Heterogeneous Wage Effects of Apprenticeship Training*

The relatively small average wage effects of employer and occupation changes after apprenticeship training mask large differences between occupation groups and apprentices with different schooling backgrounds. People who change employer and occupation within industrial occupations enjoy large wage advantages, whereas apprentices in commerce and trading occupations, as well as in construction and crafts occupations, face wage losses from an occupation change. The differences between the firms that provide the apprenticeship training are found to be small or insignificant. In this paper, we reconcile the differences between previous findings by comparing and replicating the empirical estimation strategies used. This demonstrates that selectivity in occupations and changes, unobserved heterogeneity between occupations, and sample selection do matter.     

Returns to Education and Skills in the Labor Market: Evidence from Japan and Korea

This study investigates the determinants of skill proficiency, and the impact of adult skills on earnings, in Japan and Korea. Using the Program for the International Assessment of Adult Competencies survey data, it shows that Japanese adults perform better than Korean respondents, on average, on skill proficiency tests. A decomposition analysis shows that the score gap in literacy, numeracy, and problem solving skills between the two countries is mostly due to different returns to individual characteristics such as upper‐secondary and tertiary education. Adult skills have a positive and significant impact on individual earnings and employment probability, in both countries. In Japan, the returns to literacy, numeracy, and problem‐solving skills increase significantly with experience, and tend to fall with formal education, suggesting employer learning or human capital accumulation through career progression. In contrast, in Korea, the returns to literacy and numeracy skills do not seem to increase with experience.     

Labour Mobility and Returns to Experience in Foreign Firms*

This paper uses Finnish linked employer–employee panel data to study whether employees are able to appropriate returns to knowledge accumulated in foreign‐owned firms when moving to domestic firms. The estimates indicate that highly educated employees earn a return to prior experience in a foreign‐owned firm, which is over and above the return to other previous experience. These employees do not appear to pay for the knowledge they accumulate in the form of lower starting wages in foreign‐owned firms.     

Reducing Start‐up Costs for New Firms: The Double Dividend on the Labor Market*

Starting a firm with expansive potential is an option for educated and high‐skilled workers. If there are labor market frictions, this additional option can be seen as reducing the chances of ending up in a low‐wage job and hence as increasing the incentives for education. In a matching model, we show that reducing the start‐up costs for new firms results in higher take‐up rates of education. It also gives rise—through a thick‐market externality—to higher rates of job creation for high‐skilled labor as well as average match productivity. We provide empirical evidence to support our argument.     

The heterogeneity of beauty premium in China: Evidence from CFPS

Using a nationwide representative sample of the Chinese population, we examine the effect of physical appearance on the hourly wage. Our theoretical framework that connects physical appearance and the hourly wage has two predictions. First, the beauty premium is larger for high-skilled workers than for low-skilled workers. Second, this statistical-based discrimination arises from the hiring manager’s belief that beauty contributes to productivity through non-cognitive skills. Empirical results confirm both predictions. Good-looking individuals earn roughly 5.4% more than the rest, and bad-looking individuals earn roughly 3.3% less than the rest. Moreover, quantile estimates show that the effect of physical appearance at the 0.75 quantile is more than twice as the one at the 0.25 quantile. Finally, social skills, communication skills, and self-confidence are three transmission channels through which physical appearance can positively affect one’s hourly wage in our sample. Our findings imply that the beauty premium is widespread in the labor market and relevant anti-discrimination regulations are needed.     

Proxying Ability by Family Background in Returns to Schooling Estimations is Generally a Bad Idea*

When schooling is measured with error and data on ability are lacking, return to schooling estimates will be subject to positive omitted variable bias (OVB) and negative measurement error bias (MEB). We investigate how these biases are affected when ability is proxied by family background variables. We show that the effect on OVB is uncertain, while MEB invariably increases in magnitude. Our empirical analysis demonstrates that MEB generally dominates OVB. With more background variables or increased measurement error, the total bias rapidly becomes negative and increasing in magnitude, thereby driving the return estimate further and further away from the true value.     

The gender difference in wages and the returns to schooling over the great recession in the U.S.

This paper examines the effects of the Great Recession on the gender difference in hourly wage and the rate of return to schooling in the United States. Using data from American Community Survey 2000–2015, we find that the male-female difference in hourly wage declined during and after the recession. The Great Recession decreased earnings for both men and women, especially for those with more education. We also find there is a significant gender difference in the effects of the Great Recession on the returns to schooling. The Great Recession increased the rate of return to schooling for both men and women, and the female-male difference in the returns to schooling decreased by 0.4 percentage points in the post-recession period. The change of the gender difference in the returns to schooling can be explained by the wage structure change for men and women over the recession.     

Intergenerational Transmission of Education and Mediating Channels: Evidence from a Compulsory Schooling Reform in Germany

In this paper, I estimate the causal effect that an additional year of schooling for parents has on their children's education, by exploiting a compulsory schooling reform that was implemented in all West German states between 1946 and 1969. Although previous research indicates that the reform had no effect on earnings, I find that an additional year of schooling for women strongly affects the education of their sons. There is no effect for the other parent–child gender pairs. I investigate numerous channels that might mediate the positive effect of the education of mothers. Most importantly, I find that individuals with more schooling value their children's educational success as more important.     

Marginal Tax Rates and Tax‐Favoured Pension Savings of the Self‐Employed: Evidence from Sweden*

In recent years, the study of how individuals respond to policies that aim at promoting pension savings has emerged as a vital area of economic research. This paper adds to this body of literature by estimating the tax price elasticity of contributions to tax‐favoured pension‐savings accounts on a population of self‐employed individuals. I exploit a unique total database over the Swedish population that covers the years 1999–2005. Using instrumental variables, I obtain a tax price elasticity estimate of ?0.51 and an income elasticity estimate of 0.13, whereas ordinary least‐squares (OLS) produces estimates that conflict with consumer theory.     

The Dynamics of Poverty and the Promotion of Transition from Non‐Regular to Regular Employment in Japan: Economic Effects of Minimum Wage Revision and Job Training Support

Comparison between Japan and other advanced countries shows that the relative poverty rate is high in Japan, and that many of the poor households are those with a non‐regular worker. As for mobility between income classes, the proportion of households remaining in the poor class for a long period of time in Japan is close to the average for EU countries. The panel estimation of its effect on wages shows that the raising of the minimum wage is statistically significantly associated with an increase in wages of non‐regular workers, in particular, female, but does not seem to decrease employment. The result shows that for male non‐regular workers, firm‐provided training promotes their transition to regular employment, and that for female non‐regular workers, occupational training promotes their transition to regular employment at different firms.     

Wage determination and returns to education in different ownerships of China: Evidence from quantile regressions

In this paper, quantile regressions is used to estimate wage equations of different ownerships. Quantile regressions give us distributions rather than a single estimate of the returns both to education and experience in each ownership sector. For state-owned enterprises (SOE), the returns to education tended to be larger at the bottom of the conditional distribution of wages in 1991 and 1993, and there was no such trend in 1997. For the private sector, however, the returns to education tended to be larger at the top positions in 1993 and 1997. It is also found that the growth rates of the wages at the bottom of the conditional distribution of wages are higher than those at the top in SOEs. No such patterns for the private sector is found. It is suggested the wage mechanism in the private sector is more market-oriented. __________ Translated from Shijie Jingji Wenhui 世界经济文汇 (World Economic Papers), 2006, (4): 1–26     

Unobserved Individual and Firm Heterogeneity in Wage and Job‐Duration Functions: Evidence from German Linked Employer–Employee Data

Abstract. We analyse the correlations between individual and firm fixed effects, and wage and job‐duration functions. Our results for large firms suggest that low‐wage firms tend to be stable firms, suggesting that lower wages can buy job stability. Furthermore, high‐wage workers sort into the stable low‐wage firms. Our interpretation is that high‐wage workers have a higher wage to insure against job loss and can afford more easily to forgo wages in favour of job stability. This may provide an explanation of the puzzle identified in previous literature that high‐wage workers are matched to low‐wage firms.     

Using paradata to collect better survey data: Evidence from a household survey in Tanzania

Data are a key component in the design, implementation, and evaluation of economic and social policies. Monitoring data quality is an essential part of any serious, large‐scale data collection process. The purpose of this article is to show how paradata should be used before, during, and after data collection to monitor and improve data quality. To do this we use timestamps, global positioning system (GPS) coordinates, and other paradata collected from an 800‐household survey conducted in Tanzania in 2016. We demonstrate how key paradata can be used during each phase of a research project to identify and prevent issues in the data and the methods used to collect it. Our results corroborate the importance of collecting and analyzing paradata to monitor fieldwork and ensuring data quality for micro data collection in developing countries. Based on these findings we also make recommendations as to how researchers can make better use of paradata in the future to manage and improve data quality. We argue for an expansion in the understanding and use of varied paradata among researchers, and a greater focus on its use for improving data quality.