Labor Market Decisions Research Articles

Echoes of insecurity: The detrimental effect of crime on corporate employment

AbstractThis study investigates the influence of local crime on corporate employment in China. Leveraging a comprehensive data set of 85 million court judicial documents, we construct city‐level crime measures. We find that local crime is negatively associated with corporate employment. Using China's Gang Crime Crackdown program as a quasi‐natural experiment and the difference‐in‐differences approach, we further identify the causal relationship. Violent crimes and those with longer sentences drive the negative correlation between local crime and corporate employment. This relation is particularly pronounced among low‐skilled employees, in cities with inadequate commuter security, and in financially constrained firms. Our findings emphasize the role of a secure social environment in the local labor market and firms' employment decisions.

The impact of formal and informal credit institutions on entrepreneurship

Purpose How do informal lending institutions affect entrepreneurship? This paper aims to investigates the role of formal and informal credit market institutions in the decision to become an entrepreneur over the life cycle. Design/methodology/approach The author developed a dynamic Roy model in which a decision to become an entrepreneur depends on the access to formal and informal credit markets, nonpecuniary benefits of entrepreneurship, career-specific entry costs, prior work experience, education, unobserved abilities and other labor market opportunities (salaried employment and nonemployment). Using detailed Russian panel microdata (the Russia longitudinal monitoring survey) and estimating a structural model of labor market decisions and borrowing options, the author assesses the impact of the development of informal and formal credit institutions. Findings The expansion of traditional (formal) credit market institutions positively impacts all workers’ categories, reduces the share of entrepreneurs who borrow from informal sources and incentivizes low-type entrepreneurs to switch to salaried employment. The development of the informal credit market reduces the percentage of high-type entrepreneurs who borrow from formal sources. In the case of default, a higher value of the social network or higher costs of losing social ties demotivate low-type entrepreneurs to borrow from informal sources. The author highlights the practical implications of estimates by evaluating policies designed to promote entrepreneurship, such as subsidies and accessibility regulations in credit market institutions. Originality/value This study contributes to the literature in several ways. Unlike other studies that focus on individual characteristics in the selection for self-employment [Humphries (2017), Hincapíe (2020), Gendron-Carrier (2021), Dillon and Stanton (2017)], the paper models labor and borrowing decisions jointly. Previous studies discuss transitions between salaried employment and self-employment, taking into account entrepreneurial earnings, wealth, education and age, but do not consider the availability of financial institutions as a driving factor for the selection into self-employment. To the best of the author’s knowledge, this paper shows for the first time that the transition from salaried employment to self-employment is standard and consistent with changes in access to financial institutions. Another feature of this study is incorporating both types of credit markets – formal and informal. The survey by the European Central Bank on the Access to Finance of Enterprises (2018) shows 18% of small and medium enterprise in EU pointed funds from family or friends. Therefore, the exclusion from consideration of informal credit markets may distort the understanding of the role of the accessibility of credit markets.

Motherhood and Employment in China: Gender Asymmetries in Multi-Generational Families

Abstract Prior studies have shown a negative effect of motherhood on women’s post-maternal employment, yet few have examined how the motherhood employment penalty may vary by living arrangements. Using data from the 2010–2018 waves of the China Family Panel Studies, we applied fixed-effects linear probability models to examine the effects of the number and age of children on the employment status of Chinese women and how multi-generational living arrangements moderate these effects. The results show that motherhood significantly reduces women’s likelihood of labor force participation. A woman’s coresidence with her natal mother significantly mitigates the motherhood employment penalty, especially in urban China. In contrast, coresidence with only her father or father-in-law does not reduce the penalty. These findings indicate that there is a gendered intergenerational division of labor in Chinese extended families and highlight the importance of considering gender asymmetries in multi-generational relations in understanding mothers’ labor market decisions.

Determinants of older people labour market decision in Ghana

PurposeThe purpose of this paper is to examine the prevalence of labour force participation and the factors affecting labour supply among older persons in Ghana. Both the extensive and intensive margins of older persons’ labour supply were analysed.Design/methodology/approachThe paper uses nationally representative samples of household and individual data in 2016–2017 – Ghana Living Standard Survey (GLSS 7) data – for the analysis. Heckman’s sample selection model is used to analyse both the extensive and intensive margins of older persons’ labour supply.FindingsThe study found that older persons in Ghana who are pensioners, widowed, have high levels of education, poor health status and live in urban areas are less likely to participate actively in the labour market. On the other hand, being head of a household, married and owning certain assets increase the likelihood of an older person to work. Furthermore, pensions, household headship and post-secondary education have negative effects on the labour supply as having them make older persons work fewer hours per week compared to their counterparts.Originality/valueThis research is the first study to examine the prevalence of old age employment and factors that affect labour market decisions of older persons in Ghana. It also adds to the limited literature on pension and retirement decisions in developing countries.

ВЛИЯНИЕ РЫНКА ЧЕЛОВЕЧЕСКИХ РЕСУРСОВ НА ПОЛИТИЧЕСКУЮ СТАБИЛЬНОСТЬ В СТРАНЕ

Despite the dependence of the human resource market on the market for goods and services, it acts as one of the key segments of the economic system that influences the economic and political decisions of the government. Human capital predetermines the economic development of the country both in the short term and in the long term, creating the prerequisites for effective management of natural resources, self-reproduction and ensuring return on capital. The disequilibrium state of the factor labor market causes a decrease in gross domestic product and changes in other indicators of the system of national accounts. In addition to economic problems, imbalances in the labor market also provoke political instability in the country and increase the level of uncertainty among residents. This situation arose in Great Britain at the beginning of this century, when, after the creation of a single European space for markets for goods and factors of production, uncontrolled migration from Europe became a serious challenge for residents of the country, which caused discontent among the British, the risk of a change of power and, as a result, led to Brexit. The purpose of the study is to identify the interaction between changes in the labor market and political decisions using the example of Great Britain. The objectives of the study are to establish the causes of transformations in the human resources market of the United Kingdom at the turn of the 20th–21st centuries; considering the stages of the creation of the European Union and the country’s break with it; determining the consequences of the UK's exit from the European Union. The methodology of the work includes historical-logical, comparative and systemic approaches. A dynamic study of macroeconomic indicators allows us to draw a conclusion about the direct relationship of the human resource market with the country’s political course.

Subjective expectations and schooling choices in Latin America and the Caribbean

AbstractExpectations about future labour market opportunities are essential for education and labour market decisions. This paper uses data from a survey of youths in seven Latin American and Caribbean countries to explore the role of expected returns to education on schooling decisions. We find substantial variation in subjective expectations partly explained by youths' socioeconomic characteristics. Also, we find that enrolment in tertiary education is positively related to perceived education returns. Furthermore, the association of expectations with schooling choices differs across individuals in relevant domains, including gender, skills, and socioeconomic background. Our results suggest that public policies might impact choices and reduce socioeconomic gaps in schooling by providing information on education returns.

The impact of taking up care tasks on pensions: Results of typical-case simulations for several European countries

Informal care is often accompanied by a reduction or abandonment of professional activity by the caregiver. Therefore, caregiving may be associated with a lower pension for the former caregiver than for people without care obligations. There is a large gender difference in informal care responsibilities, and this may contribute to the gender pension gap. As the impact of care-related labour market decisions depends on the design of the pension system, we carry out a cross-country comparison, in which we analyse the impact of care obligations in countries with high (Luxembourg), middle (Liechtenstein, Belgium, Portugal) and low (Slovenia) gender pension gaps. Using typical-case simulation models, we examine how the impact of care-related events is mediated by pension rules, given women's labour market decisions. To what extent does working part time or interrupting one’s career at the age of 30 or 54 reduce the later pension benefit? How are these losses mitigated by pension credits that are conditional on caregiving? We find that the mitigating effects are generally strongest in Belgium, followed by Luxembourg and Slovenia. Such credits hardly exist in Portugal, while in Liechtenstein they have only a small impact. However, the consequences of either working part time or interrupting work can also be mitigated via general rules in the system that are unrelated to caregiving (such as in Portugal and Liechtenstein). They can, on the other hand, be aggravated by the existence of higher accrual rates for individuals who extend their careers, as in Luxembourg and Slovenia.

The Gender Gap in Meaningful Work

An understanding of differences in nonmonetary work conditions is fundamental for a complete characterization of individuals’ well-being at work. Thus, to fully characterize gender inequalities in the labor market, scholars have begun to explore gender differences in nonmonetary work conditions. We examine one such condition—meaningful work—using nationally representative survey data linked with worker and employer administrative data. We document a large and expanding gender gap in meaningful work, wherein women experience their jobs as more meaningful than men do. We then explore patterns underlying this difference. We find little correlation between women’s higher experience of meaningful work and either labor market decisions related to first parenthood or women’s underrepresentation in leadership jobs. Instead, the gender gap appears to be highly correlated with the sorting of more women into occupations with a high level of beneficence: the sense of having a prosocial impact. Though both women and men experience such jobs as more meaningful, women do so by a larger margin. Next, we consider the relationship between the gender difference in meaningful work and the gender wage gap, contributing to the discussion on compensating differentials in work amenities. We find that, whereas the gender gap in meaningful work closes a substantial part of the wage gap in lower paid jobs, it does little to close the gap in higher paid jobs in which the gender wage gap is largest. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: J. Rickne received financial support from the Wallenberg Academy Fellow Grant, the Swedish Research Council for Health, Working Life, and Welfare 2019-01251. O. Folke received financial support from the Swedish Research Council 2018-00703_VR, The Swedish Research Council for Health, Working Life, and Welfare 2019-01251. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2022.01807 .

Stigma and take‐up of labour market assistance: Evidence from two field experiments

AbstractAversion to ‘stigma’—disutility associated with a programme or activity due to beliefs about how it is perceived—may affect labour market choices and utilization of social programmes, but empirical evidence of its importance is scarce. Using two randomized field experiments, we show that stigma can affect consequential labour market decisions. Treatments designed to alleviate stigma concerns about taking entry‐level jobs—such as how those jobs are perceived by society—had small average effects on take‐up of job assistance programmes. However, using compositional analysis and machine learning methods, we document large heterogeneity in the responses to our treatments. Stigma significantly affects the composition of who takes up a programme: the treatments were more successful in overcoming stigma for older, wealthier and working respondents. For other people, we show that our treatments merely increased the salience of the stigma without dispelling it. We conclude that social image concerns affect labour market decisions and that messaging surrounding programmes can have important effects on programme take‐up and composition.

Work, retirement, and post-retirement employment among older adults in India

Older adults in India, particularly those in Goa, where there is a high elderly population, have been insufficiently researched. Some older adults are financially vulnerable in their old age and must continue working, while others choose to work to stay active. Although some studies have examined the health and social issues faced by the elderly, this study contributes to a previously unexplored area in Goa. 400 Goan seniors were surveyed using multistage sampling to investigate their occupations before and after retirement, determine reasons for voluntary retirement and associated factors, and assess variables predisposing them to work. Binary Logistic Regression, Chi-square, and Fisher's Exact Tests were used. The findings showed that many were former government and private sector employees, farmers, and educators. 73 participants retired voluntarily due to factors such as health issues, family commitments, stress, and leisure. Among them, 20.5% are currently employed after retirement. Significant correlations were observed between post-retirement work and age groups such as the young-old and old-old. Factors that attracted the participants to engage in post-retirement work include insufficient income, education, experience, good physical health, and mental alertness. The study found that individuals categorized as young-old, with low household income, financially dependent, and having fewer comorbidities, were more likely to continue working after retirement. These findings highlight the need to end age discrimination and provide equal opportunity for older adults to contribute to society. Policymakers must focus on improving the wellbeing of vulnerable older adults who have inadequate resources and poor health. There is potential for further research in various states of India to understand the labor market decisions of older adults and implement necessary improvements where they are lacking.

Heterogeneous effects of emigration on labor market activity and investment decisions in Punjab, Pakistan.

We investigate the impacts of emigration on the labor market and investment decisions of migrant-sending households in Pakistan by constructing a large individual-level dataset, using several rounds of the Multiple Indicator Cluster Survey conducted between 2003 and 2014. We add to the literature by introducing a new time-varying instrumental variable to control for endogenous migration decisions, constructed as a composite of three variables that represent opportunities to work abroad: (i) the household's number of adult males, (ii) historic diaspora rates, and (iii) deviations of nighttime light intensity from its trend in migrant-receiving countries. We find a significant shift in domestic labor market activity from lower-status employment categories (not working at all, unpaid family work and manual labor) toward higher-status activities and entrepreneurship such as self-employment and becoming an employer within migrant-sending households. We also find higher investment in property, bank deposits, agricultural land, livestock, poultry and fisheries by individuals in migrant-sending households. The results are stronger for vulnerable groups, implying that migration can be a force for good for rural development, the welfare of women, and less-educated individuals.

Turning age into agency: A qualitative longitudinal investigation into older jobseekers' agentic responses to ageism

Despite existing laws prohibiting age discrimination in employment and hiring practices, ageism creates inequalities between jobseekers because of their age. Deeply manifested ageist practices take place in everyday interactions within the labor market, complicating changes in career trajectories during late working life. Bringing the time dimension into studies on ageism and individual agency, we narratively examined qualitative longitudinal interviews with 18 older jobseekers from Finland to better understand the role of time and temporality in agentic practices that older jobseekers employ to counteract forms of ageism. Older jobseekers exhibited various resilient, and reworked strategies in response to ageism depending on their diverse social and intersectional positions. As their positions changed over time, jobseekers employed different strategies, highlighting the relational and temporal dimensions of individual agency in labor market decisions. The analyses suggest that acknowledging the dynamics between temporality, ageism, and labor market behavior is vital for creating effective and inclusive policies and practices to tackle inequalities in late working life.

Caring to Work or Working to Care

We seek to understand how the labor market decisions of the family adjust in response to plausibly exogenous health shocks. Family members might work less to provide caregiving, or work more in response to medical expenditures and loss of income by the ill individual. We use records of emergency department (ED) visits and hospitalizations to empirically determine the size of these effects. Using ED events, we find evidence of intra-family insurance. By exploring how insurance varies by the severity of the health shock, we find that family labor supply responses decrease as the caregiving need increases.

“In Every Decision I’m Making, I’m Thinking About My Son”: How Children Motivate and Constrain the Labor Force Participation of Mothers With Disabilities

Although women’s employment patterns are influenced by both the presence of children and the presence of a disability, these distinct statuses have largely been explored in isolation from each other. This research employed in-depth interviews with 32 current and former disability benefit recipients to explore the ways children shape the labor market decisions and behaviors of mothers with disabilities. Motherhood served as both a motivation for and a constraint to pursuing employment, with mothers operating under distinct cost–benefit frameworks shaped by their responsibility for children. The report concludes with recommendations for programs and policies that could most effectively facilitate labor market reengagement among a subpopulation of mothers who both want to and need to work but who face unique child-related constraints to employment opportunities.

Information of employee decisions and stock returns in the Korean stock market

AbstractWe study the role of rank‐and‐file employees on asset prices in the Korean stock market using monthly labor flow data from the national pension subscription descriptions. We find that firms experiencing high net labor outflows have lower future risk‐adjusted returns. This return predictability is found to originate mainly from gross labor outflows. We further show that the workers' labor market decisions better reflect information on the firms' fundamentals when firm sales are greater related to wages or when workers can more easily transfer to better jobs. Finally, we confirm the workers' ability to predict firm performance.

It Takes Two to Borrow: The Effects of the Equal Credit Opportunity Act on Housing, Credit, and Labor Market Decisions of Married Couples

Abstract Until the 1970s, U.S. mortgage lenders commonly discounted half of the wife’s income in couples’ joint mortgage applications. This changed with the introduction of antidiscrimination legislation in the 1970s, providing a natural experiment to study the relaxation of income-related borrowing constraints. I study the effects of the reform by estimating difference-in-differences regressions and solving a simple calibrated life cycle model. I find substantial positive effects of the reform on mortgage borrowing and homeownership rates of married couples with working wives. Moreover, I find a positive effect on married women’s labor force participation, which strongly amplifies the homeownership and borrowing effects. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online

Inheritances and work for pay - will the expected wave of bequests undermine active ageing policies?

The online version contains supplementary material available at 10.1007/s10433-022-00706-1.

Beyond measurement of the motherhood penalty: How social locations shape mothers' work decisions and stratify outcomes

AbstractDespite the shrinking of the gender wage gap, women with children continue to experience earnings and career disadvantages that women without children do not experience. This review first summarizes how the severity of the “motherhood penalty” is influenced by a woman's marital status and class in ways that perpetuate existing inequalities. Next, it outlines how the same factors also play salient roles in determining women's workforce behaviors upon transitioning to motherhood, largely dictating the extent to which women's earnings and careers are negatively impacted by the arrival of children. After establishing the stratified lines upon which mothers' decisions are made, and the disparate financial ramifications of their decisions, the paper concludes with a call for future research into the mechanisms that propel mothers' labor market decisions.

Life cycle, financial frictions and informal labor markets: the case of Chile

ABSTRACT We study the implications of economic policies on household’s decisions. We focus on Chile in 2019. Using a life-cycle search model and survey data, we found that an equivalent change in labor tax rates and non-contributory pensions (NCP) have opposite effects on labor markets, specifically on informality and unemployment duration. NCP offers a milder trade-off as it produces a second-order increase in informality. However, due to the presence of informal labor markets and financial frictions, non-retired agents increase their current consumption only after a tax cut. That is, a positive wealth shock can reduce consumption. When we consider the impact on welfare, as households are assumed to value only consumption, cutting taxes seems to be preferred. We characterize labor market and consumption-savings decisions. We found two effects operating in opposite directions: substitution and wealth. The latter prevails suggesting that the life cycle aspects of the labor market are critical.

Boomerang Kids in the Pandemic: How High-Income Families Are Their Own Safety Net

In this Economic Commentary, we use the Current Population Survey to identify and examine the influx of young adults who moved in with their parents during the COVID-19 pandemic—the so-called boomerang kids—and how being in their family home influences their labor market decisions and sensitivity to occupational risk relative to that of other young adults. We find that most boomerang kids come from high-income families that can financially support them through nonemployment spells that are, on average, longer than those of young adults not living with their parents. Young adults living with their parents are also more responsive to the risk of COVID-19 exposure in the workplace and are less likely to work in occupations with high exposure risk.