Negative Employment Effects Research Articles

Impact of the Syrian refugee influx on Turkish native workers: An ethnic enclave approach

Turkey received about 2.7 million Syrian refugees between 2011 and 2015. This paper examines the causal impact of this influx on the Turkish natives' labor market outcomes using the micro level annual Household Labor Force Surveys. The migration impact is analyzed in two distinct categories considering the motives behind the migration decision. The initial migration to the border regions is defined as the primary migration and a standard difference in differences strategy is employed to estimate the labor market impacts in those regions since the initial flow to the border regions was completely exogenous. The migration from the primary regions towards the inner regions, on the other hand, is subject to endogenous selection. Hence, I defined it as the secondary migration and developed an instrumental variables estimation method to address the selection bias following the Card (2009)'s ethnic enclave approach. I found statistically significant negative employment and wage effects on the low-skilled and less-experienced individuals in the primary migration analysis. The decline in the wages of informal workers is the main contributor of the negative wage effects. Secondary migration has no impact on the employment but there are statistically significant negative wage effects on the low-skilled and less-experienced workers.

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. Yet there is sparse empirical evidence on this crucial assumption. 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 large yet very transitory spikes in search effort by individuals already looking for work. These results are not driven by changes in the composition of searchers.

The labor market effects of trade union heterogeneity

Empirical evidence suggests that the bargaining power of trade unions differs across firms and sectors. Standard models of unionization ignore this pattern by assuming a uniform bargaining strength. In this paper, we incorporate union heterogeneity into a Melitz (2003) type model. Union bargaining power is assumed to be firm-specific and varies with firm productivity. This framework allows us to re-analyze the labor market effects of (i) a symmetric increase in the bargaining power of all unions and (ii) trade liberalization. We show that union heterogeneity unambiguously reduces the negative employment effects of stronger unions. Firm-specific bargaining power creates a link between unionization and the entry and exit of firms, implying a reduction of the unions' expected bargaining power. Moreover, union heterogeneity constitutes an (un)employment effect of trade liberalization. If unions are most powerful in the high-productivity (low-productivity) firms, trade liberalization will increase (decrease) unemployment.

International Competition Intensified: Job Satisfaction Sacrificed?

There has been an intense debate as to the effects of offshoring and global value chains on labor, with the debate centering around possible negative employment and income effects for the low(er) skilled in advanced economies. Although sociological and psychological research has shown that income falls far too short when it comes to subjective well-being (SWB), the globalization’s impact on SWB has been surprisingly under-researched. This applies in particular to job satisfaction, including of those negatively affected by seeing their real income depressed. Against this backdrop, we sketch out a model that is capable of capturing job satisfaction in conjunction with the income and distributional effects of offshoring. Contrary to a great many beliefs, our theoretical considerations suggest that those remaining employed may be more satisfied with their jobs, even if suffering from increased competition and from more tasks being offshored. Running a cross-section logistic regression model that combines information on offshoring and job satisfaction lends support to our theoretical explanations. Accordingly, job satisfaction is on average rated higher in countries with comparatively high offshoring activities. More disaggregated regressions get to the heart of the matter, which is a change in the characteristics of the remaining jobs. Our results stand up to extensive robustness checks with respect to different specifications, measures of globalization, and even when controlling for many of the usually suspected variables with reference to SWB.

Regional employment and housing impacts of tax increment financing districts

ABSTRACT This paper estimates the impacts of tax increment financing (TIF) districts on employment and residential development in Polk County, Iowa, using quasi-experimental methods. A spatially lagged-adjustment model is adapted for use at the parcel level. Results indicate that TIF districts contributed gross declines in private sector, non-governmental employment. Job losses attributable to TIF totalled 110 jobs per square mile, and the negative employment effects were sustained over the long term between 2001 and 2011. In contrast, there is some evidence that TIF districts have contributed positively to residential development, although the increase in housing near the districts was not found to be statistically significant in the quasi-experimental integrated lagged adjustment model.

The Effect of the Conservation Reserve Program on Rural Economies: Deriving a Statistical Verdict from a Null Finding

AbstractThis article suggests two methods for deriving a statistical verdict from a null finding, allowing economists to more confidently conclude when “not significant” can be interpreted as “no substantive effect.” The proposed methodologies can be extended to a variety of empirical contexts where size and power matter. The example used to demonstrate the methods is the Economic Research Service's 2004 Report to Congress that was charged with statistically identifying any unintended negative employment consequences of the Conservation Reserve Program (CRP). The report failed to identify a statistically significant negative long‐term effect of the CRP on employment growth, but the authors correctly cautioned that the verdict of “no negative employment effect” was only valid if the econometric test was statistically powerful. We replicate the 2004 analysis and use new methods of statistical inference to resolve the two critical deficiencies that preclude estimation of statistical power: (a) positing a compelling effect size, and (b) providing an estimate of the variability of an unobserved alternative distribution using simulation methods. We conclude that the test used in the report had high power for detecting employment effects of ‐1% or lower resulting from the CRP, equivalent to job losses reducing a conservative estimate of environmental benefits by one‐third.

The Effect of the Conservation Reserve Program on Rural Economies: Deriving a Statistical Verdict from a Null Finding

This article suggests two methods for deriving a statistical verdict from a null finding,allowing economists to more confidently conclude when ?not can in fact be interpreted as ?no substantive effect. The proposed methodology can be extended to a variety of empirical contexts where size and power matter. The example used to demonstrate the method is the Economic Research Service's 2004 Report to Congress that was charged with statistically identifying any unintended negative employment consequences of the Conservation Reserve Program (the Program). The report failed to identify a statistically significant negative long-term of the Program on employment growth, but the authors correctly cautioned that the verdict of ?no negative employment effect was only valid if the econometric test was statistically powerful. We replicate the 2004 analysis and use new methods of statistical inference to resolve the two critical deficiencies that preclude estimation of statistical power by economists: 1) positing a compelling size, and 2) providing an estimate of the variability of an unobserved alternative distribution using simulation methods. We conclude that the test used in the report had high power for detecting employment effects of -1 percent or lower resulting from the Program, equivalent to job losses reducing a conservative estimate of environmental benefits by a third.

The Effect of the Conservation Reserve Program on Rural Economies: Deriving a Statistical Verdict from a Null Finding

This article suggests two methods for deriving a statistical verdict from a null finding, allowing economists to more confidently conclude when not can in fact be interpreted as no substantive effect. The proposed methodology can be extended to a variety of empirical contexts where size and power matter. The example used to demonstrate the method is the Economic Research Service's 2004 Report to Congress that was charged with statistically identifying any unintended negative employment consequences of the Conservation Reserve Program (the Program). The report failed to identify a statistically significant negative long-term of the Program on employment growth, but the authors correctly cautioned that the verdict of no negative employment effect was only valid if the econometric test was statistically powerful. We replicate the 2004 analysis and use new methods of statistical inference to resolve the two critical deficiencies that preclude estimation of statistical power by economists: 1) positing a compelling size, and 2) providing an estimate of the variability of an unobserved alternative distribution using simulation methods. We conclude that the test used in the report had high power for detecting employment effects of -1 percent or lower resulting from the Program, equivalent to job losses reducing a conservative estimate of environmental benefits by a third.

Hartz IV: The Solution to the Unemployment Problems in the Eurozone?

The Hartz IV reforms are consistently regarded as a successful German model for the reduction of structural unemployment. Is it therefore appropriate to advise other member states of the European monetary union to carry out similar reforms? This paper strongly disagrees, arguing that the reduction in unemployment in Germany since 2005 is mainly due to cyclical factors and to the petering out of the negative employment effects caused by the economic transformation after German unification.

The Employment-Crime Association for Individuals Convicted of a Sexual Offense in their Youth

ObjectiveWe study the bi-directional relationship between employment and crime for individuals convicted for a sexual offense in their youth (JSO) and investigate the moderating influences of age and employment duration.MethodA bi-variate dynamic binary choice model is developed to allow for interactions between employment and crime. The model takes into account statistical aspects such as state dependence and unobserved heterogeneity.ResultsFor a sample of N = 493 JSO, who are observed in early adulthood, age 18 until 28, we find significant negative predictive effects for employment on property offending and vice versa. For other types of offenses, the model indicates that the negative correlation with employment is due to spurious effects. This holds for all ages, but the negative effect of employment on property offending becomes stronger for the older cohorts, while the effect of property offending on employment decreases in magnitude. Employment duration is found to be a mild moderating factor.ConclusionThe evidence in favor of bidirectional negative relationships among offending and employment that increase in magnitude with age suggests the importance of theories that emphasize cumulative (dis)advantage, such as social control theory.

The new German statutory minimum wage in comparative perspective: Employment effects and other adjustment channels

Germany was one of only seven EU member states without a statutory minimum wage before its new legislation took effect in January 2015. We explore the consequences for wage structure, employment and companies. The new wage floor brought significant increases for low-paid employees, with limited observable negative employment effects thus far. To explain these benign outcomes, we refer to institutionalist and behavioural theories and discuss a number of other adjustment channels for companies. Preliminary evidence suggests that companies in sectors highly affected have responded by reducing working hours and/or increasing work intensity and prices. Some have cut special payments and non-wage benefits, reduced labour turnover and attempted to absorb higher wages by hiring more qualified staff. Non-compliance may also constitute an adjustment channel.

Are Local Minimum Wages Absorbed by Price Increases? Estimates from Internet-Based Restaurant Menus

The authors analyze 884 Internet-based restaurant menus from inside and outside San Jose, California, which they collected before and after the city implemented a 25% minimum wage increase in 2013. Their findings suggest that nearly all of the cost increase was passed through to consumers, as prices rose 1.45% on average. Minimum wage price elasticities averaged 0.058 for all restaurants and ranged from 0.044 to 0.109, depending on the type of restaurant. The authors’ estimate of payroll cost increases net of turnover savings is consistent with these findings. Equally important, border effects for restaurants are smaller than is often conjectured. Price differences among restaurants that are one-half mile from either side of the policy border are not competed away, indicating that restaurant demand is spatially inelastic. These results imply that citywide minimum wage policies need not result in substantive negative employment effects nor shifts of economic activity to nearby areas.

China and the great trade collapse: employment effects of falling exports to the EU and US

The paper investigates employment effects of falling exports from China to the EU and US during the great trade collapse of 2008–9. The paper uses fixed multiplier analysis to address employment effects resulting from input-output production linkages between trade and employment as well as from associated changes in household income and expenditures. Main findings are that substantial negative employment effects resulted in China from these linkages; that a large share of these employment effects were income-induced; and that industries in which women workers were disproportionately represented were harder hit through these linkages.

THE HETEROGENEOUS IMPACT OF CHILDREN ON THE PARTICIPATION OF MARRIED WOMEN IN THE LABOR MARKET IN TAIWAN

This paper is an attempt to investigate how children affect married women’s decision to participate in the Taiwanese labor market. The effect of children on the female labor supply is usually negative for most married women; however, it might also be positive for some subpopulations. Thus, herein, we use a local likelihood logit regression to detect the heterogeneity in the effects of children on married female employment that cannot be detected by parametric (e.g. probit or logit models) or semiparametric estimation. Our empirical findings provide evidence of some heterogeneity in the response related to children on the participation of Taiwanese married women in the work force. Since, we find evidence of heterogeneous effects, we suggest that different government policy instruments should be precisely targeted at different specific subpopulations in order to effectively increase the participation of married women in the labor force. When comparing these average characteristics of married women with positive versus negative employment effects due to having children, we find that the average married woman’s educational attainment and the logarithm of the husband’s wage income differ significantly between women with positive effects of children and those with negative effects of children.

The Consumption Response to Minimum Wages: Evidence from Chinese Households

This paper evaluates the Chinese minimum wage policy for the period 2002-2009 in terms of its impact on low income household consumption. Using a representative household panel, we find support for the permanent income hypothesis, whereby unanticipated and persistent income increases due to minimum wage policy change are fully spent. The impact is driven by households with at least one child. We infer significant positive welfare effects for low income households based on expenditure increases concentrated in health care and education, whereas a negative employment effect of higher minimum wage cannot be confirmed.

The Impact of Energy Prices on Employment and Environmental Performance: Evidence from French Manufacturing Establishments

This paper evaluates the historical influence of energy prices on a series of measures of environmental and economic performance for a panel of French manufacturing establishments over the period 1997-2010. The focus on energy prices is motivated by the fact that changes in environmental and energy policies have been dominated by substantial reductions in discounts for large consumers, making the evaluation of each policy in isolation exceedingly difficult. To identify price effects, we construct a shift-share instrument that captures only the exogenous variation in establishment-specific energy prices. Our results highlight a trade-off between environmental and economic goals: although a 10 percent increase in energy prices brings about a 6 percent reduction in energy consumption and an 11 percent reduction in CO2 emissions, such an increase also has a modestly negative impact on employment (-2.6 percent) and very small impact on wages and productivity. The negative employment effects are mostly concentrated in energy-intensive and trade-exposed sectors. Simulating the effect of a carbon tax, we show that job losses for the most exposed sectors can be quite large. However, these effects are upper bounds and we show that they are significantly mitigated in multi-establishment firms by labor reallocation across establishments.

The Consumption Response to Minimum Wages: Evidence from Chinese Households

This paper evaluates the Chinese minimum wage policy for the period 2002-2009 in terms of its impact on low income household consumption. Using a representative household panel, we find support for the permanent income hypothesis, whereby unanticipated and persistent income increases due to minimum wage policy change are fully spent. The impact is driven by households with at least one child. We infer significant positive welfare effects for low income households based on expenditure increases concentrated in health care and education, whereas a negative employment effect of higher minimum wage cannot be confirmed.

Minimum Wages and Relational Contracts

The need to give incentives is usually absent in the literature on minimum wages. However, especially in the service sector it is important how well a job is done, and employees must be incentivized to perform accordingly. Furthermore, many aspects regarding service quality cannot be verified and relational contracts have to be used to provide incentives. The present article shows that in this case, a minimum wage increases implemented effort, as well as the efficiency of an employment relationship. Hence, it can be explained why productivity and service quality went up after the introduction of the British National Minimum Wage, and that this might actually have caused a more efficient labor market. Furthermore, if workers have low bargaining power, a higher minimum wage also increases profits and consequently employment. Therefore, the present article presents a new perspective on reasons for why minimum wages often have no or only negligible negative employment effects

Statutory minimum wage in Hong Kong: a family impact analysis

ABSTRACTThis paper presents a study on family impact analysis of the Statutory Minimum Wage (SMW) in Hong Kong. Qualitative data were collected from seven focus groups and 13 individual interviews conducted with low-wage employees, parents of teenage workers, and parents of employees with disabilities. The 3D7L model of influence was adopted as the conceptual framework. The study found that SMW provided the participating employees with a wage floor and obviously raised their income. It facilitates family budgeting and motivates the participating employees to provide better care to their families. However, the rapid inflation eroded their increased income. They continue to work long hours to earn a living. In interaction with the gender norm, SMW boosted part-time work opportunities for women but the persistent gender norm limited their choices of work location and salary level. The implementation of SMW also escalated the social expectation on productivity that in turn intensified the marginalization of most vulnerable employees. For employees receiving public welfare allowances, the inflexible welfare policy has ‘rub off effect’ on their financial gain from SMW. In sum, SMW is not able to provide the adequate support and opportunities for the employees to actualize their motivations in giving better care to their families. Thus, the policy of SMW needs to be supported by other relevant social policies and services designed to address inflation pressures, minimize family-work conflicts, and mitigate the negative employment effects on the most vulnerable groups of employees.

Minimum Wages in Germany, Great Britain and the US

In Germany, there is an ongoing debate on whether the new statutory minimum wage has had negative employment effects. First evaluation results point at a fairly modest job loss. However, long-run effects are difficult to estimate. While the German minimum wage might be adjusted by an economically sound growth rate, minimum wages in Great Britain and some US states have been increased beyond the level that existing evidence would suggest is necessary.