Informality in an economy with active labour courts

Job regulations and the justice branch interfere on several aspects of labour contracts. We build a model which explores the role of labour courts on the wage distribution in both formal and informal sectors. We obtain that the presence of active labour courts produces a negative relation between the wage gap and the productivity of the worker, a regularity documented in the empirical literature. Active labour courts also reduce informality of unskilled workers but do not have an impact on informality of skilled workers. Some elements and implications of our model are tested using Brazilian data.     

Student demographics,school working conditions,and teacher mobility

I analyse how the inclusion of working condition data influences the estimated marginal effects of student demographics on teacher mobility. Using detailed administrative data on public schools, combined with unique data describing teachers’ perceptions of working conditions, I estimate a model characterizing the multinomial outcomes of teachers choosing to work at different schools. By comparing the estimated marginal effects of student characteristics with and without incorporating detailed working conditions, I find that excluding these additional data results in overestimating the effect of student characteristics on the probability a teacher moves to a different school, but has no influence on estimated effects for the probability of leaving teaching altogether.     

Informality,innovation, and aggregate productivity growth

This paper investigates how the costs of innovation in the formal sector temper or magnify the impacts of traditional policy levers such as taxation on sectoral choice. I embed a decision whether to operate formally or informally into a richer, general equilibrium model. Formal firms are subject to taxation, but they can improve their productivity through process innovation. Informal firms can potentially avoid taxation, and their productivity is determined by productivity growth in the formal sector. I find that changing tax rates from 50% to 60% decreases formal‐sector participation by 20.9%; however, this percentage falls by 10% when the cost of innovation is lower in the formal sector. The model also illustrates how changes in tax policy affect total factor productivity growth by limiting both the number of formal‐sector firms and the intensity of innovation. These results indicate a potential mechanism to induce firms to operate formally or mitigate harmful impacts of necessary tax changes.     

Regional and gender differentials in the persistence of unemployment in Europe

The persistence of unemployment increased during the recent great recession in many European countries, although with diversified impacts. We therefore analyse such impacts in four European countries – Italy, Spain, France and the UK – which represent different institutional frameworks and may reflect the so-called continental European and Anglo-Saxon frameworks. We analyse the determinants of unemployment persistence using individual-level data from the European Union Statistics on Income and Living Conditions (EU-SILC) panel for the period 2007–2013. These data enable us to take into account initial conditions and state dependence in addition to individual and household characteristics. We focus on gender and regional effects, which have a strong impact on the persistence in the state of unemployment. We find that gender gap is significant in Italy and the UK, implying that male workers show a higher probability of remaining unemployed. In Italy, such a pattern is due to the worsening of male workers’ conditions during the crisis, whereas in the UK, male workers show higher unemployment rates than women. Regional effects are significant in all countries analysed and underline a relevant structural factor that should be addressed on policy grounds in Europe. Such effects are greater in Spain and Italy.     

State Dependence in Welfare Benefits in a Non-Welfare Context

This study investigates state dependence in social assistance benefits in Turkey, where benefit receipt and persistence rates have significantly increased over the past decade. We estimate state dependence through dynamic random-effects probit models, controlling for observed and unobserved heterogeneity, and endogenous initial conditions. In particular, we employ Wooldridge’s estimator to achieve consistent and correct estimates of state dependence and compare the results with estimates from Heckman’s reduced-form approach as a sensitivity check. Both estimators enable us to disentangle true state dependence from its spurious components and address the potential bias due to the short panel length. Our results suggest that the receipt of benefits in the last year increases the likelihood of benefit receipt in the current year, namely the structural state dependence, by 17.2–19.5 percentage points.     

Job creation,job destruction,labour mobility and wages in Poland, 1988–19981

Longitudinal data from interviews with Poles of working age conducted in 1988, 1993 and 1998 combined with longitudinal firm‐level data present a detailed view of the transition from a state‐dominated to a market economy. Job losses in state firms and job creation in new private firms are the dominant employment changes, other than retirements from the labour force. In the Polish case, a significant proportion of this movement over the 1988–1998 period involves a spell of unemployment or exit from the labour force before obtaining a private sector job. This results in considerable job competition between workers leaving the state sector and those who are out of the labour force or unemployed. Income differences between the state sector and the de novo sector appear to have little association with mobility. These results suggest that movement to the new private sector is more likely to be the result of job loss than the result of people looking for better, higher paying jobs. Self‐employment plays an important role in the development of the private sector. People working on their own account have higher incomes than wageworkers and are likely to become owners employing additional workers. Incomes are higher in regions with high rates of job creation and depressed in regions with job destruction.     

Labour mobility during transitionEvidence from Georgia1

This article deals with labour mobility in Georgia during economic transition. We use quarterly 1998–99 panel data to examine mobility across six labour market statuses (inactivity, unemployment, formal wage employment, informal wage employment, self‐employment and farming). Our findings are consistent with the hypothesis of labour market segmentation. Formal employment is preferred to informal employment. Unemployment is largely a queuing device for individuals with higher education waiting for formal jobs. Some self‐employment is subsistence activities and consistent with a segmented labour market, while other is high risk and potentially high return activities. Age, gender and education are significant determinants of labour mobility. Finally, informal employment serves as a buffer in times of recession – with farming and informal wage employment absorbing labour shed by other statuses during the Russian financial crisis.     

Informality,public employment and employment protection in developing countries

This paper proposes an equilibrium matching model for developing countries’ labor markets where the interaction between public, formal private and informal private sectors are taken into account. Theoretical analysis shows that gains from reforms aiming at liberalizing formal labor markets can be annulled by shifts in the public sector employment and wage policies. Since the public sector accounts for a substantial share of employment in developing countries, this approach is crucial to understand the main labor market outcomes of such economies. Wages offered by the public sector increase the outside option value of the workers during the bargaining processes in the formal and informal sectors. It becomes more profitable for workers to search on-the-job, in order to move to these more attractive and more stable types of jobs. The public sector therefore acts as an additional tax for the formal private firms. Using data on workers’ flows from Egypt, we show empirically and theoretically that the liberalization of labor markets plays against informal employment by increasing the profitability, and hence job creations, of formal jobs. The latter effect is however dampened or even sometimes nullified by the increase of the offered wages in the public sector observed at the same time.     

Two separated effects of employer-provided health insurance on job mobility

We estimate the effect of employer-provided health insurance (EPHI) on job mobility via a dynamic model of joint employment and health insurance decision in the presence of uncertainty about wage rate and health status transitions. The model is based on a Markov decision process in which a hedonic wage approach provides an economic rationale for the different choices and health insurance serves as an input to the health production process. Including health transitions in the model helps us to understand how the availability of EPHI (positive job characteristic) and holding EPHI (the wage-health insurance trade-off) enter into the individuals’ decisions. The model is estimated using the 1999–2000 Medical Expenditure Panel Survey panel 4, and the results show that the ‘pure’ effects of holding EPHI are negligible, the ‘full’ effects of EPHI are significant and the degrees of the inefficiency vary between 14% and 25% across different states.     

Heterogeneity,saving-investment dynamics and capital mobility in Latin America

The purpose of this paper is to analyze the dynamics of national saving-investment relationship in order to determine the degree of capital mobility in 12 Latin American countries. The analytically relevant correlation is the short-term one, defined as that between changes in saving and investment. Of special interest is the speed at which variables return to the long run equilibrium relationship, which is interpreted as being negatively related to the degree of capital mobility. The long run correlation, in turn, captures the coefficient implied by the solvency constraint. We find that heterogeneity and cross-section dependence completely change the estimation of the long run coefficient. Besides we obtain a more precise short run coefficient estimate compared to the existent estimates in the literature. There is evidence of an intermediate degree of capital mobility, and the coefficients are extremely stable over time.      

Inequality and mobility

Acknowledging that wage inequality and intergenerational mobility are strongly interrelated, this paper presents a model in which both are jointly determined. The model enables us to study how inequality and mobility are affected by exogenous changes and what determines their correlation. A main implication of the model is that differences in the amount of public subsidies to education and educational quality produce cross-country patterns with a negative correlation between inequality and mobility. Differences in the labor market, like differences in skill-biased technology or wage compression instead produce a positive correlation. The predictions of the model are found to be consistent with various empirical observations on mobility and inequality.     

Earnings mobility in Spain: the role of job mobility and contractual arrangements

This paper analyses the relationship between earnings mobility, job mobility and changes in the contractual arrangement in Spain using a sample of Spanish workers aged 16–60 years extracted from the European Community Household Panel Survey (ECHP 1995–2001). Overall, earnings mobility remains mostly unchanged over time, although clear differences, both in terms of levels and trends, can be perceived among different types of workers. Results show that, in general, job mobility contributes to increase earnings mobility. Switching into permanent contract are associated with the highest probability of upgrading among those workers who remain with the same employer. In contrast, the highest risk of downgrading among stayers appears when changing from permanent to temporary. An analysis on low pay/no low pay transitions reveals that job mobility always increases the probability of moving from low pay to better-paid jobs among females. For males, in contrast, this occurs only when they were initially employed on a temporary basis. Furthermore, for females it is found that either switching into permanent contract while staying with the same employer, or changing employer while being employed on a permanent basis yield a higher chance of upgrading than staying with the same employer with a permanent contract.      

Job mismatches and career mobility

Does over-education assist or hinder occupational advancement? Career mobility theory hypothesizes that over-education leads to a higher level of occupational advancement and wage growth over time, with mixed international empirical evidence. This paper re-tests career mobility theory directly using a rich Australian longitudinal data set. A dynamic random effects probit model is employed to examine upward occupational mobility, considering two-digit occupational rank advancement and wage growth over three-year intervals. The ‘Household, Income and Labour Dynamics in Australia’ data across nine years are employed, and a Mundlak correction model is adopted to adjust for unobserved heterogeneity effects and potential endogeneity, both of which are important to over-education analysis. Contrary to career theory, the results point to job mismatch as an economic concern rather than a passing phase, regardless of whether or not workers are skill-matched. Results further show the importance of adjusting for endogeneity.     

Intragenerational mobility and the ratio of permanent to total inequality

This article provides finite sample conditions for the ratio of permanent to total inequality based on methods of Gottschalk and Moffitt (1994) to be equivalent to the Shorrocks R constructed with a Theil General Entropy Index. A simple test emerges of whether the two measures can be seen as equivalent that reveals the implicit social weighting placed on different parts of the income distribution by the Gottschalk–Moffitt methods. Using data from the PSID and the SOEP for annual income from 1984 through 2006, the condition for the two measures to be equivalent is found to be satisfied in both data sets.     

The impact of skilled immigrants on their local teammates’ performance

We use the Bosman ruling, which invalidated restrictions on the maximum number of foreign players allowed on professional football teams, to identify a causal positive impact of foreign players in German Bundesliga clubs on the individual performance of their domestic teammates.     

农村劳动力流动的过去、现在和未来

回顾新中国成立以来农村劳动力流动的历史,世界上还没有哪个国家像中国一样,在推进现代化过程中,伴随如此大规模人口的迁移,并且在今后很长一段时间还将继续保持,并指出农村劳动力流动对中国的经济崛起发挥了重要作用。而当前农村劳动力转移也在发生变化,这是基于中国的政策变迁、地方政府行为和劳动者自身行为的变化所导致的。未来中国的城市化和工业化能否深度推进,农村劳动力流动起着重要作用。适时调整政策以适应农村劳动力流动的变迁将是对中国政府新的考验,如果成功,将走出中国独特的农村劳动力迁移道路。     

Smartphones support smart labour

Besides enabling communication, smartphones support information flows and financial transactions, especially in developing countries, where the coverage of landline networks is limited. Drawing upon new data of rural households in the Mekong region, this article finds that smartphone ownership increases labour mobility measured as the number of commuters whereas it seems to discourage the emigration of workers.     

Social Security Disability Insurance and intergenerational economic mobility

Economic opportunity in the United States is shaped by parental health and disability. We hypothesize that Disability Insurance (DI) may mitigate the observed pattern. Using linked survey and administrative data, we find children of work-limited parents have 4.1 percentiles less upward economic mobility and 4.3 percentiles more downward mobility relative to children of non-limited parents. Despite poorer health, children of parents initially awarded DI experience a negligible mobility gap relative to peers whose parents never apply to DI and 3.6 percentiles more upward mobility than peers of parents who are initially denied benefits—suggesting DI may moderate economic mobility.     

Inflationary finance, capital mobility, and monetary coordination

This paper compares the inflation rate before and after monetary coordination between two benevolent governments. Many authors have previously argued that monetary coordination will reduce inflation [e.g., Aizenman, 1992; Beetsma & Bovenberg, 1998; Jensen, 1997; Kimbrough, 1993; Sibert, 1992; Tori, 1997]. Unlike these studies, the present paper introduces a mobile factor, which is capital. While capital may move freely between countries, it is subject to the inflation tax of the country in which it is located. This is because of a cash-in-advance type constraint governing investment expenditures. Since capital is perfectly mobile, inflation tax competition between governments leads to suboptimally low inflation. When countries coordinate their monetary policies, they can raise the inflation tax simultaneously without fear of capital flight. Hence, inflation tends to increase rather than decrease after monetary coordination.     

A transitions model for sustainable mobility

This paper reports on the development of a model for assessing transitions to sustainable mobility. The model uses the concepts of transition theory as a framework for assessing possible pathways by which a transition to a sustainable mobility society might happen. The modelling approach combines agent-based modelling techniques with a system dynamics structure. It is original in that there are two levels of agent. There are a small number of complex agents, which have an internal structure and are therefore subsystems within society, and a larger number of simple agents. Based on the UK data, the results show that Hydrogen Fuel Cell Vehicles (FCVs) come to dominate, but only in the very long run (after 2030), while biofuels and ICE (Internal Combustion Engine)-electric hybrids are the main alternatives to the regime in the next 10–30 years, because a) they are already developed and b) they fit better into current infrastructures. The model shows that technological transitions are most likely. Lifestyle change transitions require sustained pressure from the environment on society and behavioural change from consumers.