optimally used for innovation?

This paper studies the extent to which higher education graduates with higher intrapreneurial skills – creative, brokering, and championing skills – are more involved in innovation. Crucially, we differentiate between graduates employed in science, technology, engineering, and mathematics (STEM) occupations and those employed in business occupations. Using data on higher education graduates from 11 European countries, we find that, in both STEM and business occupations, high levels of creative skills are important to involvement in innovation. Higher levels of brokering skills are particularly important for graduates employed in STEM occupations, whereas higher levels of championing skills are particularly important for those in business occupations. We find, however, that the innovative potential of graduates with higher levels of intrapreneurial skills is not optimally utilized for innovation. Our study provides valuable insights for those selecting graduates for STEM and business occupations based on specific intrapreneurial skills to foster both product and process innovation, as well as for those in charge of designing higher education study curricula.     

Profit Sharing and Training*

We analyze the impact of profit sharing on training intensity. Profit sharing may affect training because it is a credible commitment by firms to reward firm‐specific skills, may reduce turnover and leads to peer group pressure to participate in training courses. To eliminate possible selectivity effects, we combine matching with difference‐in‐differences. We identify the proportion of employees participating in profits and differentiate profit sharing according to the percentage of the workers covered. Using German establishment data we find that profit sharing only has a significant effect on training intensity if the majority of the workforce benefits from it.     

Occupational Labour Demand and the Sources of Non‐neutral Technical Change*

This article introduces a two‐step empirical approach for examining both the nature and sources of non‐neutral technical change across multiple occupations. First, conventional labour‐demand parameter estimates and unbiased tests for neutrality are obtained in the context of a flexible cost system. The resulting input‐specific indices of technical change, unconstrained with respect to time path, facilitate subsequent evaluation of proposed sources. In our application to employment decisions of airline firms, we find labour‐saving technical change that is non‐neutral across occupations. We also document occupation‐specific responses to aircraft technology adoption, route system developments and an unprecedented range of technical change elements.

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Work out or out of work — The labor market return to physical fitness and leisure sports activities

This study is the first to present evidence of the return to leisure sports in the job hiring process by sending fictitious applications to real job openings in the Swedish labor market. In the field experiment job applicants were randomly given different information about their type and level of leisure sports. Applicants who signaled sports skills had a significantly higher callback rate of about 2 percentage points, and this effect was about twice as large for physically demanding occupations.Additional evidence of a sports premium in the regular labor market is arrived at when analyzing the long-run impact of physical fitness on later labor market outcomes. The analysis uses register data on adult earnings and physical fitness when enlisting at age 18. The fitness premium, net of unobservable family variables, is in the order of 4-5%, but diminishes to 2% when controlling for non-cognitive skills.     

Estimating dynamic local interactions models

This paper presents empirical methods for studying a class of local interactions models in which agents’ transitions are affected by their neighbors’ states. We consider an application to urban unemployment and social networks in job search using publicly available cross-section and retrospective data. Most links in our model are local, but some span an entire metropolitan area. Our methods are designed to accommodate the presence of strong cross-sectional dependence arising from these few cross-metro-area links. We also present simple methods to compare data and model spell distributions and to illustrate the model's dynamic properties.     

Gender gaps across the earnings distribution for full-time employees in Britain: Allowing for sample selection

This paper investigates gender differences across the log wage distributions of British employees working full-time in 2005. The raw gender wage gap shows a tendency to increase across the distribution with a glass ceiling effect indicated. A strong relationship between high skilled, white-collar occupations and carrying out managerial duties with the glass ceiling effect is indicated in the data. After allowing for positive selection into full-time employment by British women, a substantially larger gender earning gap is found: the selection corrected gender wage gap is close to twice the raw gap across most of the earnings distribution. This selection corrected gap is found to be predominantly related to women receiving lower rewards for their characteristics than men. Indeed, the results suggest the gender earnings gap would all but disappear across the earnings distribution if women working full-time received the same returns to their characteristics as men working full-time in Britain do.     

Why do firms train apprentices? The net cost puzzle reconsidered

This paper analyses the impact of increasing the share of apprentices at the cost of the share of unskilled or semi-skilled employees on establishment performance. We use representative matched employer–employee panel data and correct for estimation biases. We show that an increase of the apprentice share in trade, commercial, craft or construction occupations has a positive impact on establishment performance. Establishments that increase the apprentice share in manufacturing occupations face a negative impact on performance, however. These results shed a new light on the stylised fact that apprenticeship training always leads to net costs during the apprenticeship period in Germany: we argue that establishments only hire apprentices at a cost if their skills are relatively specific, their retention rate is high and skilled employees are hard to hire.     

Multi-skilling in small and medium-sized engineering firms: evidence from Wales and Germany

A cross-national empirical study of forty-six engineering SMEs in Wales and two regions of Germany analyses the extent to which multi-skilling of staff is occurring, the underlying reasons for such developments, and how well placed firms are in relation to prevailing labour-market and training infrastructures strategically to develop hybrid occupations. We identify four types of skill accretion, only some of which presage net enhancements of the order of skills exercized. New quality assurance or continuous improvement programmes, and organizational restructuring, were the main reasons for multi-skilling. A majority of companies encouraged skill expansion on an ad hoc basis, yet strategic exploitation of multi-skilling incorporating comprehensive training support remained infrequent, especially in Germany. Nevertheless, a minority of the German multi-skilling leads to the award of innovative 'hybrid' qualifications fusing two skilled occupations. The breadth of German initial craft training both facilitates and inhibits potential for further multi-skilling in practice. In Wales, greater flexibility in occupational and training structures provides largely unrealized potential advantages over Germany in developing multi-skilling, especially as a means to resolve recurrent shortages of skilled workers. Welsh SMEs have preferred tentative, incremental, 'bolt-on' approaches to multi-skilling that facilitate only limited external transferability.     

LABOUR DEMAND IN GERMANY BY INDUSTRIAL SECTOR,OCCUPATIONAL FIELD AND QUALIFICATION UNTIL 2025 – MODEL CALCULATIONS USING THE IAB/INFORGE MODEL

By means of a trend extrapolation of microcensus structures (undertaken by the German Federal Statistical Office) for the time period 1996–2007, the projections for labour demand by industrial sector which the IAB already has at its disposal can be transferred to demand by occupational field and subsequently by qualification level until 2025. The findings which have been claimed for some time now are upheld: production-related occupations will lose in significance, while further increases in employment particularly in occupations in the service sector are to be expected. Accordingly, the demand for personnel with a degree from a university or a university of applied sciences will go on rising, while the labour market opportunities for unskilled workers will continue to fall. However, vocational training or its academic counterparts still remain the dominant form of training in Germany. A continuing employment trend is to be expected here.     

Market imperfections and firm-sponsored training

Using worker and firm data from Dutch manufacturing, our paper investigates how product market competition and labor market imperfections affect firm-sponsored training. We find that product market competition does not affect the firms' training expenditures. Increasing competition, for instance due to increased international integration and globalization, is not a threat to investments in on-the-job training. Instead, labor market imperfections influence firm-sponsored training. An increase in labor market flexibility significantly reduces the incentives of firms to invest in training. The magnitude of this effect is nevertheless small.     

The efficiency of interprovincial migration in Canada, 1961-1978

A programming model is used to analyze the impact of the efficiency of migration flows on regional income disparities in Canada. A new method to measure such efficiency is presented in an attempt to show that occupations involving high-level skills and training have efficient migration patterns. The relationship between income differentials and internal migration is discussed.     

Wage inequality, technology and trade: 21st century evidence

This paper describes and explains some of the principal trends in the wage and skill distribution in recent decades. Increases in wage inequality started in the US and UK at the end of the 1970s, but are now widespread. A good fraction of this inequality trend is due to technology-related increases in the demand for skilled workers outstripping the growth of their supply. Since the early 1990s, labor markets have become more polarized with jobs in the middle third of the wage distribution shrinking and those in the bottom and top third rising. I argue that this is because computerization complements the most skilled tasks, but substitutes for routine tasks performed by middle wage occupations such as clerks, leaving the demand for the lowest skilled service tasks largely unaffected. Finally, I argue that technology is partly endogenous, for example it has been spurred by trade with China. Thus, trade does matter for changes in the labor market, but through a different mechanism than conventionally thought.     

Gender Differences in Entrepreneurial Propensity*

Using data from representative population surveys in 17 countries, we find that the lower rate of female business ownership is primarily due to women's lower propensity to start businesses rather than to differences in survival rates across genders. We show that women are less confident in their entrepreneurial skills, have different social networks and exhibit higher fear of failure than men. After controlling for endogeneity, we find that these variables explain a substantial part of the gender gap in entrepreneurial activity. Although, of course, their relative importance varies significantly across countries, these factors appear to have a universal effect.     

Incentive effects of social assistance: A regression discontinuity approach

Before 1989, childless social assistance recipients in Quebec under age 30 received much lower benefits than recipients over age 30. We use this sharp discontinuity in policy to estimate the effects of social assistance on various labour market outcomes using a regression discontinuity approach. We find strong evidence that more generous social assistance benefits reduce employment. The estimates exhibit little sensitivity to the degree of flexibility in the specification, and perform very well when we control for unobserved heterogeneity using a first difference specification. Finally, we show that commonly used difference-in-differences estimators may perform poorly with inappropriately chosen control groups.     

Institutions and Wage Determination: a Multi‐country Approach*

We present an empirical analysis of the determinants of labour cost in OECD countries, with particular reference to the impact of labour market institutions from 1960 to 1994. We show that labour market regulations can explain a large part of the labour cost rise in OECD countries in the last few decades once we control for productivity. These results are consistent with the findings of a companion paper [ Nickell, Nunziata and Ochel (2005) Economic Journal, Vol. 115, pp. 1–27] where the effects of institutions on unemployment are examined. We present also a discussion of the econometric issues related to the estimation of a macro pooled model like ours. We focus, among other things, on the hypothesis of poolability and on the cointegration properties of the model. The explanatory power of the model is finally tested by means of a series of country by country dynamic simulations.     

Empirical labor search: A survey

This paper surveys the existing empirical research that uses search theory to empirically analyze labor supply questions in a structural framework, using data on individual labor market transitions and durations, wages, and individual characteristics. The starting points of the literature are the Mincerian earnings function, Heckman's classic selection model, and dynamic optimization theory. We develop a general framework for the labor market where the search for a job involves dynamic decision making under uncertainty. It can be specialized to be in agreement with most published research using labor search models. We discuss estimation, policy evaluation with the estimated model, equilibrium model versions, and the decomposition of wage variation into factors due to heterogeneity of various model determinants as well as search frictions themselves. We summarize the main empirical conclusions.