We examine the effects of a single payment structure policy (SPP) that prevents an employer from offering an employee a choice among compensation structures. An SPP reduces the employer's profit and increases the employee's welfare when the employee's (privately known) ability is exogenous. In contrast, an SPP can increase both the employer's profit and the employee's welfare when the employee's ability is endogenous. An SPP secures these Pareto gains by restricting the employer's ability to limit the rent the employee earns from high ability, thereby inducing the employee to increase his human capital investment.
I investigate the impact of the COVID-19 pandemic and the subsequent surge in childcare demand on the research productivity of female economics. Using data from SSRN and a Difference-in-Differences approach, I show that around the timing of confinements, the gender production gap widens by around 20 percentage points, an adverse effect persisting up to 4 months later the beginning of social restriction measures. Declines in production, however, vanish during the school re-opening period suggesting a prominent role in childcare demand.
Work-leisure balances are beneficial to society. A partial equilibrium job search model is developed to explain desired work-leisure tradeoffs for single-job holders and multiple-job holders. Significant work-leisure mismatches are found: 63% of the observations underwork by an average of 17 hours per week, while 37% overwork by 8.5 hours. The value of leisure is approximately four times the average hourly real wage when a single job is held, and it drops by one-third when multiple jobs are held. Models ignoring possibilities of multiple jobholding overstate the elasticity of leisure and understate the value of leisure.
Given the conflicting findings about whether ethnic segregation benefits or hurts immigrants’ labor market outcomes in the existing literature, this paper investigates how segregation effects vary within young immigrants’ education levels. We also test the differential segregation effects for young immigrants with different education levels and from ethnic groups with different average education levels. We find that on average, ethnic segregation negatively impacts earnings of highly educated immigrants but benefits lower educated immigrants. Additionally, the net effects of ethnic segregation depend on whether immigrants’ own education levels match their group average education levels. Specifically, being segregated with many highly educated co-ethnics can reverse the negative segregation effects on highly educated immigrants’ earnings. However, a highly educated ethnic enclave can reduce the positive isolation effects for lower educated immigrants. Finally, we do not find significant segregation effects on immigrants’ employment.
The 1970s witnessed violent, widespread, and highly-politicized student protests in Turkey. Small protests turned into bloody street clashes, the death toll exceeded 5,000, and a military coup came in—which resulted in mass arrests. The universities were at the center of violent conflict. We study the education and labor market consequences of this political turmoil on the cohorts exposed to educational disruptions. First, we document that the number of new admissions and graduates in post-secondary education declined significantly due to the turmoil. The decline in post-secondary graduation ratio is 6.6 percentage points for the exposed individuals. Second, we estimate a counterfactual wage distribution for the exposed cohorts and check whether the turmoil affected their wage and occupation distributions. We show that the decline in educational attainment pushed the exposed population toward medium- and low-income occupations, and compressed their wages toward the minimum wage. Finally, we use the unexpected decline in post-secondary education as an instrument to estimate returns to college. We find that the college-premium is around 15 percent per year for men.
This paper uses data from the Panel Study of Income Dynamics to study the relationship between job displacement and substance use among young adults. Results show that displacement is associated with increases in the probability of smoking cigarettes and drinking and the intensity of consuming alcohol and marijuana. Men, whites, and those who live with family/friends at the time of displacement are more likely to use hard drugs after job loss. Findings suggest that government policy designed to aid displaced workers should contain provisions to anticipate and respond to substance use disorders that may arise, particularly among younger job losers.
Districts are investing more in school leadership, including the implementation of residency training programs for aspiring principals. There is limited evidence about the district return on these investments, and none in the context in which principal hiring is decentralized at the school level. This paper develops a model highlighting the conditions under which districts benefit from investments in general leadership skills and examines the residency program in the Chicago Public Schools (CPS). The event-study analysis that addresses treatment effect heterogeneity finds that principals who complete a residency are significantly more effective at raising achievement. Although the leadership skills gained through the residency are likely to make a principal more valuable to districts outside of CPS, the large majority of residents remain in CPS despite the absence of salary premia for completion of a residency or high performance. These findings suggest the presence of transition costs that enable CPS to retain more effective, residency-trained principals without having to increase pay, thereby realizing some of the return on the investment in general skills.
The COVID-19 pandemic has had a dramatic impact on families’ lives because of the increased demands of housework and childcare. Much of the additional burden has been shouldered by women. Yet, the rise in remote working also has the potential to increase paternal involvement in family life and thus to reduce gender role inequalities. This effect depends on the working arrangements of each partner, whether working remotely, at their usual workplace, or ceasing work altogether. Using two waves of an ad-hoc survey conducted in April and November 2020, we show that the time spent by women in domestic activities did not depend on their partners’ working arrangements. Conversely, men spent fewer hours helping with housework and home schooling when their partners were at home. Although men who worked remotely or did not work at all devoted more time to household activities during the second wave of COVID-19, the increased time they spent at home did not seem to lead to a reallocation of couples’ time.
Occupational credentials provide an additional—and, at times, alternative—path other than traditional academic degrees for individuals to increase productivity and demonstrate their abilities and qualifications to employers. In the United States, these credentials typically take the form of licenses and certifications. Although a critical part of the workforce landscape, the literature on the returns to credentials is inadequate, with prior research typically relying on Ordinary Least Squares (OLS) regressions which do not sufficiently control for selection. Using questions that identify credential receipt from the 2015 and 2016 United States’ Current Population Surveys, we construct an instrumental variable of local peer influence using the within-labor market credential rate of individuals sharing the same sociodemographic characteristics, while controlling for the same group's average wages and a suite of demographic and geographic controls. We use this instrument in a marginal treatment effects estimator, which allows for estimation of the average treatment effect and determines the direction of selection, and we estimate the effects of credentials on labor market outcomes. We find large, meaningful returns in the form of increased probability of individual employment, an effect which is concentrated primarily among women. The effect of having a credential on log wages is higher for those in the sub-baccalaureate labor market, suggesting the potential role of occupational credentials as an alternative path to marketable human capital and a signal of skills in the absence of a bachelor's degree.
Abstract Between 2010 and 2017, 42 U.S. states added work requirements as a food assistance eligibility criterion for Able-Bodied Adults Without Dependents (ABAWDs). Another U.S. public assistance program, Supplemental Security Income (SSI), provides food assistance without a work requirement, along with cash transfers and health insurance. Therefore, individuals for whom working is difficult may be induced to opt out of the labor force and into SSI in order to maintain access to food assistance. This study is the first to examine whether work requirements associated with food assistance eligibility lead to an increase in SSI applications and receipts. Based on difference-in-differences and event study analyses of comprehensive administrative claims data from the Social Security Administration and survey data from the Current Population Survey, this study finds evidence of lagged effects on SSI applications overall, and reduced Supplementary Nutritional Assistance Program (SNAP) receipts followed by a delayed smaller increase in SSI receipts among individuals with self-reported disabilities. While most SSI applications induced by SNAP-related work requirements appear to be unsuccessful, a small, vulnerable population may move out of the workforce and into SSI in response to the implementation of work requirements.
Using microdata between 1998 and 2020, this study provides potential explanations for the gender wage gap in South Korea, which continues to be the largest among Organisation for Economic Co-operation and Development (OECD) countries. Although improvement in females’ relative measured labor market characteristics plays an important role in the reduction of the gender wage gap, these characteristics cannot explain a large part of the gap, and wage convergence between full-time male and female workers has slowed over the period. Indeed, the unexplained gender wage gap has become larger than the explained gender wage gap. This is confirmed when a decomposition of the gender wage gap is performed across the wage distribution. This study provides evidence of the existence of a glass ceiling. In addition, this study shows that, in South Korea, where conservative gender-related norms still persist, the effects of marriage and childbirth can help to account for a dramatic increase in the gender wage gap for female workers in their 30s and 40s.
Abstract This article studies peer effects on the decision to enroll at university. To determine the social influence of peers, we use a measure encompassing the two major dimensions of social influence in the classroom: the ability and capacity of peers to exchange information about study options. This paper uses French administrative data on the universe of first year applicants to a single university over seven consecutive cohorts. We exploit idiosyncratic variations in the proportion of peers advised to change their educational choice. We find that our variable of interest has a small but negative and significant effect on the individual decision to attend university and observe stronger peer effects among groups of students of similar gender or socio-economic background. We also find a weaker impact of the proportion of peers advised to change their educational choice on the individuals of higher level of academic ability.
Using high-frequency Italian administrative data, the author studies the heterogeneous effects of a reform raising the normal retirement age (NRA) from 60 years to 65 years for private-sector male employees. The analysis, based on a difference-in-differences (DD) method, shows that the NRA raise reduces pension benefit claims but does not lead to a one-to-one increase in the employment rate since workers also apply for more disability and unemployment benefits. Moreover, most of them simply retire without any benefit. The extent of the effects varies substantially across socio-economic groups, as individuals with poorer health, with lower occupational grades and lower pay levels are the most constrained by the reform, experiencing the highest delay in pension claims, increase in employment, and inactivity. All in all, this paper shows that raising the NRA could have unintended effects as it affects more negatively the most vulnerable in the labor market.
Abstract The share of the U.S. population that receives business income has increased substantially in recent decades. At the same time, worker hire and separation rates declined, with worrying implications for productivity and wage growth. In this paper, we explore the relationship between business income (BI) receipt and labor reallocation. We show that BI recipients are largely excluded from existing measures of labor reallocation. Including BI recipients reduces the measured decline from 1994 to 2014 in the hire and separation rates by 8.3–8.7%, respectively, primarily among jobs that were secondary sources of income or short in duration. We present evidence that worker transitions between wage and salary jobs and BI represent labor reallocation, as opposed to reclassification of employees as independent contractors.
Recreational cannabis markets possibly increase labor demand through investments in facilities for growing, processing, and retail sales of cannabis, as well as through other industries such as manufacturing, leisure, and hospitality. However, this increase in labor demand may vary substantially across counties within a state as most states with legal recreational cannabis allow individual counties to ban commercial cannabis sales. Meanwhile, labor supply may change through positive and negative effects from cannabis use. Using county-level Colorado data from 2011 to 2018 and exploiting variation across counties in the existence and timing of the start of dispensary sales, we test for changes in the unemployment rate, employment, and wages, overall and by industry subsector. Consistent with an increase in labor demand, we estimate that the sale of recreational cannabis through dispensaries is associated with a 0.7 percentage point decrease in the unemployment rate with no effect on the size of the labor force. We also find a 4.5% increase in the number of employees, with the strongest effects found in manufacturing. We find no effect on wages. Given the lack of a reduction in labor force participation or wages, negative effects on labor supply are likely limited, in line with the existing literature. The decrease in unemployment, coupled with an increase in the number of employees, indicates that labor demand effects likely dominate effects on labor supply. Our results suggest that policymakers considering recreational access to cannabis should anticipate a possible increase in employment.
Abstract In this paper we examine whether – conditional on other child endowments and family inputs – bilingual children achieve different language, emotional, and pro-social developmental outcomes. Our data, which allow us to analyze children's development in a dynamic framework, are extracted from the UK Millennium Cohort Study (MCS). We model the development production functions for bilingual children using cumulative value-added specifications, which account for parental investments and children's own ability. Analysis based on child age confirms that bilingual children initially have worse language skills than their monolingual peers. The commencement of schooling appears to attenuate these differences, and by age seven, bilingual children have a developmental advantage. We find evidence of a positive relationship between bilingualism and some aspects of emotional development, and it is mainly boys who appear to benefit from their bilingual background.
Abstract This paper describes the results from an evaluation of a public policy that offers scholarships to current and former public high school students, so that they can attend technical and vocational education courses free of charge. We use a waiting list randomized controlled trial in four municipalities in a southern Brazilian State (Santa Catarina) to quantify the effects of the program on school progression, labor market outcomes and non-cognitive skills. Our intention-to-treat estimates reveal substantial gender heterogeneity two years after program completion. Women experienced large gains in labor market outcomes and non-cognitive skills. Employment rose by 21 percentage points (or approximately 33%) and the gains in earnings are of more than 50%. Also, women who received the offer scored 0.5σ higher on the synthetic index of non-cognitive skills and 0.69σ higher on an extraversion indicator. We find no effects on the male sub-sample. These findings corroborate the evidence on gender heterogeneity in the labor market effects of technical and vocational education programs. We also perform a series of exercises to explore potential channels through which these effects arise.
