Negative Employment Effects Research Articles

Air connectivity and regional employment: a spatial econometrics approach

ABSTRACT While there is ample evidence for the existence of positive wider economic impacts of air transportation, the associated spatial distribution of these impacts has received less attention. This paper uses a spatial–econometric approach with instrumental variables on European NUTS-3-level panel data to study the spatial distribution of the impacts of air transport access on a subset of service-sector employment that is not directly affected by activity in the aviation industry. While the spatially resolved approach confirms previous findings that regions close to an airport experience service-sector employment increases due to improved air transport access, we also find evidence for the presence of an agglomeration shadow, that is, negative employment effects for regions further away from an airport. The average total impact of connectivity increases on service employment is found to be positive.

Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?

AbstractThe disagreement among studies on the employment effects of minimum wages in the United States is well known. Less well known, and more puzzling, is the absence of agreement on what the research literature says—that is, how economists summarize the body of evidence on the employment effects of minimum wages. Summaries range from “it is now well established that higher minimum wages do not reduce employment,” to “the evidence is very mixed with effects centered on zero so there is no basis for a strong conclusion one way or the other,” to “most evidence points to adverse employment effects.” We explore the question of what conclusions can be drawn from the literature, focusing on the evidence using subnational minimum wage variation within the United States that has dominated the research landscape since the early 1990s. To accomplish this, we assembled the entire set of published studies in this literature and identified the core estimates that support the conclusions from each study, in most cases relying on responses from the researchers who wrote these papers. Our key conclusions are as follows: (i) there is a clear preponderance of negative estimates in the literature; (ii) this evidence is stronger for teens and young adults and the less educated; (iii) the evidence from studies of directly affected workers points even more strongly to negative employment effects; and (iv) the evidence from studies of low‐wage industries is less one‐sided.

Import competition and gender differences in labor reallocation

We study gender differences in the labor market reallocation of Peruvian workers in response to trade liberalization. The empirical strategy relies on variation in import competition across local labor markets based on their industrial composition before China entered the global market in 2001. In contrast to much of the existing literature, we find that import competition did not have persistent negative employment effects on men or led them to sort into the non-tradable or informal sectors. The adverse effects on the employment of low-educated women in the tradable sector, however, persist over time leading them to sort into the non-tradable sector or out of the labor force. The results are consistent with a mechanism in which gender occupational and industrial segregation leads to a widening of the gender gap in employment.

Minimum wage and employment: a gender perspective for Mauritius

PurposeThis paper aims to examine the employment effect of the minimum wage in Mauritius, a country that has recently introduced an economy-wide national minimum wage. As women have low labor force participation rate and higher unemployment rate compared to men, this study sheds light on the impact of the national minimum wage on male and female employment.Design/methodology/approachA conceptual framework based on the labor–leisure model of Blundell et al. (2007) incorporating the minimum wage as an important variable influencing the employment decision of the individual serves as the methodological backdrop of this paper. It applies the difference-in-difference estimation technique and uses micro data from the Continuous Multi-Purpose Household Survey for the period 2017–2019.FindingsThe results show that minimum wage has a significant negative impact on overall employment. With the imposition of the national minimum wage, the probability that an individual, currently earning less than the minimum wage, remains employed is 0.525 lower than that of a worker earning above the minimum wage level. Moreover, using sex-disaggregated data, the analysis demonstrates the negative employment effects of the minimum wage adversely impact women more than men.Originality/valueThis is a first attempt to estimate the effect of the newly introduced national minimum wage on employment in Mauritius. While the effects of a minimum wage vary across different segments of the economy, this study adopts a gender perspective by comparing the impact of the minimum wage on male and female employment.

Perspektiven zum B\xfcrgergeld

AbstractThe Hartz IV labour market reform in 2005 triggered a substantial reduction in unemployment in Germany. At the same time, it reduced social welfare for the long-term unemployed and increased uncertainty for the employed. The proposed reform by the new government (“Bürgergeld”) will adjust the German welfare system moderately towards more social insurance. This article argues that the associated negative employment effects can be minimised by requiring appropriate participation from unemployed and by preventing new paths to early retirement. In addition, the article further discusses potential reforms to better reconcile employment incentives and social insurance.

The minimum wage and search effort

Labor market search-and-matching models posit supply-side responses to minimum wage increases that may lead to improved matches and lessen or even reverse negative employment effects. Using event study analysis of recent minimum wage increases, we find that these changes do not affect the likelihood of searching, but do lead to transitory spikes in search effort by individuals already looking for work. These results are not driven by changes in the composition of searchers, and are concentrated among the groups most likely to be impacted by the minimum wage and in response to larger minimum wage increases.

Drawing the line: How the workplace shapes the naming of sexual harassment

AbstractAlthough sexual harassment naming – the process by which individuals identify and label experiences as sexual harassment – is key to tackling the problem of workplace sexual harassment, extant research focused on individual differences has explained a limited amount of variance in individuals’ propensity to name. We push this research in a new direction, drawing on institutional theory and strategic human resource management to identify workplace contextual factors that influence individuals’ propensity to name sexual harassment. Surveying 408 employed adults, we find that current employment in an industry with a high prevalence of sexual harassment reduces individuals’ likelihood of identifying scenarios as sexual harassment. Further, prior work experience in highly sexually harassing industries has a lasting negative effect on individuals’ propensity to name. In contrast, we show that individuals’ propensity to identify sexual harassment is greater when they perceive that their organization has implemented more HR practices supporting a climate for naming and that these HR practices can actually reduce the negative effect of current employment in a highly sexually harassing industry. Critically, by demonstrating that changing industry norms or adopting specific HR practices can shift individual naming of sexual harassment, we offer new avenues for sexual harassment prevention.

What Works for Whom? Youth Labour Market Policy in Poland

This paper compares the relative effectiveness of selected active labour market policies available to young unemployed people in Poland over the 2015-2016 period. We use rich administrative data and propensity score matching techniques to control for the non-random selection of unemployed individuals into alternative interventions. We find large negative employment effects of participating in public works programmes, particularly among disadvantaged individuals. The differences in effectiveness between other interventions are rather small, and most become insignificant over time. We also show that vouchers that allow unemployed individuals find on-the-job training providers themselves are more effective than on-the-job training schemes in which the unemployed individuals are directed to the training providers by the public employment services (PES).

Trade and Employment in the Formal and Informal Sectors: A Natural Experiment from Cambodia

To assess how trade affects employment in the formal and informal sectors, we exploit a natural experiment from Cambodia; the EU’s reform in rules of origin for duty-free market access provided a positive export shock to the garment industry and a negative import shock to the textile industry. We use a unique dataset on both formally registered and unregistered establishments in Cambodia. We find that the trade shocks caused large positive employment effects on formal garment establishments and large negative employment effects on formal textile establishments, with little employment effects on informal establishments in these industries. The positive employment effects predominantly involve female workers in locally owned incumbent firms.

Effects of recent minimum wage policies in California and nationwide: Results from a pre‐specified analysis plan

AbstractWe analyze the impacts of recent city minimum wage increases in California and nationwide, following a pre‐analysis plan (PAP) registered prior to the release of data covering two years of minimum wage increases. For California cities, we find a hint of negative employment effects. Nationally, we find some evidence of disemployment effects for teens, but not young adults or high school dropouts. City‐specific analyses provide limited evidence of adverse effects on the share low‐income, but the pooled city analysis does not; the national analysis generally finds no impact on the share low‐income, except for reductions in the share near‐poor, although that may at least partly reflect prior trends. All told, we view the results as providing neither strong evidence of substantial adverse effects of city minimum wages, nor strong evidence of substantial beneficial effects.

Give it Another Try: What are the Effects of a Job Creation Scheme Especially Designed for Hard-to-Place Workers?

Previous evaluations of job creation schemes (JCS) reveal mostly negative employment effects, mainly due to inherent lock-in effects. In this paper, we assess the impact of an innovative JCS that employs a pre-selection mechanism to target programme participation on unemployed job seekers with very low integration chances, hereby reducing possible lock-in effects. Relying on high-quality administrative as well as survey data, we conduct regression-adjusted matching analyses to estimate the programme effect on integration into regular employment. Our results show that the programme did not succeed to foster labour market integration, but still entails remarkably negative employment effects in the first years after participation. We argue that this results from a principal-agent problem at the last step of the selection mechanism that may have led to cream-skimming rather than targeting on very hard to place workers. However, supplementary analyses reveal that negative effects can be avoided for subgroups with very poor employment chances in case of non-participation. These results are robust to the use of different matching estimators and definitions of non-participation. The inclusion of usually unobservable survey variables as well as placebo tests based on past employment outcomes refute concerns about endogenous selection. From a policy-perspective, these findings imply that targeting JCS on workers with very low integration chances is a key factor to avoid negative employment effects found in previous evaluations. At the methodological level, our analyses add to recent literature that assesses the credibility of non-experimental evaluations based on high-quality administrative data.

Bank Concentration and Local Labor Markets

I use a quasi-experimental design supplied by bank anti-trust policy to inspect how bank concentration impacts local labor market outcomes. The regulator applies a cutoff rule when dealing with bank mergers such that markets directly below this regulatory cutoff see an increase in bank concentration, while ones directly above this cutoff do not. Markets that are just below the cutoff see an increase in their deposit-HHI as well as a decrease in their small business lending. A rise in county-level deposit-HHI of 142 points leads to a rise in the county's unemployment rate of 0.284 percentage points, a decline in employment of 0.5 percent, and a decline in average wages of 1 percent. The decline in employment is concentrated in tradable and bank dependent industries, suggesting that the employment effect is due to lower small business lending by banks. These employment effects are also concentrated in black neighborhoods, which also see a larger small business lending and entrepreneurship declines relative to other areas in the markets that receive the positive concentration shock. This paper is the first to show that local labor market conditions respond to changes in local bank concentration, and also that lower small business lending and entrepreneurship in black areas lead to disproportionately larger negative employment effects for these areas.

Fertility as a driver of maternal employment

Based on findings from high-income countries, typically economists hypothesize that having more children unambiguously decreases the time mothers spend in the labor market. Few studies on lower-income countries, in which low household wealth, informal child care, and informal employment opportunities prevail, find mixed results. Using Mexican census data, I do not find evidence for negative employment effects of an instrument-induced increase in fertility. Mothers increasingly work in the informal sector when their family size increases. The presence of grandmothers and low wealth appear to be important. Econometric approaches that allow extrapolating from this complier-specific effect indicate that the response in informal employment is bounded to be non-negative for the entire sample.

Picking up speed: Does ultrafast broadband increase firm productivity?

We estimate productivity gains and employment effects of ultrafast broadband (UFB) adoption and test whether effects differ when firms undertake complementary organizational investments. Using an IV strategy based on proximity to schools (that were targeted in the UFB roll-out), we find that UFB adoption has a positive impact on multifactor productivity (MFP) over a four year horizon and a negative impact on employment (potentially due to increased outsourcing). The positive MFP effects are most clearly observed in firms that also make complementary investments to gain the most benefit from their UFB. The negative employment effects are observed especially in firms with initial low computer intensity.

Are Minimum Wage Effects Greater in Low‐Wage Areas?

Empirical work on the minimum wage typically estimates effects averaged across high‐ and low‐wage areas. Low‐wage labor markets could potentially be less able to absorb minimum wage increases, in turn leading to more negative employment effects. In this article, we examine minimum wage effects in low‐wage counties, where relative minimum wage ratios reach as high as 0.82, well beyond the state‐based ratios in extant studies. Using data from the American Community Survey, the Quarterly Workforce Indicators, and the Quarterly Census on Employment and Wages, we implement event study and difference‐in‐differences methods, estimating average causal effects for all events in our sample and separately for areas with lower and higher impacts. We find positive wage effects, especially in high‐impact counties, but do not detect adverse effects on employment, weekly hours, or annual weeks worked. We do not find negative employment effects among women, Blacks, and/or Hispanics. In high‐impact counties, we find substantial declines in household and child poverty. These results inform policy debates about providing exemptions to a $15 federal minimum wage in low‐wage areas.

Complementarity Between Labor and Energy: A Firm-Level Analysis

This paper adds a fresh angle to the on-going debate on the potential negative employment effect of environmental policy by bringing to the fore a key factor that directly regulates its magnitude: the elasticity of substitution between labor and energy. Using firm-level data from the French manufacturing sector, we provide rigorous micro estimates of this parameter that point to strong complementarity between labor and energy. We then provide clear evidence for the empirical, as well as theoretical, relevance of the elasticity of substitution in understanding the effect of environmental policies on employment.

Effects of Recent Minimum Wage Policies in California and Nationwide: Results from a Pre-Specified Analysis Plan

We analyze the impacts of recent city minimum wage increases in California and nationwide, following a pre-analysis plan (PAP) registered prior to the release of data covering two years of minimum wage increases. For California cities we find a hint of negative employment effects. Nationally, we find some evidence of disemployment effects for teens, but not young adults or high school dropouts. City-specific analyses provide limited evidence of adverse effects on the share low-income, but the pooled city analysis does not; the national analysis generally finds no impact on the share low-income, with one exception that may reflect prior trends.

Myth or Measurement: What Does the New Minimum Wage Research Say About Minimum Wages and Job Loss in the United States?

The disagreement among studies of the employment effects of minimum wages in the United States is well known. What is less well known, and more puzzling, is the absence of agreement on what the research literature says – that is, how economists even summarize the body of evidence on the employment effects of minimum wages. Summaries range from “it is now well-established that higher minimum wages do not reduce employment,” to “the evidence is very mixed with effects centered on zero so there is no basis for a strong conclusion one way or the other,” to “most evidence points to adverse employment effects.” We explore the question of what conclusions can be drawn from the literature, focusing on the evidence using subnational minimum wage variation within the United States that has dominated the research landscape since the early 1990s. To accomplish this, we assembled the entire set of published studies in this literature and identified the core estimates that support the conclusions from each study, in most cases relying on responses from the researchers who wrote these papers.Our key conclusions are: (i) there is a clear preponderance of negative estimates in the literature; (ii) this evidence is stronger for teens and young adults as well as the less-educated; (iii) the evidence from studies of directly-affected workers points even more strongly to negative employment effects; and (iv) the evidence from studies of low-wage industries is less one-sided. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Life Employment Histories in Middle Age and Their Association With Health Outcomes in Later Life: A Sequence Analysis

Despite consistent evidence on the negative effect of precarious employment on health, little is known about the dynamic pattern of employment over the life course on later year health. Using the longitudinal data (1-18 waves) from the Korean Labor & Income Panel Study (KLIPS) (n=1,705), this study aimed to (1) identify long term change patterns of employment in two middle-age groups (early middle-aged: 40-49 / late middle-aged: 50-59), (2) examine the association between the patterns and self-rated health in old age. We apply sequence analysis with 18 years of working status and conducted regression health outcomes in the 18th wave. The result of sequence analysis found the differential employment patterns: among the early middle-aged, five patterns were identified consistently full-time, consistently not- working, transit to self-employed, mixed pattern, retired. Among the late middle-aged, five patterns were identified: consistently full time, mixed pattern, consistently retired, transit to not- working, consistently not working. Regression results indicated a negative association between precarious employment history and health in later years: Among the early middle-aged, members in the “consistently full-time” were likely to have better health compared to “transit to self-employed”. Among the later middle-aged, “retired” and “transit to not –working” were likely to have better health compared to “mixed pattern group”. The findings suggest the importance of employment history in middle age to predict the health outcome in later life. Policies to support experiencing precarious or self-employment are needed to prevent health disparity in later life.

Heterogeneous effects of minimum wage on labor market outcomes: A case study from Turkey

Abstract We assess the effects of a sharp minimum wage increase on wages, informality, and employment in Turkey, a large developing economy with one of the highest minimum wage-to-average wage ratios among OECD countries and widespread discrepancies between labor market outcomes of women and of men. We look at the quasi-experimental 2016 minimum wage increase and pay attention to identifying information coming from demographic groups. We find that the increase in the minimum wage had an economically substantial and statistically significant positive impact on wages. Despite the positive wage effects of the increase, we find no negative employment effects. However, we show that the minimum wage increase may have caused an increase in the share of informal employment among workers with less than tertiary education, especially for such workers working for small firms.