An empirical assessment of assortative matching in the labor market

In labor markets with worker and firm heterogeneity, the matching between firms and workers may be assortative, meaning that the most productive workers and firms team up. We investigate this with longitudinal population-wide matched employer–employee data from Portugal. Using panel data methods, we quantify a firm-specific productivity term for each firm, and we relate this to the skill distribution of workers in the firm. We find that there is positive assortative matching, in particular among long-lived firms. Using skill-specific estimates of an index of search frictions, we find that the results can only to a small extent be explained by heterogeneity of search frictions across worker skill groups.     

Instability in the labor market for researchers

R&D is both an activity which involves team effort, and with many of the features of a zero-sum game. This paper shows that these characteristics make the labor market for researchers unstable in the sense that firms have incentives to continuously change the composition of their research teams. Related results concerning the core of several cooperative games in characteristic form are also proved.     

The national internal labor market encounters the local labor market: Effects on employee retention

Formal salary systems are commonplace among medium to large-sized firms and within the United States government. However, there is little evidence regarding the costs, if any, of such systems. This study analyzes the effects on retention within the United States Air Force from an inflexible wage system failing to adequately compensate personnel for local compensating wage differentials. Using location-specific Air Force personnel records, I compare the differences between military and civilian wages, by occupation, across locations to determine if local labor markets play a significant role in the stay or leave decisions for personnel. Results show that rigid wage constraints do in fact impose costs on the firm through increased turnover in locations that fail to adequately adjust wages for the cost of living and amenities.     

Behavior of the firm in a market for heterogeneous labor

This paper develops a dynamic model of the firm in a labor market where workers and jobs are heterogeneous with respect to skill. The firm's recruitment policy, in a heterogeneous market, consists of both a wage offer and a skill requirement. The explicit derivation of this policy serves to clarify the difference between the long-run and short-run relationship between wages and skills. The short-run shift in this relationship helps to explain the occupational upgrading that occurs in cyclical upswings. The model also highlights the impact of the skill level distribution on the rate of change of firms' wage offers.     

Women of color in the labor market

While the labor force participation rates of women have increased, and women work in a wider range of occupations than they did two decades ago, there remain gaps between the status of women and men, as well as between white women and women of color. Additionally, as the female labor force becomes more diverse, there are also differences among women of color in labor force participation, unemployment, and occupational status. Based on projections regarding the future structure of the labor force, it is likely that even as the status of some women of color improves, many will remain stuck in low-wage service and clerical jobs.     

Using the LSAT as a labor market thermometer for lawyers

We rely upon a 50-state, 20-year panel to find that the number of Law School Admissions Test (LSAT) takers is only loosely related to economic conditions—although slightly more for men than for women, who in 2020 accounted for 58% of all LSAT takers. The number of test takers rose more than 35% between 2014 and 2020. This wave accentuated an already existing downtrend in the median real income of lawyers, and thus provides support for the hypothesis that most states have more lawyers than they need.     

Firm-specific wage growth and changes in the labor market for managers

This paper analyzes recent changes in the employment relationships between managers and firms. In both Becker's and Lazear's models of firm-specific wage growth, compensation is deferred from early in an employee's tenure with a firm until later in the contract. The deferred compensation bonds the worker to the firm. Based on cross-sectional data from Current Population Surveys, rates of firm-specific wage growth are estimated for the managerial labor market. The findings show that the rate of wage growth that is firm-specific for managers in manufacturing industries declined significantly during the early 1980s. It is estimated, for example, that a manager with 12 years of tenure in a manufacturing firm enjoyed, on average, a 25% wage premium in 1979 over an otherwise similar manager who was a new hire in a firm. By 1983 the firm-specific wage premium for a manager with 12 years of tenure was only 5%. These changes represent a significant reduction in the strength of the employment bond between firms and managers, and a reduction in the incentive effects previously enjoyed by firms from the use of deferred-compensation schemes. This change is consistent with the significant increases in the displacement rates of managers that occurred during the 1980s.     

Economic determinants of the labor force withdrawal of Registered Nurses

This study examines two outflows that affect the labor supply of Registered Nurses (RNs), nurses leaving the profession to pursue a non-nursing occupation and employed nurses withdrawing from the labor force. Using pooled CPS data for 1980–90, a probit model is specified to estimate economic influences on the labor-force-withdrawal decisions of RNs. Evaluating the estimated probit function for different sets of RN characteristics yields different probability estimates of labor-force withdrawal. The results suggest that, although relatively few RNs leave the nursing profession to seek non-nursing occupations, a significant number withdraw, at least temporarily, from the labor force. The wage rate, other family income, presence of children, and full-time/part-time work status have a significant influence on the withdrawal decision.     

Some labor market effects of labor supply responses to transfer programs

This paper utilizes a large-scale micro-simulation computer model to examine whether adverse effects on work effort initially resulting from implementation of a new income transfer plan might be partially offset through “second-round” responses by employers and by unemployed transfer recipients. The findings suggest that employer responses to shifts in labor supply curves that follow introduction of a transfer program have little potential for offsetting reductions in hours worked. Under certain circumstances, however, responses by the unemployed do offer a potential offset, particularly if in the absence of the program there would have been considerable excess supply of labor within the economy.     

Slower economic growth affects the 1995 labor market

As the pace of economic activity moderated in 1995, job growth slowed. Nonetheless, it was enough to absorb the small increase in the supply of labor, with the result that the unemployment rate remained at about the same level it had reached at the end of 1994. In the first quarter of 1995, employment grew at a brisk pace but, as the economy began to slow, job gains fell sharply. Employment growth continued at a much more moderate pace for the balance of the year, so that, by the fourth quarter, nearly 1.9 million jobs had been added to the Nation's payrolls. By comparison, in the fourth quarter of 1994 alone, payroll employment had grown by 1.1 million. Most of the job gains in 1995 were in the services industry group. Manufacturing employment, which had been rising since the fall of 1993, began to decline in the spring, and by the end of 1995, that industry group had lost nearly a quarter of a million jobs. Employment increased in most of the other major industry groups, even though declines in some of their component industries partly offset gains in others.     

An empirical investigation of environmental performance and the market value of the firm

This paper analyzes the shareholder value effects of environmental performance by measuring the stock market reaction associated with announcements of environmental performance. We examine the market reaction to two categories of environmental performance. The first category includes 417 announcements of Corporate Environmental Initiatives (CEIs) that provide information about self-reported corporate efforts to avoid, mitigate, or offset the environmental impacts of the firm's products, services, or processes. The second category includes 363 announcements of Environmental Awards and Certifications (EACs) that provide information about recognition granted by third-parties specifically for environmental performance. Although the market does not react significantly to the aggregated CEI and EAC announcements, we find statistically significant market reactions for certain CEI and EAC subcategories. Specifically, announcements of philanthropic gifts for environmental causes are associated with significant positive market reaction, voluntary emission reductions are associated with significant negative market reaction, and ISO 14001 certifications are associated with significant positive market reaction. The difference between the market reactions to the CEI and EAC categories is statistically insignificant. Overall, the market is selective in reacting to announcements of environmental performance with certain types of announcements even valued negatively.     

The long-term success of M&;A in the automotive supply industry: determinants of capital market performance

In the recent past, the automotive supply industry has been facing increasing merger activity. This paper examines the short- and long-term wealth effects of horizontal mergers and acquisitions on acquirers in the automotive supply industry. Based on a sample of 230 takeover announcements between 1981 and 2007, significant positive announcement returns to acquiring companies were determined. While these positive short-term returns to acquirers represent an outstanding attribute of this industry in terms of perceived synergy potential, this study also finds that acquirers are unable to sustain this exceptional position beyond a short-term horizon. A combination of the Fama-French-3-Factor model in calendar time and the control firm approach in event time consistently reveals significant value destruction of about 20% over 3years. In addition, the study determines a significant impact of internationalization, transaction volume, product diversification, and acquirer’s bidding experience on the long-term post-acquisition performance.     

The labor market effects of non-wage compensations

Contrary to the argument that non-wage compensation is a tax on labor reducing employment, we find that employment may increase in response to an increased demand for benefits (a decreased cost of providing benefits or increased government-mandated benefit levels), under the assumption of strong cross-economies of scale. When there are strong cross-diseconomies of scale, employment and hours both decrease. The secular increase in employer-provided insurance and the growth in U.S. employment may well reflect the role of cross-economies of scale, which seems to exist in larger firms with lower marginal non-wage benefit costs.     

Comparative analysis of labor market dynamics using Markov processes: An application to informality

This paper discusses a set of statistics for examining labor market dynamics in developing countries and offers a simple search model that informs their interpretation. It then employs panel data from Argentina, Brazil and Mexico to generate a set of preliminary stylized facts about patterns of sectoral transition and duration. Finally, it nests two competing views of the informal sector within the model and uses variation in the statistics across age and the business cycle to help discriminate between them. The results suggest that a substantial part of the informal sector, particularly the self-employed, corresponds to voluntary entry, although informal salaried work may correspond more closely to the standard queuing view, especially for younger workers.     

An agency theory perspective of the Israeli labor market segmentation: Past,present, and future

In this paper we use agency theory to present a process of the dichotomization of the Israeli workforce into two structures, each representing distinct organizational cultures. The first structure is the private sector, led by the high-tech industry; a model where the principal has strong control over the activities of the agent. The second is the public sector, an opposing model in which the principal has virtually no control over the activities of the agents and as a result, the effectiveness within this sector deteriorates. We argue that such conflicting systems cannot exist side by side without affecting each other and we suggest a role for human resource management (HRM) in future developments. Within the public sector it is the responsibility of the principal, the Israeli government, to gain more control over the agent and employ professional HRM systems for this purpose.     

Market structure determinants of performance for independent supermarkets

We create a novel dataset by merging Nielsen TDLinx data with the results of a survey of supermarket managers. We study the determinants of store performance for independent supermarkets, as measured by sales per square foot, paying particular attention to local market structure. The results show a negative and significant impact of market concentration on independent supermarket performance, which is robust to model specification. We also identify a number of format‐specific impacts and performance drivers such as store characteristics, all of which motivate future research.     

Analyzing the labor market activity of immigrant families in Germany

This paper analyzes whether immigrant families facing credit constraints adopt a family investment strategy wherein, upon arrival, an immigrant spouse invests in host country-specific human capital while the other partner works to finance the family's current consumption and the spouse's skills accumulation. Using data for West Germany, we do not find evidence for such a specialization strategy. We further examine the labor supply and wage assimilation of families whose members immigrated together relative to families whose members immigrated sequentially. Our estimates indicate that this differentiation is relevant for the analysis of the labor market activities of migrant households.     

The early inception of labor market gender differences

This paper analyzes gender differences in jobs while in school using school-class-based samples, a setting in which education differences, “glass ceilings”, and career interruptions due to parenthood are irrelevant. I find that in this early stage of life boys already earn substantially more than girls. The earnings gap cannot be explained by differences in participation rates and hours of work, nor by gender wage gaps within job types. It is entirely due to the fact that girls work more in job types with relatively low wages, in particular babysitting. During the period considered, 1984–2001, the gender patterns of jobs while in school largely remained unchanged.