Worse Labor Market Outcomes Research Articles

How does parental divorce affect children’s long-term outcomes?

Many papers report a negative association between parental divorce and child outcomes. To provide evidence whether this correlation is causal, we exploit idiosyncratic variation in the extent of gender balance in fathers’ workplaces. Fathers who encounter more women in their relevant age–occupation–group at work are more likely to divorce. This result is conditional on the overall proportion of female employees in a firm and on detailed industry affiliation. Parental divorce has persistent, and mostly negative effects on children that differ between boys and girls. Treated boys have lower levels of educational attainment, worse labor market outcomes and are more likely to die early. Treated girls also have lower levels of educational attainment, but they are also more likely to have children at an early age (especially in their teens). However, treated girls lose less in terms of employment. This could be a direct consequence of teenage motherhood, which initiates early entry into the labor market.

Temperature and intimate partner violence

AbstractThis article explores the relationship between temperature and intimate partner violence against women in 34 developing countries. Exploiting the variation in average temperatures across women's residential locations within the 12 months prior to the survey date, we detect the positive association between temperature and women's exposure to intimate partner violence. Specifically, a one standard deviation increase in temperature (equivalent to an increase of 5.94°C) raises the risks of intimate partner violence (physical, emotional, and sexual violence) at both the extensive and intensive margins. These impacts could be attributable to the loss of control (proxied by alcohol use) and worse labor market outcomes. Our heterogeneity analyses further show that women from rural areas, those from poor households, those having low education, and those living with low‐educated partners are particularly vulnerable to the damaging consequences of temperature hikes.

The short-term economic consequences of COVID-19: Exposure to disease, remote work and government response.

We examine the determinants of the consequences of COVID-19 on employment and wages in the United States. Guided by a pre-analysis plan, we investigate whether the economic consequences of COVID-19 were larger for certain occupations, using four indexes: workers relatively more exposed to disease, workers that work with proximity to coworkers, essential/critical workers and workers who can easily work remotely. We find that individuals that work in proximity to others are more affected while individuals able to work remotely and essential workers are less affected by the pandemic. We also present suggestive evidence that our indexes are likely explanations why certain demographic groups such as younger and minority workers have worse labor market outcomes during the pandemic.

Location, Location, Location: Manufacturing and House Price Growth

Abstract Exploiting data on tens of millions of housing transactions, we show that (1) house prices grew by less in manufacturing-heavy US regions, (2) this pattern is especially present for the lowest-value homes and that (3) price declines coincided with worse labour market outcomes, consistent with an income channel. Counterfactual accounting exercises reveal that regional differences in the growth of these lowest-value homes are an important driver of the changes in overall house price inequality. Hence, the economic decline in manufacturing-heavy areas extends far beyond income and employment flows to house prices.

The German Trade Shock and the Rise of the Neo-Welfare State in Early Twentieth-Century Britain

We study the international origins of the neo-welfare state in Britain during the era of globalization before World War I. We introduce a new mechanism linking trade to the expansion of the state. In addition to increasing assessments of the volatility of employment in a market economy, trade shocks changed beliefs about the deservingness of the poor. Employing a shift-share measure of local exposure to German imports, we show that rising imports caused worse labor market outcomes from 1880 to 1910. Import competition led to a decrease in support for the Conservative Party in national elections after 1900, when the Liberal Party supported welfare state reforms. We further show that rising imports increased the use in local newspapers of scientific terms like “unemployment” relative to pejorative terms like “vagrancy” to describe the poor. Political responses to globalization helped shape voter support for the modern British welfare state at its inception.

The lasting consequences of childhood sexual abuse on human capital and economic well-being.

Childhood sexual abuse is a prevalent problem, yet understanding of later‐in‐life outcomes is limited due to unobservable determinants. I examine impacts on human capital and economic well‐being by estimating likely ranges around causal effects, using a nationally representative U.S. sample. Findings suggest that childhood sexual abuse leads to lower educational attainment and worse labor market outcomes. Results are robust to partial identification methods applying varying assumptions about unobservable confounding, using information on confounding from observables including other types of child abuse. I show that associations between childhood sexual abuse and education outcomes and earnings are at least as large for males as for females. Childhood sexual abuse by someone other than a caregiver is as influential or more so than caregiver sexual abuse in predicting worse outcomes. Considering the societal burden of childhood sexual abuse, findings could inform policy and resource allocation decisions for development and implementation of best practices for prevention and support.

Pathways to Skin Color Stratification: The Role of Inherited (Dis)Advantage and Skin Color Discrimination in Labor Markets

Research has uncovered associations between skin color and myriad outcomes. What drives these associations? We develop a theoretical framework that synthesizes the multiple pathways linking skin color with life chances. Skin color stratification should be conceptualized in historical, structural terms: as the result of unequal treatment and inherited (dis)advantage, that is, unequal resources transmitted by families with different skin tones. We assess the role of two pathways— discrimination and inherited (dis)advantage—for Blacks' and Latinos' employment, earnings, and occupational prestige. We use the National Longitudinal Study of Youth 1997, which includes a visual skin color measure; multiple indicators of family background; and a sibling subsample that allows us, using fixed-effects models, to recover the effect of skin color net of family background. First, we find that darker skin tone is associated with worse labor market outcomes. Indicators of family background account for 29 to 44 percent of skin color’s associations with employment, earnings, and occupational prestige. Second, using sibling fixed-effects models, we find that darker skin tone is associated with worse labor market outcomes, but these associations are not statistically significant. In sum, our findings suggest that we pay attention to the multiple pathways linking skin color with life chances.

Anonymity or Distance? Job Search and Labour Market Exclusion in a Growing African City

AbstractWe show that helping young job seekers signal their skills to employers generates large and persistent improvements in their labour market outcomes. We do this by comparing an intervention that improves the ability to signal skills (the “job application workshop”) to a transport subsidy treatment designed to reduce the cost of job search. In the short run, both interventions have large positive effects on the probability of finding a formal job. The workshop also increases the probability of having a stable job with an open-ended contract. Four years later, the workshop significantly increases earnings, job satisfaction, and employment duration, but the effects of the transport subsidy have dissipated. Gains are concentrated on individuals who generally have worse labour market outcomes. Overall, our findings highlight that young people possess valuable skills that are unobservable to employers. Making these skills observable generates earnings gains that are far greater than the cost of the intervention.

Migration for family and labour market outcomes in Sweden

Using information on stated motives for migrating among working-age individuals in the 2007 Swedish Motives for Migration survey (N = 1,852), we use multinomial logistic regression to examine whether and how moves for family reasons are linked to labour market outcomes in ways that differ from migration initiated for other motives, including more overtly labour-related factors. The results indicate that family-based migration is associated with worse labour market outcomes than migration for employment or other reasons. Additionally, family-motivated migrants with co-resident children are more likely to experience labour market deterioration than those without children. Among those who were unemployed before moving, those who reported family as a motive for moving were significantly more likely to be employed after the move. These results help us better assess how families and social networks impact economic outcomes—negatively in some circumstances and positively in others.

Chile's Missing Students: Dictatorship, Higher Education and Social Mobility

We study the relationship between political regimes and higher education and its implications for social mobility and political opposition in the context of the 1973 coup that brought Augusto Pinochet to power in Chile. We show that the Pinochet dictatorship's aims of political control and fiscal conservatism caused a large contraction of all universities in the country, mostly through a steady reduction in the number of openings for new students. Individuals that reached college age shortly after the coup experienced a sharp decline in college enrollment, had worse labor market outcomes throughout the life cycle and struggled to climb up the socioeconomic ladder. These individuals registered to vote at higher rates for the 1988 plebiscite that triggered the democratic transition and we provide suggestive evidence that they increasingly voted against Pinochet. After democratization, children with a parent in the affected cohorts are also less likely to enroll in university.

The Violent Origins of Finnish Equality

Why is Finland today an equal country? We employ newly collected historical data to document that Finland was extremely unequal in terms of income and land distribution until a violent uprising in 1918 which was a major turning point in Finnish inequality. We show that high inequality partly originated from the famine of 1866-1868 which increased the concentration of land and power to large landowners. Regions with more exposure to the famine also had worse labor market outcomes and more coercion by the early 1900s. Using unique micro-data on casualties of the Finnish Civil War, we demonstrate that the famine contributed to insurgency participation through these factors. Although unsuccessful in replacing the government, the insurgency led to significant policy changes, including radical land redistribution and a full extension of franchise. A more drastic shift towards equality occurred in locations that were more affected by the famine and that had higher levels of pre-conflict inequality and more insurgents. These results indicate that equality has not been a persistent feature of the Finnish society inherent in its culture or values but is instead an outcome of institutional changes.

Long-Run Fiscal Consequences of Refugee Migration – The Case of Austria

We use a rich numerical OLG model of Auerbach-Kotlikoff type to simulate the long-run effects of refugee migration starting in 2015 for a country with an aging society and a generous welfare system, namely Austria. The respective refugee cohorts are on average younger, less educated, and less productive than both natives and the average migrant. The net fiscal contribution results from two opposing effects: a positive demographic effect which is counteracted by worse labor market outcomes. We robustly find that public debt is higher throughout the simulation horizon 2015-2060 than in the baseline. We further analyze the group-specific welfare consequences resulting from differentiated wage effects.

Does Higher Education Reduce Mortality? Evidence from a Natural Experiment in Chile

We provide new evidence on the causal effect of education on health. Our empirical strategy exploits the reduction in access to college experienced by individuals reaching college age shortly after the 1973 military coup in Chile, which led to a sharp downward kink in enrollment for the affected cohorts. Using data from the vital statistics for the period 1994-2017, we document an upward kink in the age-adjusted yearly mortality rate for these cohorts, a pattern that we also observe in matched individual-level records for hospitalized patients. Leveraging the downward kink in college enrollment, we estimate a negative effect of college on mortality, which is larger for men, but also sizable for women. Affected individuals have worse labor market outcomes, lower income, and are more likely to be enrolled in the public health system. They also report lower consumption of health services, which suggests that economic disadvantage and limited access to care plausibly contribute to the effect of education on health.

The economic assimilation of Irish Famine migrants to the United States

The repeated failure of Ireland's potato crop in the late 1840s led to a major famine and sparked a surge in migration to the US. We build a new dataset of Irish immigrants and their sons by linking males from 1850 to 1880 US census records. For comparison, we also link German and British immigrants, their sons, and males from US native-headed households. We document a decline in the observable human capital of famine-era Irish migrants compared to pre-famine Irish migrants and to other groups in the 1850 census, as well as worse labor market outcomes. The disparity in labor market outcomes persists into the next generation when immigrants’ and natives’ sons are compared in 1880. Nonetheless, we find strong evidence of intergenerational convergence in that famine-era Irish sons experienced a much smaller gap in occupational status in 1880 than their fathers did in 1850. The disparities are even smaller when the Irish children are compared to those from observationally similar native white households. A descriptive analysis of mobility for the children of the famine Irish indicates that having a more Catholic surname and being born in Ireland were associated with less upward mobility. Our results contribute to literatures on immigrant assimilation, refugee migration, and the Age of Mass Migration.

The impact of refugees on employment and wages in Jordan

Starting in 2011, the Syrian conflict caused a large influx of refugees into Jordan. In 2015, there were an estimated 1.3 million Syrians in a country with just 6.6 million Jordanians. This paper investigates the impact of the Syrian refugee influx on the Jordanian labor market. Panel data from 2010 to 2016 combined with information on where the refugee influx was concentrated allow us to identify the impact of refugees on Jordanians’ labor market outcomes. Overall, we find that Jordanians living in areas with a high concentration of refugees have had no worse labor market outcomes than Jordanians with less exposure to the refugee influx.

Attractiveness is in the eye of the beholder

This paper investigates attitudes towards vocational education and training (VET) using Eurobarometer data supplemented by OECD TALIS data. Attitudes are measured in two different ways. First, by a general measure reflecting attitudes towards VET in the country and second by a self-reported measure of personal attitudes towards VET based on the likelihood of recommending it to young men and women. The paper finds that the general attitude towards VET is influenced by the quality of the learning environment and the ability of VET to connect to the world of work. However, only the latter factor is associated with a person’s inclination to recommend VET to young men and women. The positive attitude towards VET is found to be at risk of erosion because interviewees associate a VET background with worse labour market outcomes compared to general education. Vocational programmes provided by schools are also associated with a less desirable learning environment.

How Does For-Profit College Attendance Affect Student Loans, Defaults and Labor Market Outcomes?

For-profit providers are becoming an increasingly important fixture of US higher education markets. Students who attend for-profit institutions take on more educational debt, have worse labor market outcomes, and are more likely to default than students attending similarly-selective public schools. Because for-profits tend to serve students from more disadvantaged backgrounds, it is important to isolate the causal effect of for-profit enrollment on educational and labor market outcomes. We approach this problem using a novel instrument combined with more comprehensive data on student outcomes than has been employed in prior research. Our instrument leverages the interaction between changes in the demand for college due to labor demand shocks and the local supply of for-profit schools. We compare enrollment and postsecondary outcome changes across areas that experience similar labor demand shocks but that have different latent supply of for-profit institutions. The first-stage estimates show that students are much more likely to enroll in a for-profit institution for a given labor demand change when there is a higher supply of such schools in the base period. Among four-year students, for-profit enrollment leads to more loans, higher loan amounts, an increased likelihood of borrowing, an increased risk of default and worse labor market outcomes. Two-year for-profit students also take out more loans, have higher default rates and lower earnings. But, they are more likely to graduate and to earn over $25,000 per year (the median earnings of high school graduates). Finally, we show that for-profit entry and exit decisions are at most weakly responsive to labor demand shocks. Our results point to low returns to for-profit enrollment that have important implications for public investments in higher education as well as how students make postsecondary choices.

Smoking and early retirement due to chronic disability

This paper considers the long-term effects of smoking on disability retirement in Sweden. Smoking is known to have damaging effects on health, but there is limited evidence on how the effects of smoking translate into worse labour market outcomes, such as the inability to work. In contrast to the few previous studies on smoking and disability retirement, we use a large population sample with registry information on smoking, which is recorded for all women who give birth in Sweden. Thanks to these comprehensive data, we are able to account for a much broader range of potential confounders. In particular, by the use of sibling and twin fixed effects, we account for unobserved heterogeneity in childhood environment and family characteristics. Given that smoking is often initiated in adolescence, one would suspect such factors to play important roles.Among individuals aged 50–64 in 2011, a simple model suggested smokers to have a 5 percentage point higher probability of receiving (full) disability pension, making them more than twice as likely as non-smokers to receive this. However, in a model with sibling fixed effects, the size of the effect was reduced by more than a third. The results point to the importance of confounders, such as childhood circumstances or behaviours, which were not accounted for by previous studies. We also consider effects on disability due to different health conditions. In relative terms, effects are the largest for circulatory conditions and tumours. Results are largely driven by health problems severe enough to merit hospitalization, and there is no evidence of a role played by financial incentives.

Special issue on health economics and policy: Guest editors' introduction.

Special issue on health economics and policy: Guest editors' introduction.

Will you still need me, will you still feed me when I'm 64? The health impact of caregiving to one's spouse.

Informal care may substitute for formal long‐term care that is often publicly funded or subsidized. The costs of informal caregiving are borne by the caregiver and may consist of worse health outcomes and, if the caregiver has not retired, worse labor market outcomes. We estimate the impact of providing informal care to one's partner on the caregiver's health using data from the Survey of Health, Ageing, and Retirement in Europe. We use statistical matching to deal with selection bias and endogeneity. We find that in the short run caregiving has a substantial effect on the health of caregivers and, for female caregivers, on their health care use. These effects should be taken into account when comparing the costs and benefits of formal and informal care provision. The health effects may, however, be short‐lived, as we do not find any evidence that they persist after 4 or 7 years.