Adverse workplace conditions, high-involvement work practices and labor turnover: Evidence from Danish linked employer-employee data

Using Danish linked employer-employee data, we find that: (i) exposing the worker to physical hazards leads to a 3 percentage point increase in the probability of voluntary turnover from the average rate of 18%; (ii) working in night shift results in an 11-percentage point hike; and (iii) having an unsupportive boss leads to a 6-percentage point jump. High involvement work practices are found to play a significant role in mitigating the adverse effects of workplace hazards. Finally, the worker under adverse workplace conditions is found to improve the 5-year odds of rectifying such workplace adversities by quitting the firm.     

Job mobility and the gender wage gap in Italy

This paper investigates the contribution of gender differences in job mobility to the emergence of a gender wage gap in the Italian labour market. We show that over the first 10 years of labour market experience job mobility accounts for up to 30% of total log wage growth for men and only 8.3% for women, and that this difference is mainly due to differences in returns to mobility. The gender mobility gap is robust to the inclusion of individual, job and firm characteristics, to different ways of accounting for individual unobserved heterogeneity, and is mainly found for voluntary job moves. Looking at the characteristics of the jobs and the firms' workers move to, we find that moves to larger firms represent by far the main source of gender differences in returns to mobility. We offer two possible explanations for this finding; one which involves differences in bargaining behaviour and one which relates to the theory of compensating differentials.     

Regional Foreign Direct Investment and Wage Spillovers: Plant Level Evidence from the UK Electronics Industry*

This paper examines the extent to which foreign investment in the UK generates wage spillovers in the domestic sector of the economy using a simultaneous dynamic panel data model and focusing on the electronics sector, possibly the most ‘globalized’ sector of UK manufacturing. It finds evidence that the higher wages paid by foreign firms cause wages in the domestic sector to be bid up. This phenomenon is, however, largely confined to the region where foreign direct investment takes place.     

Efficiency Wages and the Economic Effects of the Minimum Wage: Evidence from a Low‐Wage Labour Market*

This article exploits a natural experiment provided by the 1999 introduction of the UK National Minimum Wage (NMW) to test for efficiency wage considerations in a low‐wage sector, the UK residential care homes industry. The empirical results provide support to the wage‐supervision trade‐off prediction of the shirking model and suggest that the NMW may have operated as an efficiency wage in the care homes sector, leading to a reduction in supervision costs. These findings can explain earlier evidence suggesting that although the NMW introduction increased wages dramatically in the care homes sector, it generated only moderate negative employment effects.     

Preferences,Comparative Advantage,and Compensating Wage Differentials for Job Routinization*

I attempt to explain why there is not much evidence on compensating wage differentials for job disamenities. I focus on the match between workers’ preferences for routine jobs and the variability in tasks associated with the job. Using data from the Wisconsin Longitudinal Study, I find that mismatched workers earn lower wages and that both male and female workers in routinized jobs earn, on average, 5.5% and 7% less than their counterparts in non‐routinized jobs. However, once preferences and mismatch are accounted for, this difference decreases to 2% for men, and 4% for women, not statistically significant in both cases.     

The impact of computer use on earnings in a developing country: Evidence from Ecuador

This paper examines the earnings premium to computer use in a developing country: Ecuador. We use different approaches to examine whether the premium is causal. Controlling for an extensive set of observables, we find an earnings difference between users and non-users of around 20%. Using first differences, the premium drops and is no longer significant in a specification that includes proxies for workers' computer experience and knowledge. Estimates of the impact of the intensity of computer use are also small and in most cases insignificant. Estimates of the pencil premium are substantial in level specifications, but become insignificant in fixed effect specifications. Taken together, also in the setting of a developing country we do not find evidence in favour of the computer premium reflecting a causal impact.     

Worker absence and shirking: Evidence from matched teacher-school data

We utilise a unique matched teacher-school data set of absenteeism records to quantify the impact of group interaction on the absence behavior of primary and secondary teachers. To address problems of identification our study focuses on teachers who move between schools. The estimates for movers suggest that absenteeism is influenced by prevailing group absence behaviour at the school. Our finding suggests that a worker takes one more day of absenteeism if their average coworker takes 12 more days or 8 more days absenteeism per quarter for primary school and secondary school teachers, respectively. We interpret this as evidence that worker shirking is influenced by workplace absence norms.     

The Impact of Training on Productivity and Wages: Evidence from British Panel Data*

It is standard in the literature on training to use wages as a sufficient statistic for productivity. This paper examines the effects of work‐related training on direct measures of productivity. Using a new panel of British industries 1983–96 and a variety of estimation techniques we find that work‐related training is associated with significantly higher productivity. A 1% point increase in training is associated with an increase in value added per hour of about 0.6% and an increase in hourly wages of about 0.3%. We also show evidence using individual‐level data sets that is suggestive of training externalities.     

Impact of cultural diversity on wages,evidence from panel data

This paper combines individual data from the British Household Panel Survey and yearly population estimates for England to analyse the impact that cultural diversity has on individual wages. Do people living in more diverse areas earn higher wages after controlling for other observable and unobservable characteristics? The results show that cultural diversity is positively associated with wages, but only when cross-section data are used, while panel data estimations show no impact of diversity. Since natives with comparatively higher skills – and wages – tend to self-select into more diverse areas, cross-section analyses may produce upwardly biassed results.     

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.     

Working hours in Chinese enterprises: evidence from matched employer–employee data

The purpose of this article is to explore the factors that are correlated with hours worked in China. A distinguishing feature of the study is that we used representative‐matched employer and employee data. Hence, in addition to the usual worker characteristics examined in conventional economic models of labour supply, we also took into account the influence of firm characteristics and policies on the number of hours worked. The results suggested that in addition to the hourly wage rate, labour supply characteristics and human capital characteristics of the individual, firm‐level differences are important in explaining variation in weekly hours worked in Chinese firms. In particular, our results suggested that there is a norm of longer working hours in firms that employ a high proportion of female and migrant workers, that hours worked are less in firms which pay overtime and that hours worked are less in firms in which labour disputes have disrupted production. The policy implications of Chinese firms reducing hours worked were discussed.     

Job satisfaction and gender: Why are women so happy at work?

By most objective standards, women's jobs are worse than men's, yet women report higher levels of job satisfaction than do men. This paper uses a recent large-scale British survey to document the extent of this gender differential for eight measures of job satisfaction and to evaluate the proposition that identical men and women in identical jobs should be equally satisfied. Neither the different jobs that men and women do, their different work values, nor sample selection account for the gender satisfaction differential. The paper's proposed explanation appeals to the notion of relative well-being, especially relative to workers' expectations. An identical man and woman with the same jobs and expectations would indeed report identical job satisfaction, but women's expectations are argued to be lower than men's. This hypothesis is supported by the finding that the gender satisfaction differential disappears for the young, the higher-educated, professionals and those in male-dominated workplaces, for all of whom there is less likely to be a gender difference in job expectations.     

Modelling oil price expectations: Evidence from survey data

Using Consensus Forecast survey data on WTI oil price expectations for 3- and 12-month horizons over the period November 1989 to December 2008, we find that the rational expectation hypothesis is rejected and that none of the traditional extrapolative, regressive and adaptive processes fits the data by itself. We suggest a mixed expectation model defined as a linear combination of these traditional processes, which we interpret as the aggregation of individual mixing behavior and of heterogenous groups of agents using these simple processes. This approach is consistent with the economically rational expectations theory. We show that the target oil price included in the regressive component of this model depends on the long-run marginal cost of crude oil production and on short term macroeconomic fundamentals whose effects are subject to structural changes. For the two horizons, estimation results provide evidence for our mixed expectation model incorporating this break-dependent target price.     

Social Security and elderly labor supply: Evidence from the Health and Retirement Study

This study uses panel data from the Health and Retirement Study (HRS) to estimate the effects of Social Security income on elderly labor supply in the 1990s and early 2000s. The identification strategy takes advantage of the 1977 amendments to the Social Security Act, which led to a large, unanticipated reduction in Social Security benefits for those born after January 1, 1917. Despite the advanced age of the notch cohorts, there is a significant, negative and surprisingly elastic relationship between Social Security income and hours of work. This suggests that currently proposed reductions in benefits would induce Social Security recipients to work more hours in retirement, even through their 70s and early 80s.     

Explaining cross-racial differences in teenage labor force participation: Results from a two-sided matching model

White teenagers are substantially more likely to search for employment than black teenagers. This differential occurs despite the fact that, conditional on race, individuals from disadvantaged backgrounds are more likely to search. While the racial wage gap is small, the unemployment rate for black teenagers is substantially higher than that of white teenagers. We develop a two-sided search model where firms are partially able to search on demographics. Model estimates reveal that firms are more able to target their search on race than on age. Employment and wage outcome differences explain half of the racial gap in labor force participation rates.     

Housing-choice hindrances and urban spatial structure: Evidence from matched location and location-preference data in Chinese cities

In a monocentric city with a well-functioning residential market, Pareto-efficient spatial equilibrium entails the sorting of residents according to their bid–rent gradient in descending order away from city center. Violation of this sorting condition creates opportunities for Pareto-improving trading of locations and can be sustained only if the market is hindered. We propose a simple ordered-location-choice model using matched location and location-preference data of individual households to examine violations of the Pareto-efficient spatial sorting condition. In so doing we are able to identify population groups facing housing-choice hindrances. We find in a sample of Chinese cities undergoing housing market liberalization that poor marketability of the previously state-provided homes, inadequate provision of housing finance, and spatial mismatch between job-market and housing-market opportunities contribute to a Pareto-inefficient spatial structure.     

Housing-choice hindrances and urban spatial structure: Evidence from matched location and location-preference data in Chinese cities

In a monocentric city with a well-functioning residential market, Pareto-efficient spatial equilibrium entails the sorting of residents according to their bid–rent gradient in descending order away from city center. Violation of this sorting condition creates opportunities for Pareto-improving trading of locations and can be sustained only if the market is hindered. We propose a simple ordered-location-choice model using matched location and location-preference data of individual households to examine violations of the Pareto-efficient spatial sorting condition. In so doing we are able to identify population groups facing housing-choice hindrances. We find in a sample of Chinese cities undergoing housing market liberalization that poor marketability of the previously state-provided homes, inadequate provision of housing finance, and spatial mismatch between job-market and housing-market opportunities contribute to a Pareto-inefficient spatial structure.     

Political Influence and the Banking Sector: Evidence from Korea*

This paper uses panel data to compare the performance of Korean banks with and without effective government control of the appointment of chief operating officers. A privatization programme succeeded in spreading ownership of banks widely among the public, but government retention of an ownership stake in an institution meant de facto control by government. Despite charging lower loan rates, banks controlled by government experience higher bad loans ratios. This is in line with expectations of regulatory forbearance and government protection for recipients of political loans. Banks controlled by government are less efficient than privately controlled banks and bad loan variables are higher at banks with lower efficiency scores.     

Shifts in the Demand and Supply of Skills in the OECD: A Single‐Index Model with a Continuous Distribution of Skills*

This paper proposes a one‐dimensional index for the gap between the demand and supply of skills; this index can be estimated based on the labour market performance of groups defined with characteristics (e.g. education) that are only imperfectly correlated with labour market skills. Using data from five European countries and the US, we find that the relative demand for skills has increased more than the relative supply in the US and UK during the 1980s but not in other European countries. However, the gap between relative demand and supply increased in Italy and the Netherlands from the early 1990s.     

Earnings volatility in America: Evidence from matched CPS

We offer new evidence on earnings volatility of men and women in the United States over the past four decades by using matched data from the March Current Population Survey. We construct a measure of total volatility that encompasses both permanent and transitory instability, and that admits employment transitions and losses from self employment. We also present a detailed decomposition of earnings volatility to account for changing shares in employment probabilities, conditional variances of continuous workers, and conditional mean variances from employment entry and exit. Our results show that earnings volatility among men increased by 15% from the early 1970s to mid 1980s, while women's volatility fell, and each stabilized thereafter. However, this pooled series masks important heterogeneity in volatility levels and trends across education groups and marital status. We find that men's earnings volatility is increasingly accounted for by employment transitions, especially exits, while the share of women's volatility accounted for by continuous workers rose, each of which highlights the importance of allowing for periods of non-work in volatility studies.