Tax evasion and work in the underground sector

A bivariate random effect panel data model is estimated for male labour supply in the taxable and the non-taxable sectors in Denmark. The wage rates and non-labour income have significant effects on labour supply in both sectors. The average own wage elasticity with respect to underground labour supply is found to be small, 0.02, while the cross price elasticity from regular wages is larger, − 0.52. Simulations of potential tax reforms show that a reduction of the marginal taxes has minor effects on male labour supply to the untaxed sector, while the effect on male labour supply to the taxed sector is larger.     

Broker imposed precarity of Indian technical immigrants

The primary purpose of this article is to investigate the labour supply chain of Indian technical immigrants in the United States. The two important findings that emerge are as follows: First, the study unearths a latent phenomenon of broker‐induced precarity that results from the labour supply chain and explores how aspirational jobs are becoming precarious ones. Second, the study provides a foundation for devising policies and interventions to make the process of the labour supply chain less detrimental to the Indian technical immigrants. This article draws on a seven‐month‐long field‐based qualitative study and ensures a meticulous triangulation of the findings through an analysis of archival data and actual artefacts related to manpower movement across the labour supply chain.     

The supply multiplier with a self-employed private sector

Conclusion By modelling the private sector on the basis of self-employment, rather than the wage employment assumed by Hare (1987), we are able to proceed without making strong restrictions on functional forms. Our main conclusion is that the supply multiplier equationis affected by the inclusion of the private sector. The immediate effect of an increase in state sector goods purchases by the government is that there is an equal reduction in the amount of state sector goods available for the household sector. This is assumed to affect household demand for private sector output and household supply of labour to the private sector (as well as affecting household labour to the state sector, as in the Barro-Grossman model). The change in labour supply to the private sector affects the supply of goods by the private sector. The net result is that an excess demand (or supply) is created for private sector output and so the price of this output rises (or falls). In general, a change in private sector price leads to a change in state sector labour supply and output, a result, which, by definition, does not occur if the private sector is not included in the model. Thus, the supply multiplier in general takes a different value from that found by Barro and Grossman.Given that the rate of change of labour supply to the state sector with respect to the price of the private sector good is negative we obtain the following conclusion. (a) If a marginal decrease in the availability of state output results in an excess supply of private sector output (before price changes), the supply multiplier is not as negative as in the Barro-Grossman model and may even be zero or positive. (b) If, however, an excess demand for private sector output is created, the supply multiplier is actually more negative than in the Barro-Grossman model. Should, instead, the rate of change of labour supply to the state sector with respect to the price of the private sector good be positive these conclusions are reversed, in the sense that the terms excess supply in (a) and excess demand in (b) are interchanged.(The views expressed in this paper should not necessarily be attributed to the Department of Trade and Industry.) We would like to thank an anonymous reference for helpful comments, particularly in pointing out an inconsistency in our treatment of the individual and the aggregate behaviour of households in an earlier version of the paper.     

Supply of skilled labour and organizational change

The paper develops a model where the structure of organizations is a choice variable for firms and depends on conditions in the labour market. It shows that an increase in the supply of skilled labour may lead firms to adopt organizations with less hierarchical levels. This organizational change increases firms' demand for skilled agents and qualitatively modifies their jobs (i.e. the set of tasks assigned to skilled employees) thus increasing the skilled wage premium.     

Flexibility bites back: the multiple and hidden costs of flexible employment policies

Flexible labour markets are increasingly regarded as the answer to a wide spectrum of labour market and societal challenges from creating jobs to reducing segmentation and welfare dependency, improving public finances and supporting workforce diversity and innovation. The contention is that, contrary to these claims, flexible labour markets generate fundamental contradictions and unsustainable long‐term trends. The jobs miracle is exaggerated and based on low productivity jobs, outsiders often lose most from competition, claimants must work flexibly but still secure a full‐time wage, low‐wage employment is shrinking the fiscal base, jobs are not being adjusted to accommodate workers' changing needs and capacities and the disposable labour model is undermining long‐term productivity.     

Immigrants’ Wage Growth and Selective Out‐Migration

This paper examines immigrant wage growth taking selective out‐migration into account using administrative data from the Netherlands. Addressing a limitation in the previous literature, we address the potential endogeneity of immigrants’ labour supply and out‐migration decisions on their earning profiles using a correlated competing risk model. We distinguish between labour and family migrants, given their different labour market and out‐migration behaviours. Our findings show that accounting for selective labour supply is as important as accounting for selective out‐migration. Controlling only for out‐migration selectivity would underestimate immigrants’ wage growth, whilst controlling only for labour market selectivity would overestimate their wage growth. This shows that different selections are important for different types of migrants.     

Exits from temporary jobs in Europe: A competing risks analysis

We study transitions out of temporary jobs using the waves 1994–1999 of the European Community Household Panel applying a discrete time duration model. Specifically, we use a multinomial logit model distinguishing between exits into permanent employment and non-employment. Two different specifications are presented, one does not account for unobserved heterogeneity while the other does. Unobserved heterogeneity is assumed to follow a discrete distribution. The competing risks model is estimated jointly for all EU Member States. The duration dependence parameters suggest that in general for EU as a whole, very short contracts provide higher chances of labour market exclusion especially for men. We discuss potential implications of our findings.     

Epidemics,labour markets and unemployment: the impact of SARS on human resource management in the Hong Kong service sector

This article examines the links between epidemics and their economic consequences, specifically in terms of their impacts on labour markets and jobs. To exemplify the above, we examine the effects of SARS (Severe Acute Respiratory Syndrome) on the Hong Kong economy, its labour market and its level of employment and unemployment. The article hypothesizes that the greatest impact would be on human resource management (HRM) in the service industries and on particular sub-sectors, such as the hotel sector. It concludes that the dramatic demand and supply ‘shocks’ significantly affected both the demand for and the supply of labour in the sector, with discernible HRM consequences.     

Employment impacts of cleaner production – evidence from a German study using case studies and surveys

The study assesses net employment effects of technical progress, which can be expected by the ongoing transition from end‐of‐pipe technologies towards cleaner production. Empirical evidence is presented on the basis of case studies and firm data including a telephone survey from German industry. The main result is that the transition from end‐of‐pipe technologies to cleaner production leads to a net creation of jobs, which is however restricted to a only small number of firms and to the group of highly skilled labour. Eco‐innovations, like other innovations, are non‐neutral. The demand for skilled and highly skilled labour rises while the demand for unskilled labour decreases. Synergies between environmental, labour market and innovation policy are apparent but they are however small and specific. The exploitation of these synergies requires the design of specific policy programmes differentiating between types of eco‐innovation. The promotion of product‐integrated environmental measures should be more successful if new products complement older ones, while process‐integrated environmental measures should be more successful if consumers' demand is more price elastic. Copyright © 2001 John Wiley & Sons, Ltd. and ERP Environment     

Labour supply in Italy: an empirical analysis of joint household decisions,with taxes and quantity constraints

This study applies an econometric framework which allows for complex non-convex budget sets, highly non-linear labour supply curves and imperfect markets with institutional constraints. A married couple's version of the model is estimated on Italian microdata. The empirical results show that male labour supply is rather inelastic while labour supply among females, especially participation, is considerably more elastic. The elasticities depend strongly on household income. The largest elasticities are found for females living in poor households. The results of the tax simulations suggest that there are only modest labour supply responses from replacing the 1987 system by proportional taxes. Copyright © 1999 John Wiley & Sons, Ltd.     

Productivity – your countries need you!

• Increased global productivity could boost real wages, consumption, fiscal positions and alleviate fears of secular stagnation. But will it? Puzzles relate to the longer term global slowdown and to some countries' recent productivity‐less recoveries in jobs. We assess various explanations including mismeasurement, secular stagnation, financial sector malfunction and increased labour market flexibility. Our baseline forecast is for a moderate pro‐cyclical recovery in productivity but we show how downside risks imply it could be anaemic.
• Sustained weak productivity is a secular issue. Eight years after 2007, median productivity growth in OECD economies is less than Japan's was eight years into its lost decade. Aspects of secular stagnation and balance sheet adjustment have contributed. Measurement error may have played a role over the longer term.
• Recent experience divides recoveries into “haves” and “have nots” in terms of productivity and employment. The UK may finally be emerging from a “productivity‐less” recovery in employment after 2011; Spain and the Netherlands have experienced jobless recoveries in productivity; others, such as Canada and Sweden, have experienced pro‐cyclical (typically weak) recoveries in productivity; Italy hardly got going in either direction.
• Most theories provide, at best, a limited explanation for recent weak productivity performance. These include data mis‐measurement, increased labour market flexibility, financial sector malfunction and supply side secular stagnation.
• On balance, we think that a modest productivity bounce‐back could be imminent, caused by some demand recovery, tighter labour markets in major economies, higher real wages and firms deciding to invest more in capital, which enhances productivity and points the global economy towards normality.
• We also illustrate how global risk scenarios could dampen recovery. Negative skews imply mean G7 productivity growth across the scenarios would be an anaemic 1.1% in 2016, 0.5 percentage points (pp) lower than the baseline.

     

The relation between wealth and labour market transitions: an empirical study for the Netherlands

We study the relationship between wealth and labour market transitions. A lifecycle model, in which individuals are faced by uncertainty about the availability of jobs, serves as a basis for a reduced‐form specification for the probabilities of labour market transitions, which depend on wealth according to the model. Theory implies a negative effect of wealth on the probability of becoming or staying employed. This implication is tested for in a reduced‐from model of labour market transitions, in which we allow for random effects, initial conditions, and measurement error in wealth. Elasticities of transitions probabilities with respect to wealth are presented. Copyright © 2002 John Wiley & Sons, Ltd.     

The Effects of Immigration on Household Services,Labour Supply and Fertility

Fertility and female labour force participation are no longer negatively correlated in developed countries. At the same time, increased immigration affects supply and prices of household services, which are relevant to fertility and employment decisions. This paper analyses the effect of immigration on labour supply and fertility of native women in the UK. Adopting an instrumental variable approach, I find that immigration increases female labour supply without affecting fertility. My results show that immigration increases the size of the childcare sector, and reduces its prices, suggesting that immigrants may ease the trade‐off between working and child rearing among native women.     

Bayesian inference for the mover–stayer model in continuous time with an application to labour market transition data

This paper presents Bayesian inference procedures for the continuous time mover–stayer model applied to labour market transition data collected in discrete time. These methods allow us to derive the probability of embeddability of the discrete‐time modelling with the continuous‐time one. A special emphasis is put on two alternative procedures, namely the importance sampling algorithm and a new Gibbs sampling algorithm. Transition intensities, proportions of stayers and functions of these parameters are then estimated with the Gibbs sampling algorithm for individual transition data coming from the French Labour Force Surveys collected over the period 1986–2000. Copyright © 2003 John Wiley & Sons, Ltd.     

THEORETICAL AND PRACTICAL ARGUMENTS FOR MODELING LABOR SUPPLY AS A CHOICE AMONG LATENT JOBS

Models of labor supply derived from stochastic utility representations and discretized sets of feasible hours of work have gained popularity because they are more practical than the standard approaches based on marginal calculus. In this paper we argue that practicality is not the only feature that can be addressed by means of stochastic choice theory. This theory also offers a powerful framework for developing a more realistic model for labor supply choices, founded on individuals having preferences over jobs and facing restrictions on the choice of jobs and hours of work. We discuss and clarify how this modeling framework deviates from both the conventional discrete approach [Van Soest, A. ( 1995 ) Structural models of family labor supply. A discrete choice approach. Journal of Human Resources 30: 63–88), as well as the standard textbook approach based on marginal calculus (Hausman, J.A. ( 1992 ) The econometrics of nonlinear budget sets. Econometrica 53: 1255–1282]. We furthermore discuss how the model based on job choice can be applied to simulate effects of alternative restrictions on hours of work.     

Semiparametric three‐step estimation methods for simultaneous equation systems

This paper proposes a new method for estimating a structural model of labour supply in which hours of work depend on (log) wages and the wage rate is considered endogenous. The main innovation with respect to other related estimation procedures is that a nonparametric additive structure in the hours of work equation is permitted. Though the focus of the paper is on this particular application, a three‐step methodology for estimating models in the presence of the above econometric problems is described. In the first step the reduced form parameters of the participation equation are estimated by a maximum likelihood procedure adapted for estimation of an additive nonparametric function. In the second step the structural parameters of the wage equation are estimated after obtaining the selection‐corrected conditional mean function. Finally, in the third step the structural parameters of the labour supply equation are estimated using local maximum likelihood estimation techniques. The paper concludes with an application to illustrate the feasibility, performance and possible gain of using this method. Copyright © 2005 John Wiley & Sons, Ltd.     

Income distribution and income dynamics in the United Kingdom

In this paper, we propose a model of income dynamics which takes account of mobility both within and between jobs. The model is a hybrid of the mover‐stayer model of income dynamics and a geometric random walk. In any period, individuals face a discrete probability of ‘moving’, in which case their income is a random drawn from a stationary recurrent distribution. Otherwise, they ‘stay’ and incomes follow a geometric random walk. The model is estimated on income transition data for the United Kingdom from the British Household Panel Survey (BHPS) and provides a good explanation of observed non‐linearities in income dynamics. The steady‐state distribution of the model provides a good fit for the observed, cross‐sectional distribution of earnings. We also evaluate the impact of tertiary education on income transitions and on the long‐run distribution of incomes. Copyright © 2001 John Wiley & Sons, Ltd.     

Occupational pensions and job mobility in Britain: Estimation of a random-effects competing risks model

We analyse transitions between pensionable jobs, non-pensionable jobs, and other labour market states, using the 1988/9 UK Retirement Survey. We focus on the positive association between length of job tenure and pensionable status, allowing for the possibility that pension scheme members are less mobile than other workers because they have persistent unobserved characteristics that predispose them towards a high degree of security in both employment and retirement. We use a competing risks model with state-specific random effects. The model is estimated by simulated maximum likelihood.     

Analysis of the Vocational and Residential Preferences of a Rural Population: Application of an Experimental Technique to Rural Slovenia

Abstract

This study applies choice experiments to the analysis of the relative importance of both monetary and non-monetary determinants of vocational choice and spatial labour supply. It identifies the determinants of individuals’ choice of jobs and places of residence, and provides a better understanding of how rural labour adjustments might be managed in a country in transition. The results indicate that while wages are the most important factor influencing employment choice, other determinants affecting working conditions and residence do have a counterbalancing impact on choice. Results suggest that sample respondents do appear to be relatively immobile between sectors and also in terms of migration and commuting. However, our results do identify a range of non-wage determinants that might be used to stimulate mobility.     

How do workers decide their jobs? The influence of income,wage and job characteristics

This paper provides results on the economic decision‐making process of Spanish workers, who decide their jobs from the effects of variations in the non‐wage income, the wage and the prices of non‐pecuniary job characteristics. To that end, we formulate a non‐separable generalization of the Linear Expenditure System (NLES) as a joint model of labor supply and job characteristics demand, estimated separately for both males and females, using a 1991 Spanish survey. The main results show that: (i) some job characteristics have a positive effect on the wage, whereas others have a negative effect; (ii) the average percentage effect of employer size and the complexity index are higher for males than for females, with the fatal accident risk displaying similar values; (iii) if the non‐wage income of every worker increases, these individuals will prefer to devote less hours to work, and will also prefer jobs in smaller companies and with a lower risk; and (iv) if the wage and hedonic prices of non‐pecuniary job characteristics increase, then both males and females will prefer to reduce their labor supply, and devote their available time to jobs in bigger firms, with a higher risk and complexity. Copyright © 1999 John Wiley & Sons, Ltd.