Evidence on Caste Based Discrimination

Caste based quotas in hiring have existed in the public sector in India for decades. Recently there has been debate about introducing similar quotas in private sector jobs. This paper uses a correspondence study to determine the extent of caste based discrimination in the Indian private sector. On average low-caste applicants need to send 20% more resumes than high-caste applicants to get the same callback. Differences in callback which favor high-caste applicants are particularly large when hiring is done by male recruiters or by Hindu recruiters. This finding provides evidence that differences in callback between high and low-caste applicants are not entirely due to statistical discrimination. High-caste applicants are also differentially favored by firms with a smaller scale of operations, while low-caste applicants are favored by firms with a larger scale of operations. This finding is consistent with taste-based theories of discrimination and with commitments made by large firms to hire actively from among low-caste groups.     

Technical skill bias as a response of firms to unemployment: A matching model with applicant ranking and endogenous skill requirements

This paper considers an economy with heterogeneous workers where identical firms optimally decide on the degree of complexity of jobs. Meetings are depicted by an urn-ball process where firms rank their applicants and pick the best one. We show that a general rise in unemployment induces an increase in the employment shares of high-skilled workers which, in turn, makes firms choose more complex jobs, leading then to a decrease in the output of low-skilled workers. The technical skill bias is therefore related to the usual explanations of unemployment. Next, we state that a decentralized equilibrium is efficient in terms of job complexity but inefficient in terms of job creation when firms internalize the usual congestion effect. We then extend the analysis to a dynamic model.     

Who Creates Stable Jobs? Evidence from Brazil

Recent research shows that start‐ups are important for job creation, but these firms are also inherently volatile. We use linked employer–employee data to examine the relative importance of firm age and firm size for job creation and destruction in Brazil. Firm age is a more important determinant of job creation in Brazil than firm size; young firms and start‐ups create a relatively high number of jobs. However, young firms are also more likely to exit the market and have higher levels of employment volatility. We, therefore, condition the job creation analysis on job stability. Young firms and large firms create relatively more stable jobs in Brazil.     

Firm Recruitment Behaviour: Sequential or Non‐sequential Search?

In the extensive job search literature, studies assume either sequential or non‐sequential search. This article introduces a novel method to test the hypothesis that firms search sequentially based on the relationship between the number of rejected job applicants and the number of filled vacancies. We distinguish between ten different search methods. For most search methods, including methods that rely on social networks and temporary help agencies, we find that sequential search cannot be rejected. However, when firms use advertising or public/private employment agencies, sequential search is rejected. Hence, we find that both forms of search are relevant for our understanding of the labour market. Further, the form of search is closely related to the search method used.     

Discrimination against latino job applicants: A controlled experiment

Anglos and Latinos posing as job seekers applied for 468 job vacancies advertised in the Washington, D.C. area. Latino applicants received less favorable treatment than equally qualified Anglos more than 20% of the time. Discrimination was particularly prevalent for males and for jobs located in the center city, not requiring a college degree, and not widely advertised.     

The effects of age and family constraints on gender hiring discrimination: A field experiment in the French financial sector

Using correspondence testing, we investigate whether age and family constraints have an effect on the gender gap in access to job interviews. We sent job applications from three pairs of candidates to the same job advertisements in the French financial sector between January and March 2002, focusing on low-skilled administrative or commercial jobs and high-skilled administrative or commercial jobs. Within each pair, the applicants' characteristics were similar except for gender. We compare the gender gap in access to job interviews for single and childless applicants aged 25 and 37. We find significant hiring discrimination against women aged 25 applying for high-skilled administrative jobs. Young men are preferred to young women when employers offer long-term contracts. Among single and childless applicants aged 37, we find no significant hiring discrimination against women. We then compare the gender job-access gap for applicants aged 37 who are single and childless or married with three children. We do not find significant hiring discrimination against female applicants aged 37.     

Analysis of the Vocational and Residential Preferences of a Rural Population: Application of an Experimental Technique to Rural Slovenia

Abstract

This study applies choice experiments to the analysis of the relative importance of both monetary and non-monetary determinants of vocational choice and spatial labour supply. It identifies the determinants of individuals’ choice of jobs and places of residence, and provides a better understanding of how rural labour adjustments might be managed in a country in transition. The results indicate that while wages are the most important factor influencing employment choice, other determinants affecting working conditions and residence do have a counterbalancing impact on choice. Results suggest that sample respondents do appear to be relatively immobile between sectors and also in terms of migration and commuting. However, our results do identify a range of non-wage determinants that might be used to stimulate mobility.     

A theory of minimum wage compliance (or voluntary recognition of unions)

An urn-ball matching model of the labor market is used to develop a theory of minimum wage compliance or voluntary recognition of unions. Workers can direct their search but, in the absence of wage commitment from the firms, they have no basis to do so. The default means of wage formation in one-on-one matches is Nash bargaining. When there are multiple applicants competition drives the workers down to their continuation value. By attracting more applicants, a binding wage floor provides a means for firms to increase matching rates and improve match quality. An otherwise poorly enforced minimum wage acts as a commitment device for the payment of more generous wages.     

Does subsidised temporary employment get the unemployed back to work? Aneconometric analysis of two different schemes

Subsidised employment is an important tool of active labour market policies to improve the reemployment chances of the unemployed. Using unusually informative individual data from administrative records, we investigate the effects of two different schemes of subsidised temporary employment implemented in Switzerland: non-profit employment programmes (EP) and a subsidy for temporary jobs (TEMP) in private and public firms. Econometric matching methods show that TEMP is more successful than EP in getting the unemployed back to work. Compared to not participating in any programme, EP and TEMP are ineffective for unemployed who find jobs easily anyway or have a short unemployment spell. For potential and actual long-term unemployed, both programmes may have positive effects, but the effect of TEMP is larger.     

Entrepreneurial dynamics of the self-employed and of firms: a comparison of determinants using Spanish data

Entrepreneurship is viewed at either an individual level (self-employment), or a firm level (firms’ creation) phenomenon. We also observe the self-employed and firms that hire employees and grow, and others that do not. This paper theorizes occupational and firm-creation decisions and uses Spanish data on industry, region and time to compare entrepreneurial indicators based on official statistics of the number of self-employed individuals and of the number of firms, both with and without employees. The results show that there are important differences in the patterns of the determinants of growth rates in the self-employed and in firms and, within each of them, between those that hire employees and those that do not. We establish sound arguments to recommend the highest level of disaggregation possible in entrepreneurship studies.     

Self-employment and job generation in metropolitan areas, 1969–2009

Many regional development policy initiatives assume that entrepreneurial activities promote economic growth. Empirical research has presented rationale for this argument showing that small firms create proportionally more new jobs than large firms. However, little research has been performed on the issue of net job generation at the urban level, particularly when self-employment is considered as an indicator of entrepreneurial activities. This paper investigates to what extent US metropolitan areas in the 1969–2009 period characterized by relatively high rates of self-employment also have shown relatively high rates of subsequent total employment growth. The analysis corrects for the influence of sectoral composition, wage level, educational attainment, presence of research universities and size of the metropolitan area to measure the extent to which the number and quality of self-employed in a region contribute to total employment growth. It finds the relationship between self-employment rates and subsequent total employment growth to be positive on average during the 40-year period but to weaken over time.     

In Search of the "Right Stuff":

ABSTRACT This paper explores a topic of much speculation but relatively little empirical investigation: How those in charge of recruiting and hiring new employees assess the advantages and disadvantages of various recruiting techniques. We also examine how organizational characteristics shape hiring managers'perceptions of the primary advantages and disadvantages of recruiting techniques. A sample of hiring managers in a major metropolitan labor market identified the primary advantage of informal recruiting to be the quality of applicants and of formal recruiting to be the volume of applicants. Our analysis also shows that hiring managers in smaller firms and in the private sector more often cite quality as an advantage of informal recruiting, while hiring managers in the public sector more often identify volume of applicants as an advantage of formal recruiting.     

Trip Chaining: Who Wins Who Loses?

This paper studies how trip chaining (combining commuting and shopping or commuting and child care) affects market competition: in particular, pricing and the equilibrium number of firms as well as welfare. We use a monopolistic competition framework, where firms sell differentiated products as well as offering differentiated jobs to households, who are all located at some distance from the firms. The symmetric equilibriums with and without the option of trip chaining are compared. We show analytically that introducing the trip chaining option reduces the profit margin of the firms in the short run, but increases welfare. The welfare gains are, however, smaller than the transport cost savings. In the free-entry long-run equilibrium, the number of firms decreases but welfare is higher. A numerical illustration gives orders of magnitude of the different effects.     

Job auctions and hold-ups

We consider a labor market with search frictions in which firms need to invest in capital before they can post a vacancy. This assumption creates a natural scope for hold-up problems, but the innovation of our study is that we allow for competition among the applicants who apply for the same job. In our economy all applicants are paid their actual marginal product. Nonetheless, with random search there exists a hold-up problem, leading to underinvestment in capital. On the contrary, if workers can direct their search towards firms with different capital levels, the equilibrium is efficient. This result contrasts sharply with the predictions of models with ex-post bargaining that never yield an efficient allocation. Moreover, our results extend the efficiency of auction mechanisms to an environment with non-contractible investments.     

Corporate financial determinants of foreign direct investment

Financial market incompleteness and (partial) segmentation of financial markets internationally may endow some firms with a financial advantage which can be exploited through foreign direct investment. We argue that this advantage appears as a distinct cost-of-capital effect on FDI, and identify possible channels for such an effect. Using a sample of European firms’ cross-border acquisitions, and controlling for traditional firm-level determinants of FDI, we find strong support for a cost-of-equity effect, whereas the effect of debt costs is indeterminate. Moreover, financial FDI determinants are more important for firms with high knowledge intensity and for firms resident in relatively less financially developed countries.     

Black Applicants, Black Employees, and Urban Labor Market Policy

In this paper, we use data from a new survey of employers in four large metropolitan areas to analyze the flow of black applicants to different kinds of employers and the extent to which these applicants are hired. The results show that less-educated black workers apply less frequently for jobs in the suburbs than in the central cities, especially at smaller establishments. Their lower tendency to apply for suburban jobs seems to be mostly accounted for by factors associated with higher costs of applying and/or lower information flows. Black applicants, especially less-educated black males, are also less likely to be hired at suburban establishments. These results suggest the need for policies to improve the access of less-educated blacks to suburban employers, and also more effective enforcement of antidiscrimination laws in suburban establishments.     

Economics of personnel and human resource management

The new economics of personnel and human resource management is analysed, including its current prominence as well as its historical antecedents. The economic paradigm as applied to personnel and human resource economics is illustrated through a variety of examples in the personnel area. These involve economic phenomenon (e.g., fixed hiring costs, asymmetric information, option values) highlighting their implications for personnel issues, as well as personnel phenomenon (e.g., deferred compensation, pensions, mandatory retirement) highlighting their economic rationale. Other phenomenon that otherwise seem difficult to explain or paradoxical are analysed including: superstar salaries; long-hours and overtime coexisting with unemployment and underemployment often within the same organisation; the reluctance of seemingly risk averse workers to accept small wage cuts to avoid the possibility of a layoff; the payment of fringe benefits that may not be valued by many employees; the “regular” hiring of temporary workers when permanent workers are available; egalitarian pay structures and fairness in compensation; the persistent reporting of vacancies on the part of firms but a reluctance to raise wages to fill those vacancies; the use of piece rates in some jobs and salary structures that are based on relative ranking of workers in other jobs; and tenure or “up-or-out” rules where people who are not promoted are required to leave rather than work for lower pay. The concluding section focuses on elements that are common across these applications.     

Employee motivation,external orientation and the technical efficiency of foreign‐financed firms in China: a stochastic frontier analysis

By using a stochastic frontier model, we have identified several firm‐specific attributes as determinants of technical efficiency in foreign‐financed manufacturing firms in southern China. The empirical results suggest a strong association between efficiency and employee motivation, which includes the use of bonus incentives and flexibility in employment policy. In terms of the external orientation behavior of firms, the findings do not support the export/efficiency relationship. Sample firms with a high degree of export‐orientedness were less efficient, possibly due to the high transaction costs in China of exportation. As for the effects of expatriate input on production, our empirical evidence revealed that firms with a relatively high expatriate ratio performed less efficiently than others did. These two findings may have significant implications for the marketing strategies and management (including the localization) of human resources of foreign‐financed firms in China. Copyright © 2005 John Wiley & Sons, Ltd.     

Statistical Issues Arising in Disparate Impact Cases and the Use of the Expectancy Curve in Assessing the Validity of Pre-Employment Tests

Disparate impact cases concern the potential adverse effect seemingly neutral employment practices, such as passing a pre-employment test or possessing a fixed level of education, have on minority applicants. Their purpose is to eliminate discrimination by subterfuge, i.e., imposing a requirement that eliminates many minority individuals who could do the job but who do not meet the requirement. When a significantly higher fraction of applicants from minority groups fail the requirement compared to majority applicants, the requirement needs to be shown to be job-related. Statistical techniques used at the various stages of a disparate impact claim are described. Properties of the expectancy curve, which describes the utility of a pre-employment test and helps in defining a band of scores defining "equivalently skilled" applicants are discussed.     

Forecasting corporate default risk in China

Default risk prediction can not only provide forward-looking and timely risk measures for regulators and investors, but also improve the stability of the financial system. However, the determinants of corporate default risk in China have not been well-identified. An empirical analysis was conducted using a unique dataset of default events in the Chinese market to fill this gap. First, we demonstrated that the default probability estimated by a structural model, which is widely used in the literature, do not fully reveal the default risk of firms in China. Second, we classified default events into minor and major defaults for empirical analysis. We found that firms that survive minor defaults behave differently from other bankrupt firms. Our results suggest that the determinants of corporate default risk in China and the United States differ. We also found that a firm’s continued increase in cash holdings is one of the most important signs of default. Overall, our study significantly improves the accuracy of forecasting corporate default risk in China.