Labor Supply Of Workers Research Articles

Unemployment Insurance as a Subsidy to Risky Firms

Abstract We document that a more generous unemployment insurance (UI) system shifts labor supply from safer to riskier firms and reduces the compensating wage differentials that risky firms need to pay. Consequently, a more generous UI system increases risky firms’ value and fosters entrepreneurship by reducing new firms’ labor costs. Exploiting a UI reform in Brazil that affects only part of the workforce allows us to compare labor supply for workers with different degrees of UI protection within the same firm, sharpening the identification of the results. Altogether, our results suggest that UI provides a transfer system from safe to risky firms.

California’s Paid Family Leave Law and the Employment of 45- to 64-Year-Old Adults

AbstractPaid family leave allows workers to take time off from work to care for a family member with a serious health condition, with reduced financial risk and increased job continuity. In 2004, California was the first state in the nation to implement a paid family leave program allowing workers to take up to 8 weeks off work with partial pay to care for their own or a family member’s serious health condition. Although the effects of California’s law on the labor supply of parents of newborns have been extensively studied, the role of paid family leave in the labor supply of workers who may need to provide care for a spouse has not been studied widely. We examine the effects of California’s law on the employment of workers who are aged 45–64 and have a disabled spouse, using the 2001–2008 American Community Survey. Our preferred estimates suggest the paid leave program increased the employment of 45- to 64-year-old women with a disabled spouse in California by around 0.9 percentage points (or 1.4% on a prelaw base rate of 65.9%) in the postlaw period compared with their counterparts in other states, with a 2.9 percentage point rise in private-sector employment. The employment of men with a disabled spouse in California also increased, but by a smaller amount: 0.7 percentage points (or 0.8% on a prelaw base 86.8%; with a nonsignificant 0.4 percentage point decrease in private-sector employment).

California's Paid Family Leave Law and the Employment of 45-64 Year Old Adults

Paid family leave allows workers to take time off from work to care for a family member with a serious health condition, with reduced financial risk and increased job continuity. In 2004, California was the first state in the nation to implement a paid family leave program allowing workers to take up to eight weeks off work with partial pay to care for their own or a family member's serious health condition. While the effects of California's law on the labor supply of parents of newborns have been extensively studied, the role of paid family leave in the labor supply of workers who may need to provide care for a spouse has not been studied widely. We examine the effects of California's law on the employment of workers who are aged 45-64 and have a disabled spouse, using the 2001-2008 American Community Survey. Our preferred estimates suggest the paid leave program increased the employment of 45-64 year old women with a disabled spouse in California by around 0.9 percentage points (or 1.4% on a pre-law base rate of 65.9%) in the post-law period compared to their counterparts in other states, with a 2.9 percentage point rise in private sector employment. The employment of men with a disabled spouse in California also increased, but by a smaller amount: 0.7 percentage points (or 0.8% on a pre-law base 86.8%) (with a non-significant 0.4 percentage point decrease in private sector employment).

Unemployment Insurance as a Subsidy to Risky Firms

We document that a more generous unemployment insurance (UI) system shifts labor supply from safer to riskier firms and reduces compensating wage differentials risky firms need to pay. Consequently, a more generous UI system increases risky firms’ value and fosters entrepreneurship by reducing new firms’ labor costs. Exploiting a UI reform in Brazil that affects only part of the workforce allows us to compare labor supply for workers with different degrees of UI protection within the same firm, sharpening identification of the results. Altogether, our results suggest that UI provides a transfer system from safe to risky firms.

Health Information, Treatment, and Worker Productivity

Abstract Agricultural and other physically demanding sectors are important sources of growth in developing countries, but prevalent diseases such as malaria can adversely impact the productivity and labor supply of workers. We estimate the impact of malaria infection on worker earnings, labor supply, daily productivity, and task selection by using a phased-in design where we randomize the study week in which piece-rate workers at a large sugarcane plantation in Nigeria are offered malaria testing and treatment. Two estimation strategies indicate a significant and substantial intent to treat effect of the intervention. The program increases worker weekly earnings by 11%–13% over the weeks following the offer, depending on the reference period, estimated using a between-worker estimator that exploits the experimental design. A within-worker estimate provides similar but smaller estimates of 8%–10%. We identify different pathways through which this effect occurs. For workers who test positive for malaria, the treatment of illness principally increases labor supply, leading to higher earnings. For workers who test negative, the health information leads to increased earnings via augmented daily productivity. This productivity response arises, in part, from selection into higher return tasks within their job at the plantation. The results underline the importance of medical treatment but also of improved access to information about one's health status, as the absence of either leads workers to work less or choose lower return tasks when working.

Minimum Wages and Retirement

The authors study the effect of the minimum wage on the employment outcomes and Social Security claiming of older US workers from 1983 to 2016. The probability of work at or near the minimum wage increases substantially near retirement, and previous researchers and policies suggest that older workers may be particularly vulnerable to any disemployment effects of the minimum wage. Results show no evidence that the minimum wage causes earlier retirements. Instead, estimates suggest that higher minimum wages increase earnings and may have small positive effects on the labor supply of workers in the key ages of 62 to 70. Consistent with increased earnings and delayed retirement, higher minimum wages decrease the number of Social Security beneficiaries and amount of benefits disbursed. The minimum wage appears to increase financial resources for workers near retirement.

Minimum Wages and Retirement

We study the effect of the minimum wage on the employment outcomes and Social Security claiming of older US workers from 1983 to 2016. The probability of work at or near the minimum wage increases substantially near retirement, and previous researchers and policies suggest that older workers may be particularly vulnerable to any disemployment effects of the minimum wage. We find no evidence that the minimum wage causes earlier retirements. Instead, our estimates suggest that higher minimum wages increase earnings and may have small positive effects on the labor supply of workers in the key ages of 62 to 70. Consistent with increased earnings and delayed retirement, higher minimum wages decrease the number of Social Security beneficiaries and amount of benefits disbursed. The minimum wage appears to increase financial resources for workers near retirement.

Empirical Analysis of Chinese Labor Supply Decisions from a Dynamic Perspective: Evidence from Hangzhou Cabdrivers

According to the life-cycle theory of labor supply, labor supply of workers responds positively to short-term wage volatility. However, many researches find the elasticity of foreign cabdrivers' labor supply to wages is negative. How about Chinese cabdrivers? This paper uses GPS trip information of Hangzhou cabs to investigate the endotaxy-based and extensionality-based labor supply of drivers. To address the endophytism problem caused by measurement error and peer effect, it uses the number of fares with long trips the drivers encounter that very day as the instrument variable for earnings per hour to analyze the influence of earnings per hour on drivers' labor supply. It argues that the elasticity of endotaxy-based and extensionality-based labor supply of Hangzhou cabdrivers to wages is significantly positive, showing that government policies such as the increase in oil subsidies are actually effective incentives to raise cabdrivers' labor supply. Meanwhile, it also implies that the release from the price regulation of taxi market can help drivers to optimize their work decisions better according to the market demands.

The Effect of Salary Increases on Labour Supply in the Kyrgyz Republic: The Case of Teachers and Medical Workers

In recent years, there has been a critical shortage of teachers and medical workers in the Kyrgyz Republic. To address this problem, the Government of the Kyrgyz Republic substantially increased salaries of education and health care workers in 2011. The government doubled, and for some categories tripled, salaries of primary and secondary school teachers, medical nurses and doctors. This paper examines the effect of this wage increase on the labour supply of workers employed in these sectors. The analysis is based on data from the Life in Kyrgyzstan longitudinal survey for 2010-2012. Panel data analysis was done using the Hausman-Taylor generalised method of moments methodology. Key findings include: the effect of the salary increases was uneven as female teachers and medical workers residing in the cities increased their weekly working hours by an average of 4.9 hours relative to their rural counterparts; the salary increase helped reduce 2010 teacher and medical worker shortages by 14.5 percent and 11.4 percent, respectively in 2011; the presence of young children and higher household income negatively affected the number of hours worked; on average, women worked 5.2 hours per week less than men; and individuals living in the cities and in the northern part of the country tended to work longer hours at official jobs compared to those in rural and southern regions of Kyrgyzstan.

The Innfluence of Neighborhood Characteristics on Wages and Labor Supply in an Urban Context: The Case of a Latin-American City

Using data from Medellin, the second-largest city in Colombia, in this paper, we assess how a set of neighborhood characteristics determines wages, and labor supply for workers in the city. We use GIS data to measure the quality of the environments in which workers live. The paper focuses on the impact of the following set of characteristics on labor supply and wages: availability of public transportation, crime levels, and density of economic activity. The empirical methodology consists of the estimation of linear equations for wages and worked hours, controlling the selection of individuals within the neighborhoods observed. In order to do this, in a first stage we estimate a probabilistic model of neighborhood selection from which selection correction terms are obtained; in a second stage, these correction terms are included in the linear equations for wage and worked hours. Additionally, we control the sample selection as well. We found that the endogeneity of the location decision tends to overestimate the magnitude of the effect of neighborhood characteristics on labor market outcomes. Nevertheless, the effect of some characteristics was still significant and important after we controlled the possibility of selection into neighborhoods.

A Segmented Labour Supply Model Estimation for the Construction of a CGE Microsimulation Model: An Application to the Philippines

Labour market analysis is an important element to understand the inequality and poverty within a given population. The literature reveals that the informal sector is characterised by a great deal of flexibility and is exempt from formal market rigidities on the one hand, but on the other hand, this sector can constitute a trap from which it is difficult to exit for workers active in the sector with low wages. In this article, we aim to identify the main characteristics differentiating the labour supply of workers on the informal and formal market in the Philippines while estimating these two labour supplies, capturing discrete choice or changes in employment status. We use these estimates to construct a labour supply model that can serve as an input for a broader macro–microsimulation model applied to the Philippines. The results of the estimation provide relatively intuitive findings, highlighting some differences between the two markets. We also shed some light on this macro–microsimulation modelling framework that is generally opaque, in describing how to construct a microsimulation model with endogenous discrete choice model linked to a computable general equilibrium (CGE) model. JEL Classification: C35, O53, J24, C81, O17

Means Testing and Retirement Choices in Europe: A Comparison of the British and Danish Systems*

We develop a simulation model of household behaviour in which both the consumption/saving and labour/leisure choices are endogenous. This model is used to explore the effects of the UK and Danish state tax and benefit systems on the labour supply of workers aged 50 or over. We find that, in broad terms, differences in labour force participation can be accounted for by differences in benefit structures. Furthermore, our simulations suggest that the UK system is preferred by young people while the Danish arrangement – which imposes a larger tax burden and provides larger welfare benefits – is chosen by people of 50 or older. Notably, people older than 60 are in the majority in the simulated population. The Danish system does not promote notably greater equality over the lifetime, but it does underpin a higher level of consumption for people of 50 or older.

Understanding Growth and Inequality Trends: The Role of Labour Supply in the US and Germany

Between 1980 and 2000, average actual working hours per adult rose by 234 in the United States while falling by 170 in Germany. These trends imply that growth in per capita GDP may be a poor indicator of trends in average economic well-being and that trends in money income inequality may misrepresent trends in the inequality of economic well-being. Is greater inequality in the US the incentive that motivates greater work effort by Americans? Differentials in average usual working hours largely arise from differences in workforce participation -- particularly among women and older men. Except for the extreme lower tail, the distribution of usual working hours of prime age males is essentially identical and constant in Germany and the US -- which implies that the grea ter inequality of earnings in the US has no noticeable incentive effect on the labour supply of workers.

Understanding Growth and Inequality Trends: The Role of Labour Supply in the USA and Germany

Within the OECD, there are significant differences in the trend and level of average work hours. [For example, from 1980 to 2000, average working hours per adult (ages 15-64) rose by 234 hours in the USA to 1476 while falling by 170 hours in Germany, to 973]. Since these trends appear to be continuing (Merz, 2000) growth in per capita GDP may be a poor indicator of trends in average economic well-being. To the extent that rising inequality in money income is driven by changes in the distribution of working hours, trends in money income inequality may misrepresent trends in the inequality of economic well-being. Recently Bell and Freeman (2000) have argued that greater inequality in the USA provides the incentive that motivates greater work effort by Americans. However, changes in working hours, and differentials in working hours across countries, have been quite concentrated in particular demographic groups and largely arise from differences in labour force participation. [For example, the paid working hours of women in the USA have risen significantly, while German men aged 55 to 64 have reduced their labour force participation.] Except for the extreme lower tail, the distribution of working hours of prime age males is essentially identical and constant in Germany and the US. - which implies that the greater inequality of earnings in the USA has no noticeable incentive effect on the labour supply of workers.

Temporary Migration Overseas and Household Labor Supply: Evidence from Urban Philippines

The impact of international migration on the labor supply of workers' nonmigrant relatives has not been well documented in the literature. Using household survey data representing mostly overseas contract workers, i.e., temporary migrants, this paper shows that labor supplies of migrants and their nonmigrant relatives are inseparable. Migrants reduce the labor supply of nonmigrant relatives, which translates into lower earnings from local labor markets. Households substitute income for more leisure – a significant and previously little recognized benefit of emigration for Philippine households. This benefit varies by gender of nonmigrants and is generally higher for men.

Education, Unemployment, and Earnings

Using data on adult male workers, we first investigate the incremental effect of 1 year of schooling on unemployed hours and use this calculation to explain the difference in the proportional effects of schooling on earnings and wages. Schooling apparently reduces unemployed hours by reducing the incidence of unemployment spells, but it does not significantly affect their duration. We next test whether unemployed hours represent real constraints on worker behavior. To do this we develop and estimate life-cycle models of labor supply for workers with and without spells of unemployment, using longitudinal data. The results imply that perhaps three-quarters of the unemployed hours of male workers are part of the offer to sell labor.