Demand For Low-skilled Workers Research Articles

Monopsony power and the demand for low-skilled workers

AbstractThis study analyses firms’ labour demand when employers have at least some monopsony power. It is argued that without taking into account (quasi-)monopsonistic structures of the labour market, wrong predictions are made about the effects of minimum wages. Using switching fractional panel probit regressions with German establishment data, I find that slightly more than 80% of establishments exercise some degree of monopsony power in their demand for low-skilled workers. The outcome suggests that a 1% increase in payments for low-skilled workers would, in these firms, increase employment for this group by 1.12%, while firms without monopsony power reduce the number of low-skilled, by about 1.63% for the same increase in remuneration. The study can probably also be used to explain the limited employment effects of the introduction of a statutory minimum wage in Germany and thus leads to a better understanding of the labour market for low-skilled workers.

How Has Labor Demand Been Affected by the COVID-19 Pandemic? Evidence from Job Ads in Mexico

There is a concern among social scientists and policymakers that the COVID-19 crisis might permanently change the nature of work. We study how labor demand in Mexico has been affected during the pandemic by web scraping job ads from a leading job search website. As in the U.S., the number of vacancies in Mexico declined sharply during the lockdown (38 percent). In April there was a change in the composition of labor demand, and wages dropped across the board. By May, however, the wage distribution and the distribution of job ads by occupation returned to their pre-pandemic levels. Overall, there was a slight decline in specific requirements (gender and age), no change in required experience, and a temporary increase in demand for low-skilled workers. Contrary to expectations, opportunities for telecommuting diminished during the pandemic. Using a simple Oaxaca-Blinder decomposition, we find that the variation in the average advertised wage in April is explained more by a higher proportion of low-wage occupations than by a reduction in the wages paid for particular occupations. In sum, we find no evidence of a significant or permanent change in labor demand during the pandemic in Mexico.

Role of Digital Economy in the Development of Lifelong Education System

The author represents the economic and sociological analysis of modern features of digital economy and its role in the development of the system of lifelong education. A distinctive feature is the combination of problem and applied approaches to the analysis of the designated topic. The study is carried out on the basis of the method of identifying the essential characteristics of the digital economy taking into account the innovative nature of modern socio-economic development. This stage of development is characterized by a number of stable global trends, which, in turn, significantly change the requirements for the qualification of employees, the content and methods of their training highlighting the issues of ensuring the continuity of the educational process. Assuming high dynamics of the economy and, consequently, rapid adaptation of labor force to the technological changes the author shows, that at the present stage of society development one of the main tasks is to achieve a sharp increase of labor productivity, through which the effectiveness of a new type of economic and social relations should be manifested. The labor process of workers in the digital economy should become more diverse, meaningful and their production skills are much higher. The growth of the company's needs for more and more qualified personnel with a corresponding decrease in demand for low-skilled workers is caused by an increase in the technical level of production. It is dictated by the entire course of modern social and economic development associated with the expansion of information technologies use. The author suggests, that under these conditions, the system of lifelong education should be focused not only on the amount of theoretical knowledge and certain skills, but mainly on practice, the development of methods of analysis, the development of those qualities that allow the specialist to adapt to changing conditions quickly. The article represents the data of sociological research carried out on the basis of in-depth expert interviews. In his conclusions, the author also relied on his own experience in the development of this problem.

Determinantes de la demanda de empleo en el sector manufacturero colombiano, 2000-2010

This paper studies the determinants of labor demand for professional, administrative and blue-collar workers in the Colombian manufacturing sector. The results show that the demand for blue-collar employees exhibits the largest adjustment time and is the most sensitive to changes in total labor costs. These results suggest that policies aimed at reducing nonwage costs may be effective to raise the demand for low skilled workers. Finally, the short-run (long-run) demand for professional (administrative) workers is found to be the most sensitive to changes in production.

Foreign Direct Investment and International Migration to Dutch Cities

This article assesses separately the push/pull-factor explanations in Sassen’s theory on migration from newly industrialising countries to cities in OECD countries. The push-factor explanation argues that foreign direct investments spawn migration flows to the country from which these investments stem. The pull-factor explanation revolves around demand for low-skilled workers in cities due to the clustering of advanced producer services. It is found that Dutch investment flows indeed function as a push factor for migration to Dutch cities, but that the local settlement of immigrants is not related to the clustering of advanced producer services.

The impact of outward FDI on the home country's labour demand and skill composition

The present paper adds to the literature investigating the effects of outward FDI on the home country employment and skill composition. Considering the “industrial region” as the unit of the analysis, we capture both direct and indirect effects of foreign production on the parent company and its environment. The empirical evidence refers to the internationalisation of production by Italian firms throughout the period 1996–2002, and it shows that foreign activities have a negative impact upon the demand for low skilled workers in the parent company's “industrial region”, but also on the demand for high skilled workers when FDI are addressed to high income countries.

Economic and Labor Market Trends

SUMMARY A number of economic and labor market trends in the United States over the past 30 years affect the well-being of workers and their families. This article describes key changes taking place and the implications for social and economic policies designed to help low-income working families and their children, particularly those families that include immigrants. Important conclusions that emerge include the following: * Diversity. The workforce, like the population, is more diverse than in past decades, as more workers and their families are of mixed ethnicities and more workers have families that include both immigrant and non-immigrant members. * Demand for Low-Skilled Labor. Although demand for high-skilled workers continues to increase, two-thirds of all jobs in the U.S. labor market do not require high skills or education, and the demand for low-skilled workers also is expected to continue over the next decade. * Skills Gap. Those with strong technical skills and college educations receive higher wages; and those with fewer skills and education are relegated to the secondary labor market where wages and job security are low and few employee benefits are offered. * Working Poor. Over 2 million persons are in poverty even though at least one person in their family works full time, year round. The authors conclude that policies to help low-wage workers with families need to focus on more work supplementation strategies, improved access to supports, more targeted education and training services, and proposals extending some form of legal status to undocumented workers. Without a commitment to such policies, working poverty is likely to continue, and children in immigrant families, in particular, are likely to stay poor, even with working parents. ********** A number of economic and labor market trends in the United States over the past 30 years have altered the characteristics of the workforce and have had an impact on the well-being of workers and their families. Low-income workers in particular have been affected by some of the macro-economic trends, such as the shift in the industrial base of the nation from one centered on manufacturing to one focused more on services and, especially since the 1990s, to one defined by technology and communication. Because of economic restructuring, the gap between wages paid to those with high levels of education and skills and those with low levels of education and skills has widened. Meanwhile, the United States has experienced a shift in the ethnicity and national origins of its population, and therefore its workforce, as well as a continuing shift in family structure. The past two decades have seen a high and sustained inflow of immigrants and an increase in the proportion of the population with limited English proficiency. A significant share of the immigrant population possesses educational deficiencies and limited work skills, which means they generally enter the low-wage segment of the labor market. At the same time, the trend toward more single-parent households, at least in the non-immigrant population, continues to redefine family issues for low-wage workers, their employers, and public policy. This article describes key changes taking place in the economy and in the workforce that affect low-income families. (1) The implications of these broad and intermingled trends are discussed, along with social and economic policies designed to help low-income working families, particularly those that include immigrants. Trends in the Economy and Employment Despite the slow-down and recession in 2001 and 2002, the U.S. economy is extremely strong. The long period of economic growth in the 1990s--with strong job growth, high productivity, and low inflation--brought unemployment to historically low levels. More people, even those with relatively limited labor market experience, worked in the 1990s, and poverty rates showed a slight decline even for single mothers and their children. …

Outsourcing and the Demand for Low-skilled Labour in German Manufacturing: New Evidence

This paper analyses how international outsourcing has affected the relative demand for low skilled workers in Germany during the 1990s. In contrast to previous empirical work, the single elements of the input-output-matrix are used to disentangle international outsourcing and trade in final goods more accurately. The main finding is that during the 1990s international outsourcing had a significant negative impact on the relative demand for low-skilled workers, explaining between 19% and 24% of the overall decline in the relative demand for low-skilled labour.

Does the availability of high-wage jobs for low-skilled men affect welfare expenditures? Evidence from shocks to the steel and coal industries

We study shocks to the coal and steel industries to measure the effect of long-term changes in demand for low-skilled workers on welfare expenditures. The coal and steel industries have historically paid high wages to low-skilled men. We find a substantial increase in welfare expenditures in response to the collapse of the steel and coal industries in the 1980s, and an even more substantial reduction in welfare expenditures during the coal boom of the 1970s. Additional analysis indicates the reduction in welfare expenditures during the coal boom is due in part to a decline in single-parent households.

Current Unemployment, Historically Contemplated

Current Unemployment, Historically Contemplated Chinhui Juhn, Kevin M. Murphy, and Robert H. Topel Eleven years ago, our Brookings Paper "Why Has the Natural Rate of Unemployment Increased over Time?" analyzed long-term changes in joblessness among American men.1 We documented the dramatic rise between 1967 and 1989 in both unemployment and nonparticipation in the labor force among prime-aged males. Our main conclusion was that a steep and sustained decline in the demand for low-skilled workers had reduced the returns to work for this group, leading to high rates of unemployment, labor force withdrawal, and long spells of joblessness for less-skilled men. We found that time spent out of the labor force and time spent unemployed accounted in roughly equal measure for the long-term growth in joblessness. We concluded that structural factors, primarily the decline in the demand for low-skilled labor, had dramatically changed the prospects for a return to low rates of joblessness any time soon. After that paper was published, things appeared to change. The 1990s opened with a brief recession that was followed by the longest sustained decline in unemployment in modern U.S. history. By the end of that expansion, the unemployment rate had reached its lowest level since the late 1960s, falling below 4 percent for the first time since 1969. Some macroeconomists argued that the so-called natural rate of unemployment [End Page 79] had permanently shifted to 5 percent or below.2 Because we had emphasized changes in the structure of labor demand that had made a return to low rates of joblessness unlikely, these facts presented a challenge to our 1991 framework. Maybe we were just wrong-maybe the demand and supply framework of our previous work is inconsistent with rates of joblessness in the post-1990 period. If so, we would join a distinguished group of social scientists who have drawn attention to a significant empirical phenomenon only to watch that phenomenon disappear immediately thereafter.3 As it turns out, however, the framework that we developed for thinking about pre-1990 patterns of joblessness also does fairly well in helping to understand jobless time in the post-1990 period. In this paper we look in some detail at employment data from the 1990s, revisiting issues raised in our earlier work. Specifically, we ask: -Have the trends we identified in our earlier paper-the concentration of nonemployment among the less skilled, the growth of nonparticipation in the labor force, and the increased duration of joblessness-been reversed with the fall in aggregate unemployment? -Did the expansion of the 1990s really return the U.S. labor market to conditions of the late 1960s, as unemployment statistics seem to indicate? -Does the economic framework of supply and demand we utilized a decade ago still help in understanding long-term developments in unemployment, nonemployment, and labor force participation? Our answers are surprising. First, the basic trends toward longer spells of joblessness and rising nonemployment have continued in spite of the prolonged expansion of national output and the concomitant fall in unemployment rates. Long jobless spells and labor force withdrawal were more important in the 1990s than ever before. Second, the fall in unemployment to levels close to historical lows is very misleading. Broader [End Page 80] measures of joblessness show that the labor market of the late 1990s was more like the relatively slack labor market of the late 1980s than like the booming labor market of the late 1960s. Finally, the basic forces of supply and demand identified in our previous paper continue to have explanatory power. The theory does a reasonably good job of explaining those trends that have continued, as well as those that have changed. Recent data also provide considerable insight into what has happened in the labor market over the past decade. Over the 1990s, even as unemployment was falling, time spent out of the labor force was rising. In fact, the increase in time spent out of the labor force was so large that total joblessness-which combines the unemployed with those who have withdrawn from the labor force-was as high at the business-cycle peak in 2000 as it had been at...

Technological Change and the Demand for Skills in the 1980s: Does Skill Mismatch Explain the Growth of Low Earnings?

The sharp decline in real wages and drop in relative earnings among low-skilled workers generally is attributed to structural shifts in labor force induced by technological change that has limited demand for workers with low skill levels. While claim that cause of reduced earnings is a decline in demand for low-skilled workers is common, statistical evidence backing this assertion has not established such a link. In attempting to explain reasons underlying 15-year decline in earnings, David R. Howell asserts that, in fact, skill mismatch does not adequately explain problems faced by low-skill workers: If technological change did indeed reduce demand for lower skilled workers, there should have been a corresponding decline in employment share of these workers as well as a steadily rising rate of joblessness among them. Instead, dramatic growth in demand for low-wage workers took place during past 15 years, while their wages continued on a downward path. In an examination of employment trends among non-supervisory workforce, Howell finds that there was a rise in low-wage jobs in both goods and service industries. In fact, the last decade and a half has made it abundantly clear that choice concerning non-supervisory workforce is not limited to high skills or low wages, but instead toward gradually higher skills with dramatically lower wages. The case study literature indicates that technological change did not alter skill distribution among jobs, but that changes in job opportunities and skill level requirements varied by firm, industry, and occupation.

Occupational licensing and the transition from welfare to work

Occupational licensing laws erect barriers to entry into various labor markets, impeding the upward mobility of welfare recipients seeking to transition into employment. This paper, recognizing that labor market interventions have often been used precisely because of this effect, proceeds to examine various restrictions which directly affect low-skilled workers in the U.S. economy who now have stronger incentives to participate in labor markets in response to recent welfare policy reforms. Three distinct types of labor market restrictions are identified: (1) the licensing of professional, high-skilled occupations tends to crowd workers into lower-skilled occupations, lowering such wages and thus weakening work incentives among the welfare population; (2) quantity license restrictions (permits which set quotas limiting the overall number of suppliers in a market) suppress demand for low-skilled workers, and may substantially reduce work opportunities and, thus, incentives. Taxi license restrictions alone, for instance, may result in several hundreds of thousands of lost employment opportunities throughout the United States; and (3) quality license restrictions, where entrants face higher entry costs (typically through educational requirements above the requirements of the market), may paradoxically provide welfare recipients with enhanced opportunities for employment, particularly when coupled with job-training subsidies typically extended to welfare recipients. This we call a “de facto liberalization” of occupational licensure. While incumbent workers are certain to resist enhanced entry by welfare recipients into licensed occupations, vocational schools should aggressively support such entry, affording a possible realpolitik to the migration path envisioned. More interestingly, once entry has accelerated under de facto liberalization, occupational license rents will predictably decline, thus increasing the likelihood of explicit liberalization, and further opening labor markets to competitive entry.

Croissance, qualifications et chômage

This paper aims at a better understanding of the factors responsible for the increasing dualisation of the labour market, especially the effect of biased technological progress that may reduce, ceteris paribus, the demand for low skilled workers. The theoretical model extends the usual NAIRU analysis to the case with two types of labour (skilled and unskilled). The focus is on situations with permanent excess supply on the unskilled labour market; on the skilled labour market, firms may be constrained by labour supply shortages. One examines in this setup the consequences of biased technological change, of social security contributions and minimum wage regulations. Econometric results obtained on French data (1962- 1989) suggest that a susbstantial reduction in the relative labour cost of unskilled workers (20% or more) would be needed to eliminate the difference between the skilled and unskilled unemployment rates and bring the NAIRU down to more natural values. This objective could be reached by reducing the social security contributions levied on unskilled workers' wages.

The Labor Market Status of Black Americans: 1939–1985

Among the empirical changes in the labor maket status of black Americans since 1939, three stand out: 1) three decades of rapid progress followed by two decades of relative stagnation in many aggregate measures of relative black earnings and incomes; 2) declining employment of black males; and 3) heightened inequality within the black population. Why has relative black employment fallen when blacks' wages and their access to occupations and to institutions of higher education have improved so much? To what extent may these changes be attributed to changes in discrimination and its consequences; changes and differences in skills; and changes in the relative wages of workers of different skills. Many of these issues remain important open questions. But we can conclude that changes in the economy during the past two decades have had particularly adverse effects on the demand for low-skilled workers. In particular, lowerskilled black males, who are disproportionately among those with the least educational achievements and attainments, appear to be in very low demand and may have responded to this low demand by withdrawing from the regular labor market.