Labor Market Skills Research Articles

The construction labour market skills crisis: the perspective of small–medium‐sized firms

Reports abound of the detrimental effect of the construction skills crisis on the performance and future development of the UK construction industry. The industry's continued growth in output, coupled with its unpopularity as a career choice, has led to extreme pressure on its labour market capacity. There remains, however, a paucity of empirical research into the nature of its highly complex labour market. In particular, very little attention has been paid to the impacts being felt by the smaller firms who account for the vast majority of the industry's economic output and employment. This paper reports on research that has explored the perspectives of smaller employers with respect to the skills crisis. Using an inductive methodology, this research canvassed the opinions of representatives of small‐ and medium‐sized (SME) firms in order to establish the impact of skills shortages on the operational efficiency of the industry. The paper reveals the complex interplay of factors which have combined to shape the industry's skills crisis in recent years and uncovers the practical implications for firms attempting to operate in increasingly tight labour market conditions.

Consumer Valuation Of Higher Education And Adjusted Rates Of Return

This paper regards higher education as a bundle of services. This approach yields a rate of return which is between 0.5% and 4.1% higher than previously calculated. This paper makes use of data which shows how much students actually paid to attend college, a value which is often very different than the stated tuition. When students purchase the college bundle they are buying labor market skills, intellectual stimulation, a peer-group, socializing opportunities and a network of contacts. I identify which elements of the education bundle consumers wish to purchase. If a consumer purchases a good which enhances his income that purchase can be regarded as an investment. Otherwise it is regarded as a consumption good. Using a standard wage equation, which includes the elements of the education bundle consumers are willing to purchase, I confirm there are both consumption and investment aspects to the purchase of higher education. This implies previous rate of return calculations underestimated the investment return on a college education.

The Dynamic Impact of Immigration on Natives' Labor Market Outcomes: Evidence from Israel

This paper studies the dynamic impact of mass migration from the Former Soviet Union to Israel on natives' labor market outcomes. Specifically, we attempt to distinguish between the short-run and long-run effects of immigrants on natives' wages and employment. The transition of immigrants into a new labor market is a gradual process: the dynamics of this process come from immigrants' occupational mobility and from adjustments by local factors of production. Natives may therefore face changing labor market conditions, even years after the arrival of the immigrants. If immigrants are relatively good substitutes for native workers, we expect that the impact of immigration will be largest immediately upon the immigrants' arrival, and may become smaller as the labor market adjusts to the supply shock. Conversely, if immigrants upon arrival are poor substitutes for natives because of their lack of local human capital, the initial effect of immigration is small, and the effect increases as immigrants acquire local labor market skills and compete with native workers. We empirically examine these alternative hypotheses using data from Israel's Labor Force and Income Surveys from 1989 to 1999. We find that wages of both men and women are negatively correlated with the fraction of immigrants with little local experience in a given labor market segment. A 10 percent increase in the share of immigrants lowers natives' wages in the short run by 1 to 3 percent, but this effect dissolves after 4 to 7 years. This result is robust to a variety of different segmentations of the labor market, to the inclusion of cohort effects, and to different dynamic structures in the residual term of the wage equation. On the other hand, we do not find any effect of immigration on employment, neither in the short nor in the long run.

Firms' investments in general training and the skilled labour market

An adverse selection model is analysed, where firms can train or hire a skilled worker. In equilibrium, the market wage is determined by supply and demand. The quality of the supplied skilled labour is negatively biased, because workers stem from firms that shut down and from firms that observed their trainee's bad quality during the training. If fewer firms were to shut down, then the supplied average quality deteriorates and the incentive to train increases. The incentive is inefficient, because firms must share the informational rent and they free-ride. Ex ante workers may wish to increase the firms' bargaining power.

Tackling Social Exclusion through Positive Pathways to Resettlement

“Effective resettlement is central to the economic and social regeneration of communities and the protection of victims. Reducing re-offending is not just a criminal justice issue: it is a health issue, a drug rehabilitation issue, an employment issue and a housing issue. Resettlement is, in short, everyone's business. If we get resettlement right, then there will be significant benefits for local communities. A region with effective resettlement strategies would expect to see less crime, fewer victims of crime, reduced homelessness, a larger and more skilled labour market and more cohesive communities. There would also be large financial savings through lower criminal justice costs, health costs and the costs to victims of crimes.” Executive Summary; Pathways to Resettlement (Senior 2003).

The Improving Relative Status of Black Men

Using data from the Current Population Survey, we examine recent trends in the relative economic status of black men. Our findings point to gains in the relative wages of black men (compared to whites) during the 1990s, especially among younger workers. In 1989, the average black male worker (experienced or not) earned about 69 percent as much per week as the average white male worker. In 2001, the average younger black worker was earning about 86 percent as much as an equally experienced white male; black males at all experience levels earned 72 percent as much as the average white in 2001. Greater occupational diversity and a reduction in unobserved skill differences and/or labor market discrimination explain much of the trend. For both younger and older workers, general wage inequality tempered the rate of wage convergence between blacks and whites during the 1990s, although the effects were less pronounced than during the 1980s.

The Dynamic Impact of Immigration on Natives' Labor Market Outcomes: Evidence from Israel

This paper studies the short and medium run impact of highly skilled immigrants from the Former Soviet Union to Israel on natives' wages and employment. If immigrants are relatively good substitutes for native workers, the impact of immigration will be largest immediately upon the immigrants' arrival, and may become smaller as the labor market adjusts to the supply shock. Conversely, if immigrants upon arrival are poor substitutes for natives, the initial effect of immigration is small, and increases over time as immigrants acquire local labor market skills and compete with native workers. We empirically examine these alternative hypotheses using data from Israel between 1989 and 1999. We find that wages of both men and women are negatively correlated with the fraction of immigrants with little local experience in a labor market segment. A 10 percent increase in the share of immigrants lowers natives' wages in the short run by 1–3 percent, but this effect dissolves after 4–7 years. This result is robust to a variety of different segmentations of the labor market, to the inclusion of cohort effects, and to different dynamic structures in the residual term of the wage equation. On the other hand, we do not find any effect of immigration on employment, neither in the short nor in the medium run.

The Improving Relative Status of Black Men

Using data from the Current Population Survey, we examine recent trends in the relative economic status of black men. Our findings point to gains in the relative wages of black men (compared to whites) during the 1990s, especially among younger workers. In 1989, the average black male worker (experienced or not) earned about 69% as much per week as the average white male worker. In 2001, the average younger black worker was earning about 86% as much as an equally experienced white male; black males at all experience levels earned 72% as much as the average white in 2001. Greater occupational diversity and a reduction in unobserved skill differences and/or labor market discrimination explain much of the trend. For both younger and older workers, general wage inequality tempered the rate of wage convergence between blacks and whites during the 1990s, although the effects were less pronounced than during the 1980s.

Forms of workplace literacy using reflection-with-action methods: A scheme for inner-city adults

This paper reports on a study that was part of the Workplace Literacy Program for inner-city adults conducted at Columbia University in New York City. The program involves residents of public housing projects in Harlem, New York and provides a community-based alternative to vocational education. Participants receive training and mentoring on specific projects as well as guidance in assimilating to their new workplace ethos and in seeking new careers in information technology. The program was instrumental in developing the Inner-City Workplace Literacy Arc, which provides a scheme for assessing the workplace assimilation of inner-city adults along definable stages of development of contemporary labor-market skills. The program involves community organizations, institutions of higher education, and local businesses and thereby provides a more balanced approach to community-based learning than simple training programs. Participants have benefited by the use of reflection-with-action methods in their learning journals, group sessions and mentoring meetings.

The 'Home International' Comparisons in Vocational Qualifications

The paper provides a comparative analysis of the take-up and usage of National Vocational Qualifications within two constituent countries in the UK (Scotland and England). The methodology of the study is based upon the use of the quarterly Labour Force Survey for spring 1998 and extensive case study material. The research suggests that Scotland under-performs in the take-up of national vocational qualifications in comparison with England. However, the paper argues that this is not a cause for concern and that it should be seen as a positive outcome indicating a higher level of educational achievement and a better mix between job opportunities and labour market skills. The research evidence also suggests that social class, gender and spatiality largely determine participation levels in work-based, post-16 education and training. Finally, it is argued that intra-national comparisons between nation states in the UK can be misleading in arriving at meaningful policy measures in vocational education. A regional analysis both within a constituent country of the UK and across such constituent countries may be more helpful in arriving at a broader socio-economic solution to what are perceived as local problems.

A Structural Analysis of the Correlated Random Coefficient Wage Regression Model

We estimate a finite mixture dynamic programming model of schooling decisions in which the log wage regression function is set in a random coefficient framework. The model allows for absolute and comparative advantages in the labor market and assumes that the population is composed of 8 unknown types. Overall, labor market skills (as opposed to taste for schooling) appear to be the prime factor explaining schooling attainments. The estimates indicate a higher cross-sectional variance in the returns to experience than in the returns to schooling. From various simulations, we find that the sub-population mostly affected by a counterfactual change in the utility of attending school is composed of individuals who have any combination of some of the following attributes: absolute advantages in the labor market, high returns to experience, low utility of attending school and relatively low returns to schooling. Unlike what is often postulated in the average treatment effect literature, the weak correlation (unconditional) between the returns to schooling and the individual reactions to treatment is not sufficient to reconcile the discrepancy between OLS and IV estimates of the returns to schooling often found in the literature.

The Effect of Changes in the U.S. Wage Structure on Recent Immigrants' Earnings

Since recent immigrants tend to earn less than natives, their relative labor market status has been adversely impacted by an increase in the return to labor market skills and widening wage inequality over the past two decades. To evaluate the magnitude of this effect, this study uses Social Security earnings records matched to recent cross - sections of the SIPP and CPS to estimate the change in the return to skills among native - born workers. This is then used to adjust the earnings gap between immigrants and natives in order to estimate what the gap would have been if the return to skills had remained at its 1980 level. The results suggest that the return to skills rose by 40 percent between 1980 and 1997, leading to a 10 to 15 percentage point decrease in the relative earnings of recent immigrants. Thus examining solely the earnings of recent immigrants may lead to an overly pessimistic picture of their actual labor market skills.

Convergence in the gender wage gap in Australia over the 1980s: identifying the role of counteracting forces via the Juhn, Murphy and Pierce Decomposition

The paper utilises the Juhn Murphy and Pierce (1991) decomposition to shed light on the pattern of slow male-female wage convergance in Australia over the 1980s. The analysis allows one to distinguish between the role of wage structure and genderspecific effects. The central question addressed is whether rising wage inequality counteracted the forces of increased female investment in labour market skills, i.e. education and experience. The conclusion is that in contrast to the US and the UK, Australian women do not appear to have been swimming against a tide of adverse wage structure changes.

Convergence in the gender wage gap in Australia over the 1980s: identifying the role of counteracting forces via the Juhn, Murphy and Pierce Decomposition

The paper utilises the Juhn Murphy and Pierce (1991) decomposition to shed light on the pattern of slow male-female wage convergance in Australia over the 1980s. The analysis allows one to distinguish between the role of wage structure and genderspecific effects. The central question addressed is whether rising wage inequality counteracted the forces of increased female investment in labour market skills, i.e. education and experience. The conclusion is that in contrast to the US and the UK, Australian women do not appear to have been swimming against a tide of adverse wage structure changes.

HRD in multinationals: the global/local mix

This article is concerned with how MNCs (multinational corporations) differ from indigenous organisations in relation to their human resource development (HRD) practices, and whether this relationship changes across countries. We question whether local isomorphism is apparent in the HRD practices of MNCs, or whether MNCs share more in common with their counterparts in other countries. A series of hypotheses are put forward and tested, using survey data from 424 multinational and 259 indigenous organisations based in the UK and Ireland. The results suggest a hybrid form of localisation, where MNCs adapt their practices to accommodate national differences, but that these adaptations do not reflect convergence to domestic practice. The results also indicate that MNCs are selective in the HRD practices that are adapted. Evidence from this study indicates that country differences in career traditions and labour market skill needs are key drivers in the localisation of associated HRD practice. In contrast, MNCs, irrespective of national context, adopt comparable systematic training frameworks, ie training‐need identification, evaluation and delivery.

Shifting Paradigms of Globalization: The Twenty‐first Century Transition Towards Generics in Skilled Migration from India

Globalization of human capital through international migration is no longer about global physical presence only; it is also about global applicability of skills across various fields of specialization. This marks the main characteristics of skilled migration from India to developed countries in the twenty‐first century. The focus is shifting away from professionals in specific occupations, like doctors, engineers, scientists, architects, bankers, to information technology (IT) professionals embodying, in a way, more generic skills.In other words, it is the generic applicability of information and communications technology (ICT) which has led to large‐scale migration of Indians skilled in IT.Moreover, the exodus comprises not only the fully trained and educated workers going abroad for employment, but also students ‐ the semi‐finished human capital ‐ pursuing higher education in onshore as well as offshore universities of the developed countries.The new emigration is directed towards traditional host countries in the West such as the UK, Canada, and the US, but also towards newly emerging destinations in continental Europe (Germany, France, Belgium, Italy, Denmark), Australasia (Australia, New Zealand), East Asia (Japan, Republic of Korea), and South‐East Asia (Singapore, Malaysia).By using mainly current information and informal data as reported in the media, this article perceives emerging trends and changes in the context of the global labour market for skills, and suggests a possible framework towards evolving strategies of remedial development.

The Causes of Regional Variations in U.S. Poverty: A Cross‐County Analysis

The persistence of poverty in the modern American economy, with rates of poverty in some areas approaching those of less advanced economies, remains a central concern among policy makers. Therefore, in this study we use U.S. county‐level data to explore potential explanations for the observed regional variation in the rates of poverty. The use of counties allows examination of both nonmetropolitan area and metropolitan area poverty. Factors considered include those that relate to both area economic performance and area demographic composition. Specific county economic factors examined include economic growth, industry restructuring, and labor market skills mismatches.

Wage Divergence and Unemployment: The Impact of Insider Power and Training Costs

The US labour market is characterized by a high skill wage mark-up and low unemployment, while the German labour market has a low skill wage mark-up and a high, mainly unskilled unemployment rate. This paper adds an innovative labour supply explanation to the discussion how these distinct labour market equilibria could arise. Skill-biased technological change induces training needs for the employees willing to work in the skilled labour market and increases relative skill demand. In a simple general equilibrium model, this paper shows that skilled insiders in the USA enjoy higher rents and increase the skilled wage mark-up stronger than in Germany in the wake of skill-biased technological change. The reason is that the unskilled outsiders in the USA do not possess a powerful credible threat to improve their position. This is a consequence from higher training and education costs in the USA for unskilled employees and unemployed. In Germany, the lower skill wage mark-up leads to an increased relative skill demand which is not matched by the skill supply and therefore mis-match unemployment arises.

Changes in school students' approaches to subject option choices: a study of pupils in the West of England in 1984 and 1996

Summary This paper reports on the second phase of an ESRC‐funded project into the changing nature of pupil approaches to subject option choices in Year 9. It highlights the reasons cited by a sample of pupils in four West of England comprehensive schools for choosing particular subjects and compares them with those given by a similar cohort 12 years ago. Although there is evidence that previous gender differences have reduced, other causes for concern have emerged: notably the decrease in the popularity and perceived importance of modern languages, and the possibility that the move away from the more practical nature of some subjects, such as PE and technology, has had a demotivating effect on boys. It also comments on the social class differences in pupil aspirations and knowledge about the ways of realizing those aspirations, as well as the conflict between the advice given by parents and schools to students when making their choices and the realities of the needs of the labour market for transferable skills.

Analyzing the gender pay gap

Empirical research on gender pay gaps has traditionally focused on the role of gender-specific factors, particularly gender differences in qualifications and differences in the treatment of otherwise equally qualified male and female workers (i.e., labor market discrimination). This paper explores the determinants of the gender pay gap and argues for the importance of an additional factor, wage structure, the array of prices set for labor market skills and the rewards received for employment in favored sectors. Drawing on our previous work we illustrate the impact of wage structure by presenting empirical results analyzing its effect on international differences in the gender gap and trends over time in the gender differential in the U.S.