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Wednesday, January 16, 2013

Job creators and destroyers

 

Minimum Wage Effects on Employment, Substitution, and the Teenage Labor Supply: Evidence from Personnel Data

Laura Giuliano
Journal of Labor Economics, January 2013, Pages 155-194

Abstract:
Using personnel data from a large US retail firm, I examine the firm's response to the 1996 federal minimum wage increase. Compulsory increases in average wages had negative but statistically insignificant effects on overall employment. However, increases in the relative wages of teenagers led to significant increases in the relative employment of teenagers, especially younger and more affluent teenagers. Further analysis suggests a pattern consistent with noncompetitive models. Where the legislation affected mainly the wages of teenagers and so was only moderately binding, it led both to higher teenage labor market participation and to higher absolute employment of teenagers.

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Smart Machines and Long-Term Misery

Jeffrey Sachs & Laurence Kotlikoff
NBER Working Paper, December 2012

Abstract:
Are smarter machines our children's friends? Or can they bring about a transfer from our relatively unskilled children to ourselves that leaves our children and, indeed, all our descendants - worse off? This, indeed, is the dire message of the model presented here in which smart machines substitute directly for young unskilled labor, but complement older skilled labor. The depression in the wages of the young then limits their ability to save and invest in their own skill acquisition and physical capital. This, in turn, means the next generation of young, initially unskilled workers, encounter an economy with less human and physical capital, which further drives down their wages. This process stabilizes through time, but potentially entails each newborn generation being worse off than its predecessor. We illustrate the potential for smart machines to engender long-term misery in a highly stylized two-period model. We also show that appropriate generational policy can be used to transform win-lose into win-win for all generations.

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Age Discrimination in the Evaluation of Job Applicants

Ben Richardson et al.
Journal of Applied Social Psychology, forthcoming

Abstract:
This study investigated the nature of age discrimination against older job applicants. One hundred fifty-six participants (102 students; 54 organization based) evaluated a hypothetical job applicant's (aged 33-66 years) work-related competences and likelihood of being hired. Applicant age affected hiring decisions for both samples where there was a preference for hiring applicants aged 42-48 years. Applicants at both the older and younger ends of the continuum were less likely to be hired, with the oldest applicants (over 54 years) being the least likely to be hired. Although the applicants' age negatively affected evaluations of their trainability and sociability, the effect of applicant age on hiring evaluations was not mediated by these work-related competencies, suggesting that age discrimination occurs via direct bias against older workers.

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The End of Farm Labor Abundance

Edward Taylor, Diane Charlton & Antonio Yúnez-Naude
Applied Economic Perspectives and Policy, Winter 2012, Pages 587-598

Abstract:
An analysis of nationally representative panel data from rural Mexico, with observations in years 2002, 2007, and 2010, suggests that the same shift out of farm work that characterized U.S. labor history is well underway in Mexico. Meanwhile, the demand for agricultural labor in Mexico is rising. In the future, U.S. agriculture will compete with Mexican farms for a dwindling supply of farm labor. Since U.S. domestic workers are unwilling to do farm work and the United States can feasibly import farm workers from only a few countries in close geographic proximity, the agricultural industry will eventually need to adjust production to use less labor. The decline in foreign labor supply to farms in the United States ultimately will need to be accompanied by farm labor conservation, switching to less labor intensive crops and technologies, and labor management practices that match fewer workers with more farm jobs.

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Is There A Farm Labor Shortage?

Tom Hertz & Steven Zahniser
American Journal of Agricultural Economics, January 2013, Pages 476-481

"In this paper we review the available sources of data on farm wages, two of which (the Quarterly Census of Employment and Wages and the Farm Labor Survey) suggest that the average real wage of hired crop farm workers rose by about 3% between 2007 and 2009, but has since returned to its 2007 level. A third source (the Current Population Survey), however, finds that the average real farm wage rose from 2007 to 2010, then leveled off in 2011, with a cumulative increase of 7% since 2007. We then show that the Quarterly Census of Employment and Wages can be used to identify county- and crop-specific changes in earnings per employee...We find preliminary evidence that is suggestive of labor shortages in support activities such as farm labor contractors and crew leaders and soil preparation, planting and cultivating, and in the production of various fruit and vegetables, particularly in counties in California, Michigan, and several other states."

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Misclassification Errors and the Underestimation of the U.S. Unemployment Rate

Shuaizhang Feng & Yingyao Hu
American Economic Review, forthcoming

Abstract:
Using recent results in the measurement error literature, we show that the official U.S. unemployment rate substantially underestimates the true level of unemployment, due to misclassification errors in the labor force status in the Current Population Survey. During the period from January 1996 to August 2011, the corrected monthly unemployment rates are between 1 and 4.4 percentage points (2.1 percentage points on average) higher than the official rates, and are more sensitive to changes in business cycles. The labor force participation rates, however, are not affected by this correction.

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Hiring as Cultural Matching: The Case of Elite Professional Service Firms

Lauren Rivera
American Sociological Review, December 2012, Pages 999-1022

Abstract:
This article presents culture as a vehicle of labor market sorting. Providing a case study of hiring in elite professional service firms, I investigate the often suggested but heretofore empirically unexamined hypothesis that cultural similarities between employers and job candidates matter for employers' hiring decisions. Drawing from 120 interviews with employers as well as participant observation of a hiring committee, I argue that hiring is more than just a process of skills sorting; it is also a process of cultural matching between candidates, evaluators, and firms. Employers sought candidates who were not only competent but also culturally similar to themselves in terms of leisure pursuits, experiences, and self-presentation styles. Concerns about shared culture were highly salient to employers and often outweighed concerns about absolute productivity. I unpack the interpersonal processes through which cultural similarities affected candidate evaluation in elite firms and provide the first empirical demonstration that shared culture - particularly in the form of lifestyle markers - matters for employer hiring. I conclude by discussing the implications for scholarship on culture, inequality, and labor markets.

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Trends in the Economic Independence of Young Adults in the United States: 1973-2007

Maria Sironi & Frank Furstenberg
Population and Development Review, December 2012, Pages 609-630

Abstract:
One of the major milestones of adulthood is achieving economic independence. Without sufficient income, young people have difficulty leaving their childhood home, establishing a union, or having children - or they do so at great peril. Using the National Longitudinal Survey, this article compares the employment and economic circumstances of young adults aged 22-30 in 1973, 1987, and 2007, and their possible determinants. The results show that achieving economic independence is more difficult now than it was in the late 1980s and especially in the 1970s, even for the older age groups (age 27-28). The deterioration is more evident among men. From the 1970s there has been convergence in the trajectories for the achievement of economic self-sufficiency between men and women, suggesting that the increase in gender parity, especially in education and labor market outcomes, is making their opportunities to be employed and to earn good wages more similar. This convergence also suggests that union formation increasingly may depend on a capacity to combine men's and women's wages.

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Panel Conditioning in Longitudinal Studies: Evidence From Labor Force Items in the Current Population Survey

Andrew Halpern-Manners & John Robert Warren
Demography, November 2012, Pages 1499-1519

Abstract:
Does participating in a longitudinal survey affect respondents' answers to subsequent questions about their labor force characteristics? In this article, we investigate the magnitude of panel conditioning or time-in-survey biases for key labor force questions in the monthly Current Population Survey (CPS). Using linked CPS records for household heads first interviewed between January 2007 and June 2010, our analyses are based on strategic within-person comparisons across survey months and between-person comparisons across CPS rotation groups. We find considerable evidence for panel conditioning effects in the CPS. Panel conditioning downwardly biases the CPS-based unemployment rate, mainly by leading people to remove themselves from its denominator. Across surveys, CPS respondents (claim to) leave the labor force in greater numbers than otherwise equivalent respondents who are participating in the CPS for the first time. The results cannot be attributed to panel attrition or mode effects. We discuss implications for CPS-based research and policy as well as for survey methodology more broadly.

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Time Use During the Great Recession

Mark Aguiar, Erik Hurst & Loukas Karabarbounis
American Economic Review, forthcoming

Abstract:
Using data from the American Time Use Survey between 2003 and 2010, we document that home production absorbs roughly 30 percent of foregone market work hours at business cycle frequencies. Leisure absorbs roughly 50 percent of foregone market work hours, with sleeping and television watching accounting for most of this increase. We document significant increases in time spent on shopping, child care, education, and health. Job search absorbs between 2 and 6 percent of foregone market work hours. We discuss the implications of our results for business cycle models with home production and non-separable preferences.

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The Effect of Wage Payment Reform on Workers' Labor Supply, Wages, and Welfare

Esther Redmount, Arthur Snow & Ronald Warren
Journal of Economic History, December 2012, Pages 1064-1087

Abstract:
We examine the economic consequences of an 1886 reform in Massachusetts that mandated the weekly payment of wages. We derive conditions on key elasticities of labor supply that determine the qualitative effects of the reform on workers' effective wages and utility. We match census and administrative data on workers in a Lowell textile mill for a period encompassing the switch from monthly to weekly payment. Empirical estimates of a labor supply equation imply that the reform increased workers' effective wage rates and welfare. The reform also decreased the mill workers' average wage, as predicted by the theory of compensating differentials.

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A Century of Human Capital and Hours

Diego Restuccia & Guillaume Vandenbroucke
Economic Inquiry, forthcoming

Abstract:
An average person born in the United States in the second half of the 19th century completed 7 years of schooling and spent 58 hours a week working in the market. In contrast, an average person born at the end of the 20th century completed 14 years of schooling and spent 40 hours a week working. In the span of 100 years, completed years of schooling doubled and working hours decreased by 30%. What explains these trends? We consider a model of human capital and labor supply to quantitatively assess the contribution of exogenous variations in productivity (wage) and life expectancy in accounting for the secular trends in educational attainment and hours of work. We find that the observed increase in wages and life expectancy accounts for 80% of the increase in years of schooling and 88% of the reduction in hours of work. Rising wages alone account for 75% of the increase in schooling and almost all the decrease in hours in the model, whereas rising life expectancy alone accounts for 25% of the increase in schooling and almost none of the decrease in hours of work. In addition, we show that the mechanism emphasized in the model is consistent with other trends at a more disaggregate level such as the reduction in the racial gap in schooling and the decrease in the cross-sectional dispersion in hours.

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Is Business Failure Due to Lack of Effort? Empirical Evidence from a Large Administrative Sample

Mette Ejrnæs & Stefan Hochguertel
Economic Journal, forthcoming

Abstract:
Does insurance provision reduce entrepreneurs' effort to avoid business failure? We exploit unique features of the voluntary Danish unemployment insurance (UI) scheme, that is available to the self-employed. Using a large sample of self-employed individuals, we estimate the causal effect of insurance choice on the probability to become unemployed. Identification of the insurance choice comes from eligibility conditions for an early retirement plan, accessible only to UI members. We find that those who are insured are 2 percentage points more likely to subsequently become unemployed compared to the uninsured, however only 0.6 percentage points is caused by moral hazard.

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Accurate by way of aggregation. Should you trust your intuition-based first impressions?

Noah Eisenkraft
Journal of Experimental Social Psychology, March 2013, Pages 277-279

Abstract:
How much should you trust your intuition about other people's job performance? Different literatures provide different answers to this question. Social psychological research on "thin slices" suggests that untrained observers can predict a person's job performance based on a few moments of observation. Industrial/organizational psychologists have found a weaker relationship between job performance and the intuitive judgments that people make following employment interviews. This paper argues that interviewers' intuitive judgments appear to be weaker predictors than intuitive judgments of thin slices because thin slices research measures predictive validity at the aggregate-level of analysis. Intuition-based first impressions are not valid predictors of job performance unless people have an opportunity to collect and combine the judgments of multiple independent raters.

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Earnings Effects of Entrepreneurial Experience: Evidence from the Semiconductor Industry

Benjamin Campbell
Management Science, forthcoming

Abstract:
Although previous studies have examined the rewards available to individuals inside entrepreneurial firms, entrepreneurial experience may provide rewards that are independent of the entrepreneurial context. Building on human capital theory, this study provides theoretical explanations for the effects of experience at a start-up on earnings across an individual's career and then examines these implications in the context of California's semiconductor industry. Comparing the career trajectories of employees who join start-ups with a matched control group of comparable workers without start-up experience, I perform a counterfactual analysis and find that start-up experience in this context has a persistent positive effect on earnings that extend outside the entrepreneurial environment. The results from the matched sample are consistent with the development and revelation of valuable general human capital through entrepreneurial experience and suggest that the rewards to entrepreneurship are not limited to just the rewards available inside entrepreneurial firms.

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Does Non-Union Employee Representation Act as a Complement or Substitute to Union Voice? Evidence from Canada and the United States

Michele Campolieti, Rafael Gomez & Morley Gunderson
Industrial Relations, January 2013, Pages 378-396

Abstract:
This paper examines two central questions related to non-union employee representation (NER) in Canada and the United States. First, using Taras and Kaufman's (2006) four faces NER approach, we ask whether non-union and union forms of voice act as substitutes or complements for employees at the workplace? Second, we ask whether non-union forms of employee representation serve to deflect any latent desire for traditional union voice. We find that NER is negatively related to the presence of unionization at the workplace; it appears to reduce the desire to be unionized. This substitution effect proves to be stronger in Canada than in the United States.

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How Are Iraq/Afghanistan-Era Veterans Faring in the Labor Market?

Jennifer Humensky et al.
Armed Forces & Society, January 2013, Pages 158-183

Abstract:
This study examines labor market status of Veterans of the Iraq/Afghanistan-era and previous eras, and variations by age and by health status, using the Current Population Survey (CPS) March supplement from 2006 to 2011. Although this observational study does not demonstrate a causal effect of military service on labor market outcomes, the authors find that Iraq/Afghanistan-era service among the youngest Veterans (ages 18-24) was associated with higher earnings and greater odds of being enrolled in school, but also higher odds of unemployment. Military service in previous eras by older Veterans, particularly those in fair or poor health, was associated with higher odds of unemployment and lower earnings than their nonveteran counterparts. Future research should examine the reasons for the higher unemployment rates of the youngest Veterans and should examine whether receipt of services such as health care services, disability benefits, and military reintegration programs are associated with improved labor market outcomes.

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Job Strain as a Risk Factor for Leisure-Time Physical Inactivity: An Individual-Participant Meta-Analysis of Up to 170,000 Men and Women

Eleonor Fransson et al.
American Journal of Epidemiology, 15 December 2012, Pages 1078-1089

Abstract:
Unfavorable work characteristics, such as low job control and too high or too low job demands, have been suggested to increase the likelihood of physical inactivity during leisure time, but this has not been verified in large-scale studies. The authors combined individual-level data from 14 European cohort studies (baseline years from 1985-1988 to 2006-2008) to examine the association between unfavorable work characteristics and leisure-time physical inactivity in a total of 170,162 employees (50% women; mean age, 43.5 years). Of these employees, 56,735 were reexamined after 2-9 years. In cross-sectional analyses, the odds for physical inactivity were 26% higher (odds ratio = 1.26, 95% confidence interval: 1.15, 1.38) for employees with high-strain jobs (low control/high demands) and 21% higher (odds ratio = 1.21, 95% confidence interval: 1.11, 1.31) for those with passive jobs (low control/low demands) compared with employees in low-strain jobs (high control/low demands). In prospective analyses restricted to physically active participants, the odds of becoming physically inactive during follow-up were 21% and 20% higher for those with high-strain (odds ratio = 1.21, 95% confidence interval: 1.11, 1.32) and passive (odds ratio = 1.20, 95% confidence interval: 1.11, 1.30) jobs at baseline. These data suggest that unfavorable work characteristics may have a spillover effect on leisure-time physical activity.

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I can't get no job satisfaction: Meta-analysis comparing permanent and contingent workers

Christa Wilkin
Journal of Organizational Behavior, January 2013, Pages 47-64

Abstract:
Scholars are concerned that contingent workers experience more adverse psychological job outcomes than permanent employees, but the empirical work on job satisfaction is mixed. The purpose of this study was to quantitatively summarize the potential mean differences in job satisfaction between contingent workers and permanent employees. Meta-analytic results from 72 primary studies (N = 237 856) suggest that compared with permanent employees, contingent workers experience lower job satisfaction (d = -0.21); but when outlying primary studies are removed, the mean difference is small but significant (d = -0.06). Methodological artifacts explain small but significant differences in job satisfaction but do not account for much variance. Moderator analyses support previous findings that contingent workers are not a homogeneous group; some contingent workers (e.g., agency workers) experience lower job satisfaction than permanent employees, whereas the job satisfaction of other contingent workers (e.g., contractors) is similar to permanent employees. The findings have implications for increasing our understanding of job satisfaction by showing that job satisfaction appears to vary by employment type. Practical implications suggest that extending human resource practices to contingent workers may increase their job satisfaction, which has been shown to influence job performance, citizenship behaviors, and turnover.

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Participation Versus Procedures in Non-Union Dispute Resolution

Alexander Colvin
Industrial Relations, January 2013, Pages 259-283

Abstract:
This study examines the resolution of conflict in non-union workplaces. Employee participation in workplace decision making and organizational dispute resolution procedures are two factors hypothesized to influence the outcomes of conflicts in the non-union workplace. The adoption of high involvement work systems is found to produce an organizational context in which both triggering events for conflict, such as disciplinary and dismissal decisions, and dispute resolution activities, such as grievance filing and appeals, are reduced in frequency. Dispute resolution procedures have mixed impacts. Greater due process protections in dispute resolution procedures in non-union workplaces are associated with increased grievance filing and higher appeal rates but do not have significant impacts on the precursors to conflict. This study provides evidence of substantial organizational-level variation in non-union conflict resolution, suggesting the importance of expanding the predominant individual and group-level focus of current conflict management research to include more organizational-level factors. It also supports the importance to non-union employee representation of direct participation strategies involving employee involvement in the workplace, in addition to procedures that provide for off-line representation.

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Effects of contracting out employment services: Evidence from a randomized experiment

Helge Bennmarker, Erik Grönqvist & Björn Öckert
Journal of Public Economics, forthcoming

Abstract:
In many countries welfare services that traditionally have been provided by the public sector are being contracted out to private providers. But are private contractors better at providing these services? We use a randomized experiment to empirically assess the effectiveness of contracting out employment services to private placement agencies. Our results show that unemployed at private placement agencies have a closer interaction with their case worker than unemployed at the Public Employment Service (PES); e.g., they receive more assistance in improving their job search technology. We do not find any overall difference in the chances of finding employment between private placement agencies and the PES, but this hides important heterogeneities across different types of unemployed. In particular, private providers are better at providing employment services to immigrants, whereas they may be worse for adolescents. Any effects tend to fade away over time.

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Do Financial Incentives Affect Firms' Demand for Disabled Workers?

Rafael Lalive, Jean-Philippe Wuellrich & Josef Zweimüller
Journal of the European Economic Association, February 2013, Pages 25-58

Abstract:
A number of OECD countries aim to encourage work integration of disabled persons using quota policies. For instance, Austrian firms must provide at least one job to a disabled worker per 25 nondisabled workers and are subject to a tax if they do not. This "threshold design" provides causal estimates of the noncompliance tax on disabled employment if firms do not manipulate nondisabled employment; a lower and upper bound on the causal effect can be constructed if they do. Results indicate that firms with 25 nondisabled workers employ about 0.04 (or 12%) more disabled workers than without the tax; firms do manipulate employment of nondisabled workers but the lower bound on the employment effect of the quota remains positive; employment effects are stronger in low-wage firms than in high-wage firms; and firms subject to the quota of two disabled workers or more hire 0.08 more disabled workers per additional quota job. Moreover, increasing the noncompliance tax increases excess disabled employment, whereas paying a bonus to overcomplying firms slightly dampens the employment effects of the tax.

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Trends and correlates of post-retirement employment, 1977-2009

Robin Pleau & Kimberlee Shauman
Human Relations, January 2013, Pages 113-141

Abstract:
The stereotypical retirement experience - the abrupt ceasing of all paid work and commencement of a life of leisure - is the experience of only half of all workers. Yet, despite the prevalence of combining work and retirement in the US and the implications this work-retirement behavior may have for organizations and individual workers, post-retirement employment behavior is understudied. In this article, we add to the growing literature on retirement and late-life employment processes by examining the trends and correlates of post-retirement employment in the US from 1977 to 2009. We find a modest curvilinear trend in post-retirement employment for both males and females over the last 33 years. However, the modest upward trends in post-retirement employment obscure the countervailing influences of significant changes in behavior and in the macro-level demographic and economic forces that are significant determinants of post-retirement employment.

By KEVIN LEWIS | 09:00:00 AM