Share Of High-skilled Workers Research Articles

How does the Covid‐19 pandemic affect regional labor markets and why do large cities suffer most?

AbstractWe estimate the spatially heterogeneous effects of the coronavirus disease 2019 pandemic on labor market dynamics in Germany until December 2021. While initially slightly stronger in rural regions and large agglomerations, adverse effects quickly become more pronounced and persistent in large agglomerations compared to all other region types. We ascribe the larger impact of the pandemic in large agglomerations to two factors. First, a combination of a higher share of skilled workers and jobs suitable for working from home is positively related to an increased inflow rate into unemployment. We argue that local spillover effects from reduced product market demand in large cities caused by changes in behavior such as working from home or online shopping are a possible explanation. Second, some of our results suggest that a lower outflow rate out of unemployment is associated with a higher precrisis unemployment rate in large agglomerations. This might reflect the less favorable composition of unemployment in large cities, which reduces the probability of transitions into employment during crises.

Job creation and destruction in the digital age: Assessing heterogeneous effects across European Union countries

Do investments in Information and Communication Technology (ICT) create jobs? The literature suggests that, even if innovations are labour saving, there may be compensating mechanisms that lead to a positive employment effect. We investigate this issue using country-level data for the European Union from 1995 to 2019. The results suggest an average positive net effect of ICT investment on total employment. An increase of €100,000 in the ICT investment stock is associated with an average increase of 3.3 jobs in the European Union. However, the magnitude of the impact is heterogeneous across countries. The differences are explained by the country-specific characteristics of ICT investment (non-machine versus machine-based) and the existing skill endowment of the labour force. Moreover, the rate of return on investment expressed in terms of net job creation tends to decline over time, as the share of high-skilled workers in the market increases.

The distributional impact of recessions: The global financial crisis and the COVID-19 pandemic recession

Using U.S. Current Population Survey data, this paper compares the distributional impacts of the COVID-19 Pandemic Crisis and those of Global Financial Crisis in terms of (i) worker characteristics, (ii) job characteristics–“social” (where individuals interact to consume goods), “teleworkable” (where individuals have the option of working at home), and “essential” jobs (which were not subject to government mandated shutdowns during the recent recession), and (iii) wage distributions. We find that young and less educated workers have always been affected more in recessions, while women and Hispanics were more severely affected during the Pandemic Recession. Surprisingly, teleworkable, social and essential jobs have been historically less cyclical. This historical acyclicality of teleworkable occupations is attributable to its higher share of skilled workers. Unlike during the Global Financial Crisis, however, employment in social industries fell more whereas employment in teleworkable and essential jobs fell less during the Pandemic Crisis. During both recessions, workers at low-income earnings have suffered more than top-income earners, suggesting a significant distributional impact of the two recessions. Lastly, a large share of unemployed persons was on temporary layoff during the COVID-19 recession, unlike the Global Financial Crisis.

The Distributional Impact of Recessions

Using the U.S. Current Population Survey data, this paper compares the distributional impacts of the Pandemic Crisis and those of the Global Financial Crisis in terms of (i) worker characteristics, (ii) job characteristics–“social” (where individuals interact to consume goods), “teleworkable” (where individuals have the option of working at home), and “essential” jobs (which were not subject to government mandated shut-downs during the recent recession), and (iii) wage distributions. We find that young and less educated workers have always been affected more in recessions, while women and Hispanics were more severely affected during the Pandemic Recession. Surprisingly, teleworkable, social and essential jobs have been historically less cyclical. This historical acyclicality of teleworkable occupations is attributable to its higher share of skilled workers. Unlike during the Global Financial Crisis, however, employment in social industries fell more whereas employment in teleworkable and essential jobs fell less during the Pandemic Crisis. Lastly, during both recessions, workers at low-income earnings have suffered more than top-income earners, suggesting a significant distributional impact of the two recessions.

The Distributional Impact of Recessions: the Global Financial Crisis and the Pandemic Recession

Using the U.S. Current Population Survey data, this paper compares the distributional impacts of the Pandemic Crisis and those of the Global Financial Crisis in terms of (i) worker characteristics, (ii) job characteristics–“social” (where individuals interact to consume goods), “teleworkable” (where individuals have the option of working at home), and “essential” jobs (which were not subject to government mandated shut-downs during the recent recession), and (iii) wage distributions. We find that young and less educated workers have always been affected more in recessions, while women and Hispanics were more severely affected during the Pandemic Recession. Surprisingly, teleworkable, social and essential jobs have been historically less cyclical. This historical acyclicality of teleworkable occupations is attributable to its higher share of skilled workers. Unlike during the Global Financial Crisis, however, employment in social industries fell more whereas employment in teleworkable and essential jobs fell less during the Pandemic Crisis. Lastly, during both recessions, workers at low-income earnings have suffered more than top-income earners, suggesting a significant distributional impact of the two recessions.

Regional inequality in the U.S.: Evidence from city‐level purchasing power

AbstractUsing quarterly data for 42 products over the period from 1990 to 2015, we find that there has been a large and growing dispersion of purchasing power across U.S. cities since 1990 and the dispersion varies widely across products. We also find that total factor productivity shock precedes or predicts the rise in regional inequality of purchasing power. We view that the growing regional inequality found in the purchasing power among U.S. cities might have proceeded after nationwide productivity shocks mainly by the cities with higher share of skilled workers through the products with more flexible price adjustments.

The Distributional Impact of Recessions: The Global Financial Crisis and the Pandemic Recession

Using the U.S. Current Population Survey data, this paper compares the distributional impacts of the Pandemic Crisis and those of the Global Financial Crisis in terms of (i) worker characteristics, (ii) job characteristics-'social' (where individuals interact to consume goods), 'teleworkable' (where individuals have the option of working at home), and 'essential' jobs (which were not subject to government mandated shut-downs during the recent recession), and (iii) wage distributions. We find that young and less educated workers have always been affected more in recessions, while women and Hispanics were more severely affected during the Pandemic Recession. Surprisingly, teleworkable, social and essential jobs have been historically less cyclical. This historical acyclicality of teleworkable occupations is attributable to its higher share of skilled workers. Unlike during the Global Financial Crisis, however, employment in social industries fell more whereas employment in teleworkable and essential jobs fell less during the Pandemic Crisis. Lastly, during both recessions, workers at low-income earnings have suffered more than top-income earners, suggesting a significant distributional impact of the two recessions.

Editorial

Editorial

Economic growth, the high-tech sector, and the high skilled: Theory and quantitative implications

Europe's “2020 Strategy” has the main goal of stimulating economic growth by increasing the weight of the high-tech sector and the share of high-skilled workers. However, cross-country European data suggests the relationship between economic growth and both the technology structure and the skill structure is statistically insignificant. We investigate an analytical mechanism that connects these facts by extending a directed-technical-change growth model and taking it to the data. Under high relative barriers to entry into the high-tech sector and scale effects we replicate the empirical relationships. We derive quantitative policy implications on the effects of a reduction of barriers to entry.

Distribuição de qualificações profissionais e disparidade regional de desemprego na Hungria

In this paper we address the empirical question whether the skill distribution of regions has a permanent effect on regional unemployment rates. We argue that if technology and skill are complements and workers with different skills are poor substitutes, the uneven spatial distribution of human capital plays an important role in shaping regional unemployment rate differentials. When the adaption and application of technology need skilled workers, the inflow of technology raises the skill premium and attract skilled workers, which in turn also ameliorate low-skilled unemployment, if skilled and unskilled workers are not perfect substitutes in the production process, or the higher share of skilled workers in the traded sector increase the demand for unskilled labor in the local non-traded sector. Empirical evidence from the Hungarian post-socialist transition confirms the hypothesis that the uneven distribution of skills inherited from the socialist era had a major and permanent influence on the emergence of regional unemployment disparities, which prevailed even after the end of transition through the inward flow of technology through FDI and the spatial concentration of economic activity. Regression estimates show that the share of college educated individuals has a strong negative effect on regional unemployment. However this is not only the result of the initially lower risk of unemployment among college educated individuals but also the complementarity between different skill levels. Separate estimates on skill-specific unemployment rates show that an increase in the percentage share of college graduates abates the unemployment rate of lower skilled workers.

Cash Holdings and Labor Heterogeneity: The Role of Skilled Labor

Firms differ in their dependence on skilled labor, and face labor adjustment costs that increase with their workers’ skill level. We show that firms with a higher share of skilled workers, and thus less flexibility to adjust their labor demand in response to cash flow shocks, hold more precautionary cash. The effect of labor skills on cash holdings is more pronounced for financially constrained firms and varies with exogenous differences in firing and hiring costs. We address endogeneity concerns by using subsamples of firms with reasonably similar characteristics, propensity score matching, and a quasi-experimental shock to labor markets.

Cities export specialization

ABSTRACTWe analyse whether more populated cities have an export specialization different from the one of less populated cities. Using very detailed product-level export data for Brazilian urban areas over the period 2000–2013, we show that more populated cities export proportionately more skill-intensive and complex goods than less populated cities. This result is consistent with the larger diversity of skills and the higher share of skilled workers in more populated cities.

Determinants of Labour Productivity in Malta: Evidence from a Firm-Level Survey

IntroductionThe Maltese economy has been one of the best performing members of the euro area after the global financial crisis. Growth has been job-rich with the increase in employment after the crisis being four times higher than that achieved in the decade before the crisis. The resilience of the Maltese economy is attributed to a more diversified economic base, which since around EU membership in 2004 has gradually shifted from traditional activities towards higher-value added ones, mostly in services.Labour productivity, however, has been sluggish after the crisis, underperforming most other European economies (Micallef, 2015). In addition, the absence of sectoral price deflators renders an in-depth analysis of sectoral productivity particularly challenging at a time when it is being increasingly recognised that economy-wide measures of productivity have to be complemented by sectoral and, if available, firm-level developments (Di Mauro and Ronchi, 2015).The changing structure of the Maltese economy further complicates the analysis of productivity. The main sectors generating growth since EU membership have similar value added multipliers compared to those in the previous decade but much higher employment multipliers. Grech (2015) argues that the expansion of these labour-intensive services industries has played a key role in the slowdown of Malta's apparent productivity in recent years and the associated rise in unit labour costs, despite moderate increases in wage growth. These trends complicate the assessment of competitiveness using aggregate measures of unit labour costs.This paper adds to the empirical literature on productivity in Malta by exploiting information from a unique firm-level survey carried out by the Central Bank of Malta in 2014 as part of the Wage Dynamics Network (WDN) project. Such a survey provides rich evidence, directly from firms, with a detailed breakdown by sector and size classes that are not available from existing statistics. Using this dataset, developments in labour productivity compared to costs are investigated within an empirical multivariate framework that controls for the firm's characteristics (such as size and sector of activity), production technology, the characteristics of the workforce, restructuring efforts, exposure to foreign markets, as well as the nature of shocks hitting the firm. To the best of my knowledge, this is the first study that looks at the determinants of labour productivity in Malta by using survey information to fill the gap imposed by severe data limitations, both at a micro and macro level.The main results are summarized as follows. Labour productivity is more likely to be lower in firms with a higher share of labour in total costs, thus confirming that the significant shift towards more labour-intensive services observed in recent years is likely to be an important driver behind the slowdown in productivity. Firms implementing changes to their production structure by out-sourcing part of their operations are more likely to experience an improvement in productivity. The characteristics of the workforce, such as a higher share of skilled workers and workforce stability, are positively related to productivity. On the contrary, credit constrained firms are less likely to experience an improvement in productivity. Adverse demand shocks are negatively related to labour productivity, possibly due to labour hoarding, although this result is not robust across the various model specifications.The rest of the paper is organised as follows. Section 2 provides a brief review of the literature on the main determinants of productivity. Section 3 gives an overview of the WDN survey. Section 4 looks at the survey results on productivity, focusing in particular on the empirical model. A discussion of the results and some policy recommendations are found in section 5. Section 6 concludes.1.Literature reviewThere is a broad consensus among economists that productivity plays a key role in economic success and is the main driver of per capita growth in the long-run (Krugman, 1994; Hall and Jones, 1999). …

“Phantom of the Opera” or “Sex and the City”? Historical amenities as sources of exogenous variation

Using the location of baroque opera houses as a natural experiment, Falck et al. (2011) claim to document a positive causal effect of the supply of cultural goods on the regional distribution of talents. This paper raises considerable doubts on the validity of the identification strategy underlying these estimates. While we are able to replicate the original results, we show that the same empirical strategy also assigns positive causal effects to the location of historical brothels and breweries. The estimated effects are similar in size and significance to those of historical opera houses. We document that these estimates reflect the importance of institutions for long-run economic growth, and that the effect of historical amenities on the contemporary local share of high skilled workers disappears upon controlling for regions' historical importance.

The Supply and Demand of Skilled Workers in Cities and the Role of Industry Composition

The share of high-skilled workers in U.S. cities is positively correlated with city size, and this correlation strengthened between 1980 and 2010. Furthermore, during the same time period, the U.S. economy experienced a significant structural transformation with regard to industrial composition, most notably in the decline of manufacturing and the rise of high-skilled service industries. To decompose and investigate these trends, this paper develops and estimates a spatial equilibrium model with heterogeneous firms and workers that allows for both industry-specific and skill-specific technology changes across cities. The estimates imply that both supply and demand of high-skilled labor have increased over time in big cities. In addition, demand for skilled labor in large cities has increased somewhat within all industries. However, this aggregate increase in skill demand in cities is highly concentrated in a few industries. The finance, insurance, and real estate sectors alone account for 35 percent of the net change over time.

'Phantom of the Opera' or 'Sex and the City'? Historical Amenities as Sources of Exogenous Variation

Using the location of baroque opera houses as a natural experiment, Falck et al. (2011) claim to document a positive causal effect of the supply of cultural goods on today’s regional distribution of talents. This paper raises serious doubts on the validity of the identification strategy underlying these estimates, though. While we are able to replicate the original results, we proceed to show that the same empirical strategy also assigns positive causal effects to the location of historical brothels and breweries. These estimated effects are similar in size and significance to those of historical opera houses. We document that all these estimates reflect the importance of institutions for long-run economic growth, and that the effect of historical amenities on the contemporary local share of high skilled workers disappears upon controlling for regions’ historical importance.

'Phantom of the Opera' or 'Sex and the City'? Historical Amenities as Sources of Exogenous Variation

Using the location of baroque opera houses as a natural experiment, Falck et al. (2011) claim to document a positive causal effect of the supply of cultural goods on today’s regional distribution of talents. This paper raises serious doubts on the validity of the identification strategy underlying these estimates, though. While we are able to replicate the original results, we proceed to show that the same empirical strategy also assigns positive causal effects to the location of historical brothels and breweries. These estimated effects are similar in size and significance to those of historical opera houses. We document that all these estimates reflect the importance of institutions for long-run economic growth, and that the effect of historical amenities on the contemporary local share of high skilled workers disappears upon controlling for regions’ historical importance.

New economic geography and US metropolitan wage inequality

This paper investigates the distributional aspect of market access. Following the New Economic Geography (NEG) literature, we derive a spatial skill demand equation that positively links skill premiums to market access. Using data from U.S. metropolitan areas, we show that not only are average wages greater in metropolitan areas with higher market access, but wage differentials are also more unequally distributed. Specifically, greater market access is linked to relatively weaker (stronger) outcomes for those at the bottom (top) of the wage distribution. Further assessment finds that market potential is favorably associated with greater shares of high- skilled workers. The analysis provides further rationale for the much-observed positive relationship between the metropolitan area's share of high-skilled workers and its skilled-worker wage premium (all else constant).