Labor Supply Research Articles

Climate-related Disaster and Human Capital Investment in the Global South — Household Heterogeneity and Growth

AbstractThis study develops a dynamic model of climate-related disaster impacts, considering multidimensional household heterogeneity, for analyzing changes in growth and inequality in low-income countries. Focusing on human capital development, the study demonstrates the multiple impacts of disaster risk reduction (DRR) policies on human capital investment, including the effect of schooling opportunities for households constrained by the subsistence consumption constraint. Through numerical simulations performed for two economies that differ in terms of human capital, modeled after Madagascar and Fiji, it is illustrated that the possibilities of involuntary unemployment and the work-learning choice drive the diversity in macroeconomic impacts of a disaster. In an economy characterized by low levels of human capital, a disaster could cause an increase in labor supply in the immediate aftermath but interrupt human capital formation, impeding long-term growth and human capital formation. Such a result contradicts prevailing intuition by demonstrating that a disaster occurring in an economy under recession may not result in a large adverse GDP impact in the short run but may negatively impact growth in the long run. On such a path, a policy of development in DRR infrastructure with appropriate taxation could reduce human-capital gaps in the long run by supporting continued post-disaster human-capital-investment opportunities for the poor.

‘AgTech’ and the restructuring of agrifood labour regimes: Digital technologies, migrant labour and the intensification of production in the UK glasshouse sector

AbstractThis article examines the challenges surrounding the adoption of robotic automation and ‘AgTech’ in glasshouse agrifood production and considers ways in which growers and technology capital are seeking to transform the organisation of work at the point of production because of digital technological interventions. The article does so by examining the deployment by growers of ‘AgTech’ in the glasshouse agrifood sector in the context of the labour regime centred around seasonal migrant labour supply in the UK. The article makes three main contributions. Conceptually it centres technological transformation of the workplace within the context of wider labour regimes. Second, it argues that transformations of the labour process at the point of production through the introduction of ‘AgTech’ are one response by growers to labour supply shortages. Third, it examines the attempts by grower capital to intensify and fragment the nature of work as a result of the introduction of ‘AgTech’.

SPOUSAL LABOR SUPPLY, CAREGIVING, AND THE VALUE OF DISABILITY INSURANCE

AbstractThis article evaluates the insurance value of the Social Security Disability Insurance (SSDI) program among married households when wives face a trade‐off between market hours and spousal care following their husbands' disability. Event study analyses show that wives' labor supply responses to their husbands' disability are small, and instead, a considerable amount of time is spent in spousal care. Using a dynamic structural model, I find that incorporating time loss due to spousal care increases the insurance value of SSDI relative to its costs. Finally, budget‐neutral policy reforms that subsidize the cost of care can improve social welfare.

Impact of the 2017 Tax Cuts and Jobs Act on Household Labor Supply and Welfare across the Income Distribution

Impact of the 2017 Tax Cuts and Jobs Act on Household Labor Supply and Welfare across the Income Distribution

The impact of progressive era labor regulations on annual earnings and employment in manufacturing in the USA, 1904–1919

AbstractWe analyze the impact of the broad range of state labor regulations on employment and annual earnings in manufacturing for wage earners and salaried workers using a new panel data set for the 48 US states in 1904, 1909, 1914, and 1919. The effects of state labor regulations influenced the labor market for wage earners and had virtually no effect on the market for salaried workers. Fixed effects analysis shows that increases in a newly developed labor law index were associated with a rise in employment and a decline in earnings for wage workers. These changes imply a dominant rise in labor supply that reflected marginal benefits for workers that were higher than the marginal costs or marginal benefits to employers. After the demand and supply shifts were completed, both workers and employers ultimately experienced improved gains from trade. Under a wide range of assumptions about the earnings elasticity of demand, the results are also consistent with the regulation increasing labor demand and thus providing positive marginal benefits to employers. The effects of appropriations per gainfully employed worker were much smaller and depended on the size of the law index.

Defamilization? Not for everyone. Unequal labour-market participation among informal caregivers in Europe

Growing care dependencies among the elderly due to population ageing in Europe challenge the labour-market participation of informal caregivers. While familiarized care regimes incentivize family caregiving by providing many cash-for-care-benefits, resulting in reduced labour supply, defamiliarized care regimes allocate more public spending to care infrastructure, alleviating the care responsibilities placed on family members. At the same time, care provision on the micro-level is distributed unequally across gender, age, and socioeconomic status. The question then emerges: Does the labour-market participation of informal caregivers vary between and within countries depending on the social-expenditure policy of welfare states? To answer this research question, a multilevel design was used, employing SHARE data and macro-indicators from OECD and Eurostat databases. The results reveal higher probabilities of labour-market participation for informal caregivers in general when social expenditures on formal care infrastructure are higher. However, labour-market participation was observed as being unequally distributed among the heterogeneous group of persons with and without caregiving duties. Women and individuals of lower socioeconomic status did not benefit from social expenditures in the same way as their counterparts, leading to lower levels of labour-market participation.

Consumption externalities, elastic labor supply and wealth distribution

This study employs a neoclassical growth model to investigate the impact of consumption externalities on the distribution of wealth. It also jointly accounts for heterogeneity in the degree of consumption externalities, heterogeneity in the initial wealth endowments, and endogenous labor supply. First, we demonstrate that catching-up occurs when an initially poorer household works more than an initially wealthier one, after which the additional income acquired through hard work offsets the initial wealth difference. Second, a reduction in wealth inequality is only consistent and systematic if an initially wealthier household works relatively less than the social average. When this condition is not met, a reduction in wealth inequality only occurs if the initial wealth is highly and unevenly distributed.

The Impact of Climate Change on Work: Lessons for Developing Countries

Abstract We identify five areas where climate change may impact work and draw lessons for developing countries by reviewing the evidence. Firstly, demand for labor is unevenly affected, with agriculture, heat-exposed manufacturing, and the brown energy sector experiencing downturns, while other sectors may see a rise, resulting in an uncertain overall impact. Secondly, climate change impacts labor supply through absenteeism, shirking, and altering work-time patterns, depending on the activity and sector. Thirdly, productivity may decline, especially in heat-exposed industries, primarily due to health reasons. Fourthly, heightened earnings variability likely increases vulnerability among the self-employed. Fifthly, climate change can influence labor allocation and catalyze sectoral reallocation. Higher temperatures are also linked to increased migration. But caution is needed in interpreting these findings, as studies across these topics predominantly use fixed effect estimation and concentrate on short-term impacts, neglecting adaptation. Emerging research on adaptation indicates that workplace cooling is unappealing for firms with narrow profit margins, while coping strategies of farms and households have unclear optimality due to adoption barriers. Government responses remain understudied, with six potential areas identified: green jobs, green skills, labor-oriented adaptation, flexible work regulation, labor market integration, and social protection. We conclude by outlining future research directions.

Human capital for the green economy

This study aims to assess the market availability of human capital for the needs of the green economy under the conditions of the changing labour market in Poland. It is a theoretical and analytical study based on desk research and critical analysis of available factual information. Based on an analysis of quantitative data describing the age structure and education of Poles from the perspective of three consecutive decades, a growing labour supply deficit was found. It also points to a possible shortage of competencies needed to green the economy. It was emphasised that, in view of the low effectiveness of the state's prevention policy aimed at preventing the growing demographic crisis, it would be necessary to supplement the shortage of workers from external resources, that is, labour migration. However, this may also be difficult because the labour markets in other European countries become increasingly competitive. Recommended solutions to foster labour market sustainability for the green economy may be to delay the exit of employees from the labour market, boost female economic activity, and make the education system more efficient.

The impact of household registration system reform: evidence from China

ABSTRACT We construct a DSGE model with three sectors: households which are divided into urban registered residents and non-urban residents, firm, and government, calibrate and estimate the model with data of China. This study aims to evaluate the impact of household registration system (HRS) reform of China, and provides a theoretical thought to understand this reform. Impulse response analysis and counterfactual simulation show the short-term and long-term effects of the reform on output, consumption, and labour supply. The shock (1%) in public goods consumption increases labour supply and private consumption of non-urban registered residents by 0.21% and 0.42%, decreases by about 0.13% and 0.14% in urban registered residents, and increases in overall labour supply, consumption, and output levels by approximately 0.08%, 0.26% and 0.36%, respectively. While the impact of wage level increases labour supply and private consumption of non-urban registered residents by about 0.03% and 0.6%, about 0.03% and 0.25% of urban registered residents. This leads to increases of overall labour supply, consumption, and output levels by approximately 0.03%, 0.28% and 0.12%, respectively. Transfer payment shocks has a very weak effect. Overall, the economic effects of the household registration system reform policy are significant.

Determinants of older people labour market decision in Ghana

PurposeThe purpose of this paper is to examine the prevalence of labour force participation and the factors affecting labour supply among older persons in Ghana. Both the extensive and intensive margins of older persons’ labour supply were analysed.Design/methodology/approachThe paper uses nationally representative samples of household and individual data in 2016–2017 – Ghana Living Standard Survey (GLSS 7) data – for the analysis. Heckman’s sample selection model is used to analyse both the extensive and intensive margins of older persons’ labour supply.FindingsThe study found that older persons in Ghana who are pensioners, widowed, have high levels of education, poor health status and live in urban areas are less likely to participate actively in the labour market. On the other hand, being head of a household, married and owning certain assets increase the likelihood of an older person to work. Furthermore, pensions, household headship and post-secondary education have negative effects on the labour supply as having them make older persons work fewer hours per week compared to their counterparts.Originality/valueThis research is the first study to examine the prevalence of old age employment and factors that affect labour market decisions of older persons in Ghana. It also adds to the limited literature on pension and retirement decisions in developing countries.

Measuring physicians' response to incentives: Labour supply, multitasking and earnings

AbstractPhysicians are typically paid for services completed. Yet, they provide different types of services with different prices, introducing a multitasking element to their labour‐supply decisions. We show that optimal behaviour generates a maximum earnings function in which earnings depend on prices and total hours worked. Estimation by limited‐information methods identifies a lower bound to the own‐price substitution effect of a price change. Full‐information methods identify the full response to incentives, including income effects. We illustrate these methods on a sample of specialist physicians working in Québec, Canada. Our results suggest that the own‐price substitution effects of a price change are both economically and statistically significant. Income effects are present but overridden when prices increase for individual services. In contrast, in the presence of broad‐based fee increases, the income effect dominates the substitution effect, which leads physicians to reduce their supply of services.

Remittance Dynamics: Unraveling Socio-Economic Impact on Households in Pokhara

This research aims to evaluate the socio-economic implications of remittances on households in Pokhara Valley, Nepal by employing a positivist approach, empirical observation, quantitative analysis, and statistical methods through comparative research design and utilizes statistical tools such as chi-square tests and independent samples t-tests. Quantitative data are collected through structured questionnaires, enabling numerical insights into spending patterns, human capital investments, and agricultural involvement for hypothesis testing. From the findings of this study households receiving remittances demonstrate higher investments in health and education, positively impacting their socio-economic status. However, migration for remittances has led to a decreased labour supply, negatively affecting agricultural involvement. The research concludes by emphasizing the need for further comprehensive research to elucidate the broader socio-economic consequences of remittances on households at the national level. The study holds implications for policymakers, urging measures to encourage remittance investments in domestic development. It recommends addressing import trends and balancing payment deficits by leveraging remittance funds. Additionally, the research suggests for initiatives supporting agricultural production, small industries, and market development to utilize remittance funds for broader economic growth.

OPPORTUNITIES AND THREATS OF USING ARTIFICIAL INTELLIGENCE IN THE LABOR MARKET: INTERNATIONAL FORECAST AND NATIONAL PERSPECTIVES

The article outlines the theoretical aspects and directions of AI development in the modern world, presents a classification, and spheres of its application in real economic conditions. Based on the research, the following are compiled: a list of top professions at the global and national levels; the structure of vacancies and resumes on the national market; a comparison of trends in the labor market outlined by international and national expert organizations in the field of the labor market with trends identified using AI; an assessment of the opinion of AI (chatbots ChatGPT and Gemini) on the issues of evaluating and forecasting the development directions of the labor market, demand and supply for various professions in the Republic of Belarus.

Does reliable electricity mean lesser agricultural labor wages? Evidence from Indian villages

Using a panel of 1,171 villages in rural India that were surveyed in the India Human Development Surveys, I perform a difference-in-differences analysis to find that improvements in electricity reliability have a negative effect on the increase in casual agricultural labor wage rates. Changes in men’s wage rates are found to be affected more adversely than women’s, resulting in a smaller widening of the gender wage gap. I find that better electricity reliability reduces the time spent by women in fuel collection substantially which could potentially increase labor supply. The demand for labor remains unaffected by reliability, which could lead the surplus in labor supply to cause wage rates to stunt. However, I show that electrical appliances such as groundwater pumps considerably increase labor demand indicating that governments could target increasing the adoption of electric pumps along with bettering the quality of electricity to absorb the surplus labor into agriculture.

Uniform agricultural tax abolition and differential household labor supply: Evidence from China's urban household survey

Uniform government public policy has steadily shaped the labor supply from households in the past few decades in China with possible differential impact on each parent. This paper investigates how uniform tax policy change plays differential roles in household's labor supply through government public education spending. Utilizing the exogenous shock from China's agricultural tax abolition in 2005, we find that the abolition results in a reduction in female employment but an increase in male employment. Specifically, a 1% increase of agricultural tax to public revenue ratio in the reference year leads to a 0.485% labor supply reduction and 1.50 fewer hours of work per month for married women, whereas the married men's labor supply increases by 0.191% and their working hours by 1.06 h in a typical urban family with school-going children. The effects are greater on married women with primary school-age children and married men from high-asset households. Our mechanism analysis indicates that public education spending works as a substitute for private education spending and affects the household labor supply through investment in children's human capital. Our findings offer a new perspective on the decreasing female labor supply and the widening employment gap between (married) women and (married) men in the Chinese labor market. The findings suggest that public tax policy could lead to unintended consequences on household's labor supply decisions, and thus exacerbate the gender employment gap in the labor market.

Household Labor Supply and the Value of Social Security Survivors Benefits

We combine quasi-experimental variation in spousal death and age eligibility for survivors benefits using US tax records to study the effects on American households’ labor supply and the design of social security’s survivors insurance. Benefit eligibility at the exact age of 60 induces sharp reductions in the labor supply of newly widowed households, highlighting the value of survivors benefits and the liquidity they provide following the shock. Among eligible widows, the spousal death event induces no increases in labor supply, suggesting little residual need to self-insure. Using theory, we underscore the program’s protective insurance role and its high valuation among survivors. (JEL D12, D91, G22, G51, H55, J16, J22)

Hospital Queues, Patient Health, and Labor Supply

Long waits for health care raise concerns about the consequences of delayed treatment. We use variation in queue congestion to estimate effects of wait time for orthopedic surgery. We do not find that longer wait times lead to increased health care utilization. However, we do find persistent reductions in labor supply: long waits increase medium to long-term work absences and permanent disability receipt. Effects are driven by individuals who are on sick leave at referral. Our results are consistent with patterns of state dependence, where extended periods of temporary disability while awaiting treatment create persistent barriers to returning to work. (JEL I11, I12, I18, J22)

The Indirect Fiscal Benefits of Low-Skilled Immigration

The Indirect Fiscal Benefits of Low-Skilled Immigration

Financing universal health care: Premiums or payroll taxes?

This paper presents a stochastic overlapping generations model with endogenous health investment to study the transition from the existing hybrid health insurance system in Germany towards a uniform system, financed by either funded or unfunded premiums or payroll taxes.Our simulation results highlight the insurance properties of payroll taxes, but also their cost in terms of labor supply distortions and moral hazard. We find that compulsory deductibles decrease aggregate welfare in Germany, although they reduce moral hazard and increase private health investment. Reform models with premiums also induce precautionary behaviour and increase labor supply, but at the same time increase exposure to productivity risk. Since the introduction of a funded system is costly for transitional cohorts, unfunded premiums provide the highest efficiency gains in our framework.