Labor Demand Effects Research Articles

Public Insurance Expansions and Labor Demand in Physician Practices

<h3>Abstract</h3> Existing research has examined the demand-side effects of ACA Medicaid expansions, but supply-side implications are not well-understood. Using a model of uncertain demand, we show how firms choose between fixed- and variable-cost labor investments. We empirically test the model predictions via a difference-in-differences strategy that uses Medicaid expansions and detailed staffing information on over 129,000 physician practices. We find no substitution toward less expensive provider types whose employment carries fixed costs in the short run; instead, practices are 4-8 percent less likely to employ any nurse practitioner or physician assistant post-expansion. Small practices seem to drive the restrained labor demand effects.

The Labor Demand Effects of Refugee Immigration: Evidence From a Natural Experiment

The Labor Demand Effects of Refugee Immigration: Evidence From a Natural Experiment

Labour Demand Effects of Internationalization in the Colombian Manufacturing Industry, 1974-2015

Colombia experienced a major structural change in the early nineties. This structural change is related to major trade and labour market reforms undertaken around 1992, which is considered the inflection year. This paper focuses on evaluating whether the structural change in international trade exposure significantly altered the employment response to wage changes in the manufacturing industry. Hamermesh’s (1993) framework is used to explain the total employment effect, which is made of the substitution and scale effects. This total effect is empirically quantified, and its two components disentangled. We find that the employment elasticity of a wage change rose from -1.05 in 1974-1991 to -1.56 in 1992-2015. By components, the substitution effect rose from -0.68 to -1.19, and the scale effect remained stable at -0.38. These findings suggest that trade liberalization has had negative consequences on workers’ welfare. A larger sensitivity of labour demand has been associated with a larger workers’ tax burden and a greater instability in labour market outcomes (Rodrik, 1997). Therefore, the increases in payroll taxation experienced during the nineties may have led to job destruction and an amplified workers’ tax burden, while capital-labour substitution processes may have accelerated on account of the larger employment sensitivity.

Essential work and emergency childcare: identifying gender differences in COVID-19 effects on labour demand and supply

AbstractWe examine whether the COVID-19 crisis affects women and men differently in terms of employment, working hours, and hourly wages, and whether the effects are demand or supply driven. COVID-19 impacts are studied using administrative data on all Dutch employees up to December 2020, focussing on the national lockdowns and emergency childcare for essential workers in the Netherlands. First, the impact of COVID-19 is much larger for non-essential workers than for essential workers. Although female non-essential workers are more affected than male non-essential workers, on average, women and men are equally affected, because more women than men are essential workers. Second, the impact for partnered essential workers with young children, both men and women, is not larger than for others. Third, single-parent essential workers respond with relatively large reductions in labour supply, suggesting emergency childcare was insufficient for them. Overall, labour demand effects appear larger than labour supply effects.

Simulating employment and fiscal effects of public investment in high-quality universal childcare in the UK

This paper simulates the likely fiscal and employment effects of a vast public annual investment programme of free universal high-quality early childhood education and care (ECEC) services in the UK. It examines the extent to which it would pay for itself fiscally for different scenarios of pay increases. Investing in high-quality universal ECEC benefits all children by improving their life chances, especially for those living in lower income families. It also generates larger employment effects than other more typical investment policies such as construction projects and fosters gender equality in employment: not only it provides many high-quality jobs for women, it also allows many mothers to improve their lifetime earnings prospects by freeing up their childcare constraints. This in turn has beneficial fiscal revenue effects for the government. Estimations of annual public expenditure for a system of highly qualified and well-paid childcare staff with low child-to-staff ratios are performed, with universal coverage for all pre-school children aged 6 months to 4.5 years. Labour demand and matching supply effects are also simulated using input–output methods, for different take-up rates of the programme. A microsimulation tool is used to calculate increases in household income and tax liabilities and decreases in social security benefits spending. This results in a net annual funding requirement of between 28 and 39% of the gross investment. Two funding methods are then explored: raising taxation in a progressive way and recouping the cost over time from persistent mothers’ increased earnings. The former would entail a net additional contribution by the richest 20% of households of at most 0.4% of their income; the latter would require 21 to 31 years to offset the programme on average, which is within a typical working life-course following a first child’s birth, of 35 years.

The Labor Demand Effects of Refugee Immigration: Evidence from a Natural Experiment

The Labor Demand Effects of Refugee Immigration: Evidence from a Natural Experiment

Not all technological change is equal: how the separability of tasks mediates the effect of technology change on skill demand

Abstract We measure the labor-demand effects of two simultaneous forms of technological change—automation of production processes and consolidation of parts. We collect detailed shop-floor data from four semiconductor firms with different levels of automation and consolidation. Using the O*NET survey instrument, we collect novel task data for operator laborers that contains process-step level skill requirements, including operations and control, near vision, and dexterity requirements. We then use an engineering process model to separate the effects of the distinct technological changes on these process tasks and operator skill requirements. Within an occupation, we show that aggregate measures of technological change can mask the opposing skill biases of multiple simultaneous technological changes. In our empirical context, automation polarizes skill demand as routine, codifiable tasks requiring low and medium skills are executed by machines instead of humans, whereas the remaining and newly created human tasks tend to require low and high skills. Consolidation converges skill demand as formerly divisible low and high skill tasks are transformed into a single indivisible task with medium skill requirements and higher cost of failure. We conclude by developing a new theory for how the separability of tasks mediates the effect of technology change on skill demand by changing the divisibility of labor.

In medio stat victus: Labor Demand Effects of an Increase in the Retirement Age

After falling for four decades, statutory retirement ages are increasing in most OECD countries. The labor market adjustment to these reforms has not yet been thoroughly investigated by the literature. We draw on a major pension reform that took place in Italy in December 2011 that increased the retirement age by up to six years for some categories of workers. We have access to a unique dataset validated by the Italian social security administration (INPS), which identifies in each private firm, based on an administrative exam of eligibility conditions, how many workers were locked in by the sudden increase in the retirement age, and for how long. We find that firms mostly affected by the lock in are those that were downsizing even before the policy shock. The increase in the retirement age seems to displace more middle-aged workers than young workers. Furthermore, there is not a one-to-one increase in the number of older workers in the firms where some workers were locked in by the reform. We provide tentative explanations for these results, based on the interaction between retirement, employment protection legislation and liquidity constraints of firms.

The effects of recreational cannabis access on labor markets: evidence from Colorado

AbstractRecreational 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.

Online Appendix: 'How Do New Immigration Flows Affect Existing Immigrants? Evidence from the Refugee Crisis in Germany'

We apply difference-in-differences regressions to study the impact of the 2015 refugee crisis in Germany on the culturally closer diaspora of existing immigrants originating from Turkey and Middle Eastern and North African countries (TMENA). Our identification allows us to emphasize the role of immigrants' culture in estimating immigration's socio-economic impact. Additionally, we distinguish between the labor demand and labor supply effects associated with immigration, which enables us to reflect on the ambiguous labor market impact of immigration suggested in the existing literature. In particular, we find that TMENA immigrants experienced a substantial reduction in unemployment in 2015, consistent with the differential demand shock induced by refugees' consumption of culturally similar goods and services. However, the unemployment effects dissipated starting in 2016, coinciding with refugees' delayed yet incremental labor market integration. We also consider the social impact of the refugee crisis and find that while worries about immigration increased among all respondents, the increases were statistically significantly smaller among TMENA immigrants, primarily due to their cultural proximity to arriving refugees. Our results suggest that TMENA immigrants' assimilation of German identity was unaffected by the refugee crisis.

Essential Work and Emergency Childcare: Identifying Gender Differences in COVID-19 Effects on Labour Demand and Supply

We examine whether the COVID-19 crisis affects women and men differently in terms of employment, working hours and hourly wages outcomes, and whether the effects are demand or supply driven. COVID-19 impacts are studied using administrative data on all Dutch employees up to 30 June 2020, focussing on the national lockdown and the emergency childcare for essential workers in the Netherlands. First, we find that the impact of COVID-19 is much larger for non-essential workers than for essential workers. Although, on average, women and men are equally affected, female non-essential workers are more affected than male non-essential workers. Second, partnered individuals with young children are equally affected by the crisis as others, irrespective of gender and spousal employment. Third, single-parent essential workers experience relatively large negative labour supply effects, suggesting emergency childcare was not sufficient for this group. However, overall, labour demand effects appear more important than labour supply effects.

Essential Work and Emergency Childcare: Identifying Gender Differences in Covid-19 Effects on Labour Demand and Supply

We examine whether the COVID-19 crisis affects women and men differently in terms of employment, working hours and hourly wages outcomes, and whether the effects are demand or supply driven. COVID-19 impacts are studied using administrative data on all Dutch employees up to 30 June 2020, focussing on the national lockdown and the emergency childcare for essential workers in the Netherlands. First, we find that the impact of COVID-19 is much larger for non-essential workers than for essential workers. Although, on average, women and men are equally affected, female non-essential workers are more affected than male non-essential workers. Second, partnered individuals with young children are equally affected by the crisis as others, irrespective of gender and spousal employment. Third, single-parent essential workers experience relatively large negative labour supply effects, suggesting emergency childcare was not sufficient for this group. However, overall, labour demand effects appear more important than labour supply effects.

Essential work and emergency childcare: Identifying gender differences in COVID-19 effects on labour demand and supply

We examine whether the COVID-19 crisis affects women and men differently in terms of employment, working hours and hourly wages outcomes, and whether the effects are demand or supply driven. COVID-19 impacts are studied using administrative data on all Dutch employees up to 30 June 2020, focusing on the national lockdown and the emergency childcare for essential workers in the Netherlands. First, we find that the impact of COVID-19 is much larger for non-essential workers than for essential workers. Although, on average, women and men are equally affected, female non-essential workers are more affected than male non-essential workers. Second, partnered individuals with young children are equally affected by the crisis as others, irrespective of gender and spousal employment. Third, singleparent essential workers experience relatively large negative labour supply effects, suggesting emergency childcare was not sufficient for this group. However, overall, labour demand effects appear more important than labour supply effects.

Human capital spillovers and the churning phenomenon: Analysing wage effects from gross in- and outflows of high-skilled workers

The article estimates human capital externalities on wages originating from internal gross migration flows of high-skilled workers. We draw on rich administrative micro panel data that allow us to disentangle externalities from sorting and labour market supply and demand effects through an extensive set of time-varying fixed effects. We show that regional inflows and outflows of high-skilled workers occur simultaneously and that both are positively correlated. Given the existence of such a churning phenomenon, looking only at net migration flows might be misleading. Our econometric analysis indicates that inflows of high-skilled workers increase the wages of locals, whereas outflows decrease those wages. Although externalities from outflows outweigh those from inflows in the short run, the opposite holds in the long run. Our results suggest that human capital externalities are transmitted through the productivity effects of local personal networks, which, for newcomers, develop over time.

Not All Technological Change Is Equal: Disentangling Labor Demand Effects of Simultaneous Changes

We separate and directly measure the labor-demand effects of two simultaneous forms of technological change–automation and parts consolidation. We collect detailed shop-floor data from four semicon...

The Effects of Minimum Wages on Low‐Skilled Immigrants’ Wages, Employment, and Poverty

Raising the minimum wage has been advanced as complementary policy to comprehensive immigration reform to improve low‐skilled immigrants’ economic well‐being. While adverse labor demand effects could undermine this goal, existing studies do not detect evidence of negative employment effects. We re‐investigate this question using data from the 1994 to 2016 Current Population Survey and conclude that minimum wage increases reduced employment of less‐educated Hispanic immigrants, with estimated elasticities of around –0.1. However, we also find that the wage and employment effects of minimum wages on low‐skilled immigrants diminished over the last decade. This finding is consistent with more restrictive state immigration policies and the Great Recession inducing outmigration of low‐skilled immigrants, as well as immigrants moving into the informal sector. Finally, our results show that raising the minimum wage is an ineffective policy tool for reducing poverty among immigrants.

The Declining Labor Market Prospects of Less-Educated Men.

Over the last half century, US wage growth stagnated, wage inequality rose, and the labor-force participation rate of prime-age men steadily declined. In this article, we examine these worrying labor market trends, focusing on outcomes for males without a college education. Though wages and participation have fallen in tandem for this population, we argue that the canonical neoclassical framework, which postulates a labor demand curve shifting inward across a stable labor supply curve, does not reasonably explain the data. Alternatives we discuss include adjustment frictions associated with labor demand shocks and effects of the changing marriage market—that is, the fact that fewer less-educated men are forming their own stable families—on male labor supply incentives. In the synthesis that emerges, the phenomenon of declining prime-age male labor-force participation is not coherently explained by a series of causal factors acting separately. A more reasonable interpretation, we argue, involves complex feedbacks between labor demand, family structure, and other factors that have disproportionately affected less-educated men.

How New Immigration Flows Affect Existing Immigrants?

We apply difference-in-differences regressions to study the impact of the 2015 refugee crisis in Germany on the culturally closer diaspora of existing immigrants originating from Turkey and Middle-Eastern and North-African countries (TMENA). Our identification allows us to emphasize the role of immigrants' culture in estimating immigration's socio-economic impact. Additionally, we distinguish between the labor demand and labor supply effects associated with immigration, which enables us to reflect on the ambiguous labor market impact of immigration suggested in the existing literature. In particular, we find that TMENA immigrants experienced a substantial reduction in unemployment in 2015, consistent with the differential demand shock induced by refugees' consumption of culturally similar goods and services. However, the unemployment effects dissipated starting in 2016, coinciding with refugees' delayed yet incremental labor market integration. We also consider the social impact of the refugee crisis and find that while worries about immigration increased among all respondents, the increases were statistically significantly smaller among TMENA immigrants, primarily due to their cultural proximity to arriving refugees. Our results suggest that TMENA immigrants' assimilation of German identity was unaffected by the refugee crisis.

Not All Technological Change is Equal: Disentangling Labor Demand Effects of Automation and Parts Consolidation

We measure the labor-demand effects of two simultaneous forms of technological change—automation of production processes and consolidation of parts. We collect detailed shop-floor data from four semiconductor firms with different levels of automation and consolidation. Using the O*NET survey instrument, we collect novel task data for operator laborers that contains process-step level skill requirements, including operations and control, near vision, and dexterity requirements. We then use an engineering process model to separate the effects of the distinct technological changes on these process tasks and operator skill requirements. Within an occupation, we show that aggregate measures of technological change can mask the opposing skill biases of multiple simultaneous technological changes. In our empirical context, automation polarizes skill demand as routine, codifiable tasks requiring low and medium skills are executed by machines instead of humans, while the remaining and newly created human tasks tend to require low and high skills. Consolidation converges skill demand as formerly divisible low and high skill tasks are transformed into a single indivisible task with medium skill requirements and higher cost of failure. We conclude by developing a new theory for how the separability of tasks mediates the effect of technology change on skill demand by changing the divisibility of labor.

Minimum Cash Wages, Tipped Restaurant Workers, and Poverty

This is the first study to examine the effect of increases in the tipped minimum cash wage—the wage employers must pay to tipped employees—on poverty. Using March Current Population Survey data (1988–2014), we find that tipped minimum cash wage increases are associated with declines in the risk of a tipped restaurant worker living in a poor family (elasticities around –0.2). However, we find little evidence of poverty‐alleviating effects when using the household rather than the family as the sharing unit. This result is consistent with evidence that a substantial share of tipped workers who live in a poor family live in a nonpoor household with persons unrelated by blood, marriage, or adoption who contribute to the household's income. Furthermore, we find that tipped minimum cash wage hikes are associated with increases in the risk of a younger, less‐educated individual living in a poor family or household. Adverse labor demand effects that redistribute income among low‐skilled individuals drive these results. We conclude that raising the tipped minimum cash wage is a poorly targeted policy to deliver income to poor restaurant workers.