Identifying non-cooperative behavior among spouses: Child outcomes in migrant-sending households

I propose a model of household decision-making under asymmetric information and show that resulting allocations may not be fully cooperative. The model yields a simple test for cooperative decision-making, which I apply to data from China. I find that, when the father migrates without his family, children spend more time in household production, while mothers spend less time in both household production and income-generating activities. This is not consistent with standard cooperative models of the household: simply reallocating time to compensate for the father's absence would cause an increase in household labor for both children and mothers and, if migration occurs in response to a negative shock, we should observe an increase in mothers' time in income-generating activities rather than a reduction. The results also do not appear to be driven by an increase in mothers' bargaining power, as children's human capital is not affected by migration, controlling for income.     

NEW EVIDENCE ON REAL WAGE CYCLICALITY WITHIN EMPLOYER–EMPLOYEE MATCHES

In the most thorough study to date on wage cyclicality among job stayers, Devereux's (2001) analysis of men in the Panel Study of Income Dynamics (PSID) produced two puzzling findings: (1) the real wages of salaried workers are noncyclical, and (2) wage cyclicality among hourly workers differs between two alternative wage measures. We examine these puzzles with additional evidence from other sources. Devereux's finding of noncyclical real wages among salaried job stayers is not replicated in the National Longitudinal Survey of Youth (NLSY) data. The NLSY data, however, do corroborate his finding of a discrepancy for hourly workers between the cyclicality of the two alternative wage measures. Evidence from the PSID Validation Study contradicts Devereux's conjecture that the discrepancy might be due to a procyclical bias from measurement error in average hourly earnings. Evidence from the Bureau of Labor Statistics establishment survey supports his hypothesis that overtime work accounts for part (but not all) of the discrepancy. We conclude that job stayers' real average hourly earnings are substantially procyclical and that an important portion of that procyclicality probably is due to compensation beyond base wages.     

Caste discrimination and transaction costs in the labor market: Evidence from rural North India

This paper is an empirical attempt to quantify caste-based discrimination in the labor market using household data taken from rural North India. In the regression analysis, transaction costs associated with entry into the labor market and reservation wages are estimated simultaneously along with market wages. The estimation results provide evidence of the existence of transaction costs in the labor market and discrimination against backward classes with regard to access to regular employment. In line with previous studies, the results suggest that the achievements of India's reservation policy so far have at best been limited. In addition, a comparison between the estimates from the model employed in this paper and conventional (reduced-form) approaches shows that discrimination in labor market entry is likely to be underestimated in the conventional reduced-form approaches.     

FEMALE DUAL LABOUR MARKETS AND EMPLOYEE BENEFITS

The American workforce and the role of employee benefits have changed dramatically since the 1980s when economists seriously considered dual labour market models to describe pay and employment patterns. Then, dual labour market models described men's labour markets, but not women's and the tests applied to wages and salaries, not total compensation including employee benefits. Applying a switching regression technique using the 2000 Current Population Survey and including women workers and employee benefits, we find that the dual labour market hypothesis is consistent with both female and male labour market structures, especially when total compensation is considered.     

Flexibility at the Margin and Labor Market Volatility in OECD Countries*

We study the business‐cycle behavior of segmented labor markets with flexibility at the margin (e.g., just affecting fixed‐term contracts). We present a matching model with temporary and permanent jobs (i) where there is a gap in the firing costs associated with these types of jobs and (ii) where there are restrictions in the creation and duration of fixed‐term contracts. We show that a labor market with ``flexibility at the margin'' increases the unemployment volatility with respect to one that is fully regulated. This analysis yields new insights into the interpretation of the recent volatility changes witnessed in the OECD area.     

Teams,Teamwork and Absence*

We argue that firms with interdependent worker productivity, team production, have a higher cost of absence and, as a consequence, spend additional resources on monitoring absence. As a result, firms with team production should have lower absence rates. We estimate the determinants of absence for blue‐collar workers using a sample of German manufacturing establishments. Workplace teams are used as a proxy for team production. The estimates reveal that firms with teams have lower absence rates, as do smaller establishments. The size effect, however, is unique to establishments with teams, which fits prior theoretical work that has not been previously tested.     

Economic transition and gender differentials in wages and productivity: Evidence from Chinese manufacturing enterprises

We use firm-level data to analyze male–female wage differences in Chinese industry in the late 1990s. Our estimates indicate that employers' discrimination against women was not a significant source of the gender wage gap in Chinese state-owned enterprises. Instead, we find that the relative wage of unskilled female to male workers was higher than their relative productivity. This result indicates that unskilled female workers in the state sector had historically received wage premiums and consequently accounted for a disproportionate share of the sector's labor surplus.     

ARE COMPUTERS AT HOME A FORM OF CONSUMPTION OR AN INVESTMENT? A LONGITUDINAL ANALYSIS FOR JAPAN*

This study examines the effect on labour market outcomes, of computer possession at home using longitudinal data collected in Japan. There are positive correlations between computer possession and women's full‐time employment and the salaries of both men and women. In a fixed effects analysis, however, no temporal, causal effects of computer possession on labour market outcomes were found. Overall, the results suggest that the positive correlation between computer possession and better labour market outcomes does not imply causality among workers strongly attached to the labour market.     

Causal Effects of Paternity Leave on Children and Parents

Reserving a share of the parental leave period for fathers is considered necessary in order to induce fathers to take leave, and to increase men's participation in child‐rearing. We investigate how a parental leave reform directed towards fathers affected leave‐taking, and, in turn, children's and parents' long‐term outcomes. A paternal leave quota greatly increases the share of men taking paternity leave. We find evidence that children's school performance improves as a result, particularly in families where the father has higher education than the mother. We find no evidence that paternity leave counters the traditional allocation of parents' labor supply.     

DEMOGRAPHIC SHIFT,POPULATION AGEING AND ECONOMIC GROWTH IN CHINA: A COMPUTABLE GENERAL EQUILIBRIUM ANALYSIS

Abstract. Using a computable general equilibrium (CGE) model and a given ageing profile of the population to forecast the growth path of China's economy during the twenty‐first century, this study finds that: population ageing leads to declining economic growth as labour supply shrinks and the rate of physical capital formation declines; households’ material living standards improve, albeit at a declining rate; falling domestic investment partially offsets declining national savings; and the resulting saving‐investment surplus generates a current account surplus and capital outflows. Finally, the main force that can sustain China's economic growth against the backdrop of population ageing is productivity improvement.     

Why Some Firms Train Apprentices and Many Others Do Not

Abstract. The latest study investigating the cost–benefit ratio of apprenticeship training for Swiss companies has shown that most apprentices offset the cost of their training during their apprenticeship on the basis of the productive contribution of the work they perform. Given this outcome, it is worth investigating why so many firms choose not to train apprentices. Maximum-likelihood selection models were used to estimate the net cost of training for firms without an apprenticeship programme. The models show, firstly, that non-training firms would incur significantly higher net cost during the apprenticeship period if they would switch to a training policy and, secondly, that this less favourable cost–benefit ratio is determined less by cost than by absence of benefit. For the apprenticeship system as such the results indicate that, as long as training regulations and the market situation permit a cost-effective training of apprentices, companies do not need specific labour market regulations or institutions to offer training posts. In this respect, the Swiss findings might be of interest for the ongoing German discussion about the expected repercussions of a more general labour market deregulation on the apprenticeship training system.     

A historiographical exhumation of J.A. Hobson's Over-Saving Thesis: General theory versus historiography

Abstract

The discussion of J.A. Hobson's understanding of over-saving has been largely confined within John Maynard Keynes' famous critique in the General Theory. I argue that gauging Hobson's contribution by ‘general theory’, that is, by an ahistorical, non-evolutionary yardstick, is to miss the larger part of Hobson's achievement. Hobson's conception of over-saving was contained within an evolving historiography of capital accumulation and took on various meanings depending on whether Hobson was discussing a competitive or monopolistic environment. I show that Keynes' ‘corrected’ version of over-saving was implicitly contained within Hobson's analysis of an evolving monopolistic industrial structure.     

The Effect of Parental Absence on Child Development in Rural China

This study estimates the effect of parental absence on the development of children in rural China. Although some previous studies have looked into the effect of parental absence on children's academic achievements, we investigate the effects of parental absence on both the cognitive and non‐cognitive skills of children. Our results show that parental absence during early child development mostly incurs negative effects on the academic achievement and non‐cognitive development of children. A child whose parents are both absent tends to have lower Chinese and mathematics test scores, lower self‐assessment on his/her behavior, and is less likely to be happy and satisfied. A gender difference is also observed in the effect of parental absence: girls suffer more from the effect of both parents being absent on their mathematics test scores than do boys.     

Does the labour supply of wives respond to husbands' wages? Canadian evidence from micro data and grouped data

Abstract. Using micro data and grouped data, we assess the extent to which Canadian wives adjusted their labour supply in response to changes in husbands' wages during the period 1980‐2000. Grouped data parameters based on weighted least squares and the unbiased‐error‐in‐variables estimator developed by Devereux (2004, 2007a,b) yield cross‐wage elasticities that are substantially higher (in absolute value) than those derived from OLS regressions run on micro data. Both grouping estimators indicate that the labour supply of Canadian wives responded strongly to changes in husbands' wages during the 1980s. For the 1990s, our estimates of wives' cross‐wage elasticity display greater dispersion.     

The Impact of Lifecycle Events on Women's Labour Force Transitions: A Panel Analysis*

This panel study explores the impact of different lifecycle events on women's labour force transitions. We explicitly investigate whether the factors that determine entry into the labour force differ from the factors that determine withdrawal from the labour force. The results demonstrate that labour force transitions – entry and withdrawal – occur more frequently among young women. The event of childbirth is strongly associated with labour force withdrawal, while marital separation and reductions in family earnings are strongly associated with labour force entry. Moreover, labour force transition probabilities are more sensitive to income‐reducing events than to income‐supplementing events.     

Hiring Older Employees: Do the Age Limits of Early Retirement and the Contribution Rates of Firms Matter?

We examine the effects of a Finnish pension reform on firms' incentives to hire older employees. The reform restricted the eligibility ages for early retirement and changed the size‐related contribution rates of firms. According to our theoretical model, the positive effect on the values of new hires extends to age groups younger than those directly affected by the reform, and the effects are strongest in the largest firms. These model predictions were confirmed in a difference‐in‐difference‐in‐differences analysis on the probability of the hiring of workers of different ages in firms of different sizes.     

EDUCATIONAL GENDER INEQUALITY AND INVERTED U‐SHAPED FERTILITY DYNAMICS*

In this article, we examine the dynamic interactions between narrowing educational gender inequality and inverted U‐shaped fertility dynamics by constructing a two‐period overlapping generations model that includes both sexes. In the early stage of development, neither male subjects nor female subjects are educated. At some period, male subjects begin to be educated, whereas female subjects remain uneducated. At this stage, the male subjects' education levels, as well as the fertility rates, gradually increase over time. Fertility achieves a peak just before the onset of the female subject's education. Subsequently, fertility steadily decreases over time. Gender inequality in education also decreases during periods of fertility decline.     

Search equilibrium and social and private returns to education

Social and private returns to education are computed using the structural estimates of an extended Burdett-Mortensen search equilibrium model. The extension includes different skill groups linked via a production function with variable degree of homogeneity, allowing thereby for a unimodal earnings density with a decreasing right tail. We find that the decreasing unemployment risk for higher skill groups and the absence of tuition fees in Germany increase private returns and lead to a too large share of high skilled individuals in the workforce, which is suboptimal from the social point of view.     

Structural Features of Female Employment Status and Earnings Mobility: The Experience in Germany

Structural changes in basic economic indicators, changes in traditional role patterns, and in female employment behavior shed light on the performance of the European labor markets in the 90s. This paper focuses on the cyclical sensitivity of women's employment status and earnings position in Germany. Using data from the German Socio-Economic Panel (GSOEP) we test the hypothesis that labor market adjustments are not gender-neutral but affect women's employment status and women's relative earnings position to a greater extent than those of men. Cross-sectional as well as longitudinal analysis indicate positive effects on female employment status and earnings position during a period with worsening economic indicators. Logistic regression analysis confirms an increasing likelihood of an upward earnings mobility for women in the 90s. Notwithstanding these positive trends the results show that - due to social norms and attitudes - women are still discriminated against in the labor market and in terms of their relative earnings position. Thus social policy is called upon to improve women's social and employment conditions.     

Truthtelling in Matching Markets

We analyze a search and matching model with non‐transferable utility and asymmetric information. Randomly paired agents go through an evaluation phase, at the end of which they discover each other's types and choose to match or not. Before deciding to enter this phase, agents can communicate through cheap talk. We provide conditions for this communication to be informative, and we examine how it affects agents' welfare. We show that communication is Pareto‐improving only when the matching is assortative in the absence of communication and left unchanged by information transmission.