Heterogeneous Workers Research Articles

Chancen und Risiken der Festlegung von Altersgrenzen des Ruhestands

Life course sociology differs on its position towards age limits, with Kohli stressing their morality and functionality, whereas Riley/Riley focus on their age differentiating and dysfunctional effects. Empirically, the German development of retirement age regulation between 1970 and the early 1990s demonstrates how a short sighted and maladjusted age limit policy can disrupt the legitimacy and the finances of retirement systems. Problems for a fixation of an adequate age limit arise from corporate interests, adaptation mechanisms of retirement systems, and from the heterogeneity of older workers. Surprisingly, contrary to most life course theories and despite general economic difficulties, since 1996 we have observed institutional reforms that empirically result in a rise in German retirement age which is accompanied by increased standardization of the transition from work to retirement. The unforeseen effectiveness of policies directed at age limits to influence the adaptability of retirement systems via duration regulation constitutes an interesting field of new forms of predictable life course policy.

Wage distribution in Japan, 1989–2003

Abstract. This study examines the recent trend of the Japanese wage distribution based on a micro‐level data set from the Basic Survey on Wage Structure (1989–2003). We perform several decomposition analyses of changes in the distribution of the hourly wage. We observe that lower returns to education and years of tenure contribute to a diminishing income disparity between groups for both sexes. A larger variance within a group contributes to the wage disparity for males, while an increased heterogeneity of workers' attributes contributes to the wage disparity for females. The Dinardo, Fortin, and Lemieux decomposition confirms the basic findings with a parametric variance decomposition.

Unions, Firing Costs, and Unemployment

Abstract. We study the effects of firing costs in unionized economies with heterogeneous workers. We consider an overlapping generations model where workers participate in the labour market both when young and when old. All workers belong to the same union that sets wages unilaterally. We find that at given wages firing costs increase youth unemployment and decrease old‐age unemployment. However, once the wage response is considered, firing costs increase both youth and old‐age unemployment. Indeed, knowing that when firing costs are higher firms refrain from firing, the union increases the wage of old workers, and, therefore, old‐age unemployment increases.

The effects of workforce heterogeneity on productivity in an experiential learning environment

This paper investigates the effects of heterogeneity in various workforce learning/forgetting characteristics on productivity. An important aspect of this study is that worker heterogeneity is specifically modeled and examined by including the variance of key parameters as controlled experimental factors in addition to these parameters’ means. Initially, we analytically investigate the impact of heterogeneity in each of the four parameters in the learning/forgetting model used in this study. The analytical results are subsequently verified and further investigated using computer simulation. Specifically, seven macro-level factors are investigated including the rate of turnover, the mean and variance of the latent initial expertise existing in the workforce for the tasks to be performed, the mean and variance of worker steady-state productivity levels, the variance of the rate of worker learning, and the variance of working forgetting. The simulation models were developed and informed by empirical data from industry. The results indicate significant effects for mean initial expertise, mean steady-state productivity, the variance of initial expertise, the variance of the rate of worker learning, and the variance of worker forgetting. Results have managerial implications in the comparison and selection of various workforce populations for production systems.

OVEREDUCATION AND COLLEGE MAJOR: EXPANDING THE DEFINITION OF MISMATCH BETWEEN SCHOOLING AND JOBS*

In this paper we expand the concept of educational mismatch to incorporate both the quantity and type of schooling into a measure of the distance between schooling and work. The wage effects increase as the distance between schooling and work increases, suggesting heterogeneity of both schooling and workers among the overeducated. The transferability of skills between college major and occupation, as well as the reason for accepting the position, is also examined.

Specialization and efficiency with labor-market matching

This paper constructs a labor-market matching model with heterogeneous workers. Due to matching frictions, there may be a mismatch of talents within a production team, forcing a worker to specialize in a task at which she is not talented. We consider a partnership model where production takes place in teams consisting of two workers. We characterize the steady-state of the matching equilibrium. The constrained efficiency of the matching equilibrium depends on the distribution of talents. The constrained-efficient allocation can always be implemented by a type-specific tax. We also examine an alternative model with Diamond–Mortensen–Pissarides type matching between firms and workers.

Worker Heterogeneity, New Monopsony, and Training

Abstract. A worker's output depends not only on his/her own ability but also on that of colleagues, who can facilitate the performance of tasks that each individual cannot accomplish on his/her own. We show that this common‐sense observation generates monopsony power and is sufficient to explain why employers might expend resources on training employees even when the training is of use to other firms. We show that training will take place in better‐than‐average or ‘good’ firms enjoying greater monopsony power, whereas ‘bad’ firms will have low‐ability workers unlikely to receive much training.

Skills, Innovation, and Growth: An Agent-Based Policy Analysis

Summary We develop an agent-based macroeconomic model featuring a distinct geographical dimension and heterogeneous workers with respect to skill types. The model, which will become part of a larger simulation platform for European policymaking (EURACE), allows us to conduct exante evaluations of a wide range of public policy measures and their interaction. In particular, we study the growth and labor market effects of various policy types that promote workers’ general skill levels. Using a calibrated model it is examined in how far effects differ if spending is uniformly spread over all regions in the economy or focused in one particular region.We find that the geographic distribution of policy measures significantly affects the effects of the policy even if total spending is kept constant. Focussing training efforts in one region is the worst policy outcome while spreading funds equally across regions generates a larger output in the long-run but not in the short-run.

The Joint Design of Unemployment Insurance and Employment Protection: A First Pass

Unemployment insurance and employment protection are typically discussed and studied in isolation. In this paper, we argue that they are tightly linked, and we focus on their joint optimal design in a simple model, with risk-averse workers, risk-neutral firms, and random shocks to productivity. We show that, in the “first best,”unemployment insurance comes with employment protection—in the form of layoff taxes; indeed, optimality requires that layoff taxes be equal to unemployment benefits. We then explore the implications of four broad categories of deviations from first best: limits on insurance, limits on layoff taxes, ex post wage bargaining, and ex ante heterogeneity of firms or workers. We show how the design must be modified in each case. Finally, we draw out the implications of our analysis for current policy debates and reform proposals, from the financing of unemployment insurance, to the respective roles of severance payments and unemployment benefits.

The aggregate labor market effects of the Swedish Knowledge Lift program

The Swedish adult education program known as the Knowledge Lift (1997–2002) was unprecedented in its size and scope, aiming to raise the skill level of large numbers of low-skill workers. This paper evaluates the potential effects of this program on aggregate labor market outcomes. This is done by calibrating an equilibrium search model with heterogeneous worker skills using pre-program data and then forecasting the program impacts. We compare the forecasts to observed aggregate labor market outcomes after termination of the program.

Working Time Reduction, Labour Cost, Employment and Inequality - A Review

Following an old economic literature dealing with work sharing, the aim of this paper is to review the theoretical effects on unemployment and inequality we may expect from a working time reduction (WTR). To do so, we begin considering labour demand models and we go through general equilibrium models. We also discuss work sharing together with tax cuts and we include heterogeneous workers. The main conclusion is that the impact of WTR on employment, unemployment and inequality is uncertain, whatever the theoretical framework we consider. For instance, subsidizing labour seems to be a more efficient way to reduce unemployment.

Distribution of Wealth and Interdependent Preferences

We examine the socially optimal wealth distribution in a two-person two-good model with heterogeneous workers and asymmetric social interactions where only one (social) individual derives positive or negative utility from the leisure of the other (non-social) individual. We show that the interdependence can effectively counter-act the need to transfer wealth to low-wage individuals and may require them to be poorer by all objective measures. We demonstrate that in the presence of social interactions it can be socially desirable to keep substantial wealth inequality.

Life-Cycle Equilibrium Unemployment

This paper extends the job creation--job destruction approach to the labor market to take into account a deterministic finite horizon. As hirings and separations depend on the time over which investment costs can be recouped, the life-cycle setting implies age-differentiated labor-market flows. While search by the unemployed falls with age, the separation rate is rather U-shaped over the life cycle. Worker heterogeneity in the context of undirected search implies an intergenerational externality, which is not eliminated by the Hosios condition. We show that age-specific policies are required to attain the first-best allocation

Salários e risco de acidentes de trabalho: evidências de diferenciais compensatórios para a indústria manufatureira

O objetivo deste trabalho é fornecer evidências empíricas para a hipótese de diferenciais compensatórios de salários para a indústria brasileira de transformação. O argumento básico é o de que indústrias que expõem seus trabalhadores a maiores riscos de acidentes de trabalho deveriam compensá-los com maiores salários. Os resultados obtidos neste trabalho corroboram os fatos estilizados da literatura, ou seja, a ausência do controle da heterogeneidade não observada dos trabalhadores subestima fortemente os valores dos prêmios compensatórios e, após tal controle, a hipótese de diferenciais compensatórios é amplamente corroborada.

A Microfoundation for Production Functions: Assignment of Heterogenous Workers to Heterogenous Jobs

A Microfoundation for Production Functions: Assignment of Heterogenous Workers to Heterogenous Jobs

Worker heterogeneity and labor market volatility in matching models

Shimer demonstrated that aggregate productivity shocks in a standard matching model cause fluctuations in key labor market statistics—such as the job-finding rate, the vacancy/unemployment ratio, and the unemployment rate—that are too small by an order of magnitude [Shimer, R., 2005. The cyclical behavior of equilibrium unemployment and vacancies. American Economic Review 95 (1) 25–49]. This paper shows that when the standard model is extended to allow for worker heterogeneity, it exhibits considerably greater volatility. In the model, marginal workers, whose productivity only slightly exceeds the value of their alternative use of time, constitute a disproportionate share of unemployment on average, and that share rises when aggregate conditions deteriorate. These composition effects cause firms to open fewer vacancies during downturns.

ON EMPLOYMENT CONTRACTS WITH ENDOGENOUS ON-THE-JOB SEARCH

We consider an equilibrium search model and employment contracts when workers have endogenous on-the-job search. When a firm tries to retain an employee by matching outside offers, variable search intensity leads to a moral hazard problem. We first consider workers with identical productivities. We derive an equilibrium where firms commit not to respond to outside offers and workers search less. Second, we investigate the case with heterogeneous workers and asymmetric information. Assuming that firms can commit to retain all workers irrespective of their ability, we establish conditions under which it is optimal to do so. This policy again reduces the incentive for active on-the-job search. We discuss an equilibrium where all firms use these so-called ‘pooling’ contracts.

Sorting It Out: International Trade with Heterogeneous Workers

Each worker brings a bundle of skills to the workplace, for example, quantitative and communication skills. Since employers must take this bundle as a package deal, they choose workers with just the right mix of skills. We show that international differences in the distribution of worker skill bundles—for example, Japan’s abundance of workers with a modest mix of both quantitative and teamwork skills—have important implications for international trade, industrial structure, and domestic income distribution. Formally, we model two‐dimensional worker heterogeneity and show that the second moments of the distribution of skills are critical, as in the Roy model.

Optimal allocation of heterogeneous workers in a U-shaped production line

In this paper, we deal with a U-shaped production line with multiple heterogeneous multi-function workers. Skills of workers are assumed to be different. We consider an optimization problem for finding an allocation of workers to the line that minimizes the overall cycle time under the minimum number of workers satisfying the demand. All of processing, operation and walking times are deterministic. We propose an algorithm for computing an optimal allocation of workers to machines.

Location choices of firms and workers in an urban model with heterogeneities in skills and preferences

This paper investigates the location choices of firms and workers, and the implied commuting behavior, in a city comprising several jurisdictions. Jurisdictions are geographically represented by segments that are connected to each other at the center. Each jurisdiction has its own amenities. Workers are classified into types on the basis of their skills and amenity preferences. Firms employ all types of worker. A business area may be formed in the center or in the suburban segments. A monocentric configuration arises when the commuting cost is small and heterogeneity of workers is large.