Labor Market Hypothesis Research Articles

Does economic self‐interest determine public attitudes toward immigrants? An econometric case study in Japan

AbstractWe examine two economic self‐interest hypotheses regarding the determinants of public attitudes toward immigrants: (1) the labor market hypothesis, which states that the employment and wage impacts of immigration determine the public attitudes, and (2) the welfare state hypothesis, which states that natives hold negative perceptions of immigrants due to concerns that they may strain the country's welfare budget. The first hypothesis predicts that natives' education will affect pro‐immigrant attitudes more positively when immigrants come from lower income countries. The second hypothesis predicts that natives' income affects the pro‐immigrant attitudes more negatively when immigrants come from lower income countries. We use the Japanese General Social Survey, which asks respondents' tolerance toward immigrants from different countries, allowing us to control for unobserved individual characteristics through a method akin to the fixed effect estimation. Our results indicate no difference in the effects of education and income on pro‐immigrant attitudes regardless of whether immigrants come from high‐ or low‐income countries. We conclude that economic self‐interest does not explain Japanese public attitudes toward immigrants. We discuss the policy implications about how to improve public attitudes toward immigrants.

Footbinding and its cessation: An agent-based model adjudication of the labor market and evolutionary sciences hypotheses

An agent-based model was developed to represent demographic, marital, and economic data from the period of Chinese history during which footbinding was practiced. This general model of the Chinese social ecology is used to understand the maintenance and cessation of footbinding in the context of contested explanations from the social sciences. The Labor Market Hypothesis states that parents initiated and maintained the practice to exploit the handicraft labor of their daughters, and that footbinding ceased when cheap machined thread and cloth entered rural China. The Evolutionary Sciences Hypothesis states that footbinding assisted in achieving hypergamous marriages for daughters by raising their value on the marriage market, was maintained due to fitness concerns facing parents who feared daughters would be unmarriageable if not bound, and ceased because of influences of foreign norms. Factors including length of generations, monetary value of handicraft labor, adult sex ratio, rate of polygyny, age at marriage, inheritance and more inform this model. Since the rate of population growth and peak rate of footbinding at cessation are known, the model evaluates the two hypotheses in terms of their relative consistency with these two outcomes.

Segmented and unequal: evidence on the dual labor market and youth unemployment from the Korea youth survey

ABSTRACT Empirical studies of the dual labor market, particularly those employing the endogenous switching regression model, are rare, and few studies appear to have considered youth unemployment, which may have negative long-term effects on economic growth and social equality. Using data from South Korea, we test the proposition that the dual structure of the labor market is one of the main causes that make the youth unemployment rate higher and worsens social inequality. The results strongly support the labor market hypothesis, suggesting that the dual market model is more relevant for the youth labor market; the findings also indicate that the social inequality structure may be strengthened by the dual market structure that excludes youth with socially disadvantaged conditions from the primary labor market.

Preferences Over Foreign Migration

AbstractDo existing theories regarding the impact of foreign migration explain preferences in non-oecd countries? The author adapts and applies explanations for opposition to migration in the Arabian Gulf, a significant region in global migration today, using a survey experiment implemented in Qatar. The results offer a rare validation of predictions from the labor market competition model, demonstrating that individual employment circumstances are important preference determinants. Additionally, while OECD citizens prefer high-skilled migrants, Qataris are indifferent about blue- versus white-collar workers. Mediation analysis suggests that this null effect is the result of competing cultural and economic concerns over the effect of differing classes of migrants on economic and social welfare. The novel context provides a critical test case of the labor market hypothesis and offers insight into how migration preferences in the Global South differ from the Western experience.

Footbinding, Hypergamy, and Handicraft Labor: Evaluating the Labor Market Explanation of Footbinding

Footbinding was a millennium-long practice in which ethnically, Han Chinese families would alter the feet of young girls. The leading explanation of footbinding in interdisciplinary circles is the labor market hypothesis. It posits that parents were motivated to footbind daughters to keep them spinning and weaving, thus making money for the family. Lacking direct means of testing their hypothesis, advocates of the labor market hypothesis present allegedly disconfirming evidence against the major competing explanation of footbinding, an evolutionary social sciences hypothesis according to which footbinding is positively related to hypergamous marriage. This paper presents a methodological critique of this case against a hypergamy hypothesis for footbinding. This critique uncovers erroneous assumptions, methodological problems, ad hoc data modification, inaccurate operationalization, and confounded testing of the hypergamy hypothesis and concludes that this hypothesis ought not to be rejected at this time.

Changes in cyclical patterns of the USA labor market: from the perspective of nonlinear Okun’s law

The validity of Okun’s law has been debated because of the increase in cyclicality in aggregate hours after 1985. To investigate this, I measure Okun’s coefficients in three phases of the business cycle – recession, early, and late expansions. I found that an increased coefficient for aggregate hours is due to the increased responsiveness of the employment rate during late expansions and to the increased responsiveness of hours per employee during early expansions. These findings question the flexible labor market hypothesis focusing on firms’ firing behaviors during recessions. Rather, working hours’ flexibility represents a more prominent feature of the post-1985 USA labor market.

Sociale stijging of daling? Beroepsmobiliteit van non-EU-migranten in Nederland, Noorwegen, Portugal en het Verenigd Koninkrijk

The purpose of this article is to identify the occupational mobility trajectories of non-EU migrant workers in Europe and to test empirical data against the neoclassical human capital theory that predicts upward occupational mobility in the course of time and the segmented labour market theory that predicts immigrant’s confinement to secondary segments of the labour market. We use survey and semi-structured interviews (2,514 and 357 respectively) with migrants from three origin countries (Brazil, Morocco, Ukraine) in four destination countries (the Netherlands, Norway, Portugal, United Kingdom). Using both quantitative analysis and complementary qualitative evidence, we find support for the segmented labour market hypothesis of limited upward occupational mobility in the course of time after migration. However, immigrants with longer residence in the destination country have higher changes of upward occupational mobility, giving also support to the human capital theory. Frail legal status negatively impacts upward mobility changes. Men experience upward mobility more often than women. Following education in the destination country also positively affects the changes of upward mobility. Therefore, destination countries should have policies that enable immigrants to enhance their human capital.

Cash Balance Pension Plan Conversions: An Analysis Of Motivations And Pension Costs

In recent years, many corporations have replaced their traditional defined benefit (DB) pension plans with cash balance (CB) plans, which share many of the characteristics of defined contribution plans. This study provides empirical evidence on the characteristics of CB converters and the behavior of pension costs and obligations pre- and post-conversion. We find that CB converters are larger than firms that retain traditional DB plans as well as those that terminate DB plans. They are less profitable than the former, but more profitable than the latter. CB conversions are not associated with proxies for greater labor mobility (e.g., firm-specific employee turnover rate). They are associated with a workforce that is closer to retirement, on average, lending credence to the breach of implicit contract rather than the labor market hypothesis as a motivator of CB conversions. Consistent with this intuition, we document that CB converters recognize a reduction of unrecognized prior service costs in the year of conversion, consistent with a negative plan amendment. Unlike pre-conversion, pension costs and obligations are significantly lower for CB firms post-conversion than for a matched sample of firms retaining traditional DB plans. CB conversions are more popular than DB plan terminations among firms with overfunded pension plans in periods when expected return on plan assets is likely to be high, with a consequent positive effect on reported income.

“Foreign Brides” Meet Ethnic Politics in Taiwan

A great number of women from China, Vietnam, and Indonesia recently arrived in Taiwan to marry men of lower social strata. Such an unusual pattern of migration has stimulated debates about the status and the citizenship of the new arrivals. This study analyzes Taiwanese responses toward these marriage migrants by using a national survey conducted in 2004. Three aspects of restrictive attitudes were tapped concerning these newcomers: (1) rights to work; (2) access to public health insurance; and (3) full citizenship. Immigrants from China were most opposed, compared to women with other origins (Southeast Asia, Japan, Europe, and the US). The seemingly unrelated regression estimation regression results do not support the split labor market hypotheses, as marriage migrants do not appear to be economic threats toward members of the lower classes. In contrast, ethnic nationalism plays a key role in determining the natives’ restrictive attitudes. The case of Taiwan represents a special genre, where ethnic politics selectively arouses the social rejection of women immigrants of certain origins.

Do Satisfactory Working Conditions Contribute to Explaining Earning Differentials in Italy? A Panel Data Approach

Abstract. The aim of the present paper is to analyse the wage differentials associated with non‐pecuniary working conditions using objective and subjective data. In some situations a worker can be compensated for unsatisfactory working conditions via a higher wage; conversely, in the presence of segmented labor markets, higher wages can be associated with favorable non‐monetary working conditions. Moreover, a positive correlation between wages and satisfactory working conditions exists when there is efficient union bargaining regarding both wages and working conditions. In the present study, we estimate a wage equation with variables that capture workers’ subjective views regarding their current non‐pecuniary working conditions, allowing for unobserved individual heterogeneity. Our results reveal a positive wage differential associated with satisfactory non‐pecuniary working conditions. This result supports the segmentation labor market hypothesis. The focus of the study is on Italian workers, but we compare the core results the those obtained for other Mediterranean countries.

FEMALE DUAL LABOUR MARKETS AND EMPLOYEE BENEFITS

AbstractThe American workforce and the role of employee benefits have changed dramatically since the 1980s when economists seriously considered dual labour market models to describe pay and employment patterns. Then, dual labour market models described men's labour markets, but not women's and the tests applied to wages and salaries, not total compensation including employee benefits. Applying a switching regression technique using the 2000 Current Population Survey and including women workers and employee benefits, we find that the dual labour market hypothesis is consistent with both female and male labour market structures, especially when total compensation is considered.

Adolescents' formal employment and school enrollment: Effects of state welfare policies

AbstractVariations in state welfare policies in the reform era may affect adolescents through two mechanisms: A competing labor market hypothesis posits that stringent state welfare policies may reduce adolescent employment; and a signaling hypothesis posits that stringent welfare policies may promote enrollment. To test these hypotheses, we use a dynamic joint model of adolescents' school enrollment and formal employment, separating state welfare policies from non‐welfare state policies, state labor market conditions, and unobserved state characteristics. Longitudinal data from the NLSY97 on adolescents aged 14 to 18 and various state data sources over the period 1994–1999 support the competing labor market effect but not the signaling effect. In particular, lower‐income dropouts suffer more severely from fewer labor market opportunities when state welfare policies are more stringent, which indicates that welfare reform may compromise work opportunities for lower‐income dropouts. © 2004 by the Association for Public Policy Analysis and Management.

Why do Firms Convert to Cash Balance Pension Plans? An Empirical Investigation

In recent years, many corporations have replaced their traditional defined benefit (DB) pension plans with “cash balance” (CB) plans, which share many of the characteristics of defined contribution plans. This study provides empirical evidence on the characteristics of CB converters and the behavior of pension costs and obligations pre- and post-conversion. We find that CB converters are larger than firms that retain traditional DB plans as well as those that terminate DB plans. They are less profitable than the former, but more profitable than the latter. CB conversions are not associated with proxies for greater labor mobility (e.g., firm-specific employee turnover rate). They are associated with a workforce that is closer to retirement, on average, lending credence to the breach of implicit contract rather than the labor market hypothesis as a motivator of CB conversions. Consistent with this intuition, we document that CB converters recognize a reduction of unrecognized prior service costs in the year of conversion, consistent with a negative plan amendment. Unlike pre-conversion, pension costs and obligations are significantly lower for CB firms post-conversion than for a matched sample of firms retaining traditional DB plans. CB conversions are more popular than DB plan terminations among firms with overfunded pension plan assets in periods when expected return on plan assets is likely to be high, with a consequent positive effect on reported income.

Distributional assumptions and a test of the dual labor market hypothesis

Recent application of the switching regression model to allocate workers into the primary and secondary labor markets is considered to be the best solution to the classification problem of the empirical testing of the dual labor market theory. In such models, normality of the error terms is assumed. This paper adopts the switching regression model to test the dual labor market theory by assuming different distributions of the error terms. The test results strongly support the dual labor market theory regardless of the assumption one makes about the error terms. However, the results indicate that different distribution can lead to different percentage distributions of workers in the two segments. In particular, the normal distribution generates more workers in the primary segment than the non-normal distributions. Therefore, care must be taken not to generalize the type of industries or occupations that fall under the primary and secondary segments.

Employees' and Employers' Preferences for Working Time Reduction and Working Time Differentiation

Working time reduction is high on the political agenda of the European Union and its member states. In Dutch banks, reduced working time (RWT) was agreed in collective bargaining; however, employers are able to exclude employees from RWT. A total of 82 per cent of employees were assigned RWT. Using large-scale survey data based on 17,308 employees, regression analyses were performed to investigate which employees had favourable RWT attitudes and which employees were assigned RWT. With regard to employee attitudes, the maximizing income hypothesis was mostly supported. Low-income, breadwinning and part-time employees were less in favour of RWT. The maximizing non-working hours hypothesis is only partly supported. Female employees had more favourable attitudes to RWT, but this showed little correlation with the presence of young children. Supervisors had less favourable attitudes to RWT. There was little support for the minimizing working hours hypothesis. Attitudes of employees in redundant jobs hardly differed from other employees, which is surprising given that RWT is aimed at work sharing. In explaining employers' strategies, this article shows that RWT was not assigned at random; its primary aim was to strengthen the banks' long-term transformation from administrative bureaucracies to commercial organizations. The banks did not seem to be aiming for a short-term increase in productivity as RWT was not assigned less frequently to insufficiently staffed departments or more frequently to employees in redundant jobs. Finally, the labour market hypothesis is barely supported. Only one bank assigned RWT less frequently to jobs that were in short supply.

Career, experience and returns to human capital: is the dual labour market hypothesis relevant for the UK?

This paper investigates the relationship between career status, labour market experience and returns to human capital accumulation in the context of a two-tier, career and non-career labour market. Using micro data from the British Household Panel Survey (BHPS), this study detects wage and employment mechanisms that differ between these two tiers of workers. The paper finds no support for the hypothesis of strict duality, by which the returns to education are expected to differ across labour market segments, with the returns in career employment being high and positive and the returns in the non-career sector being close to zero. The paper, however, finds support for significant returns to current tenure only in the career sector and also for the scarring hypothesis, according to which part-time employment and unemployment experience have a negative effect on participation and earnings in the career sector. Finally, there is evidence that only non-career earnings are significantly affected by local demand conditions, in contrast to earnings in the career sector. Career status is modelled as an endogenous variable subject to an initial job choice.

Causes of Gender Discrimination in Korean Labor Markets

Earlier studies investigating whether women were more adversely affected than men during the Asian financial crisis found that female workers had especially unfavorable experiences in the areas of labor force participation, involuntary disengagement, recruitment, and wages. This paper reviews various theories of gender discrimination to understand the causes of gender discrimination in the South Korean labor market and tests hypotheses drawn from various theories, using survey data on employers. The results of this study are not conclusive, but provide support for the cultural gender stereotyping approach and labor market risks and costs approach. Based on the results of the research, policy recommendations are made.

Black Teen Childbearing: Reexamining the Segmented Labor Market Hypothesis

Black Teen Childbearing: Reexamining the Segmented Labor Market Hypothesis

The Suburban Dependency Hypothesis, Reconsidered

There has been substantial debate on the relevance of the central city to the metropolitan area. This article examines one aspect of the debate, the thread of research that surrounds the suburban dependence hypothesis. Since its proposal, the suburban dependence hypothesis has been criticized for its lack of a theoretical framework and for model misspecification. Variant hypotheses have been developed that acknowledge the limitations of the suburban dependence hypothesis but also recognize its conceptual appeal. These include the tight labor market, elasticity, downtown dependence, and interdependence hypotheses. A review of the literature indicates that the suburban dependence, downtown dependence, and elasticity hypotheses are wedded to a narrow interpretation of the traditional monocentric model. This narrow interpretation, in turn, does not specify the relationship between cities and suburbs given a multinucleated or polycentric urban structure.

Immigrants in the Spanish Labour Market

Data from a 1994 survey of immigrants show poor correlation of previous professions with current employment in Spain, along with a much-reduced range of semi-skilled occupations – the ‘disqualification’ phenomenon. Apparent ethnic specialization also is noted, and analyzed as networked or chain migration. The dual labour market hypothesis is examined, and tested in three areas – construction, domestic service and agriculture. It is concluded that the first two are clearly segmented, with immigrants confined to the secondary sector; in the case of agriculture, natives are competing with immigrant workers. This is the only area found where wage and other forms of discrimination are evident.