The impact of labor market entry conditions on initial job assignment and wages

We estimate the effects of labor market entry conditions on wages for male individuals first entering the Austrian labor market between 1978 and 2000. We find a large negative effect of unfavorable entry conditions on starting wages and a sizable negative long-run effect. Our preferred estimates imply a decrease in starting wages by about 0.9 % and a lifetime loss in wages of about 1.3 % for an increase in the initial local unemployment rate by one percentage point. We show that poor entry conditions are associated with lower quality of a worker’s first employer and that the quality of workers’ first employer explains as much as three-quarters of the observed long-run wage effects resulting from poor entry conditions. Moreover, wage effects are much more persistent for blue-collar workers because some of them appear to be permanently locked in into low-paying jobs/tasks.     

Shifts in attitudes and labor market discrimination: Swedish experiences after 9-11

We present longitudinal survey data suggesting that the terrorist attacks in the USA on September 11, 2001, changed attitudes toward certain minorities in Sweden. This finding is consistent with results in previous studies. To investigate whether this change in attitudes also affected the labor market situation of these minorities, we study unemployment exit around 9-11 using detailed data on the entire Swedish working-age population. Contrary to what may be expected from many theories of labor market discrimination, the time pattern of exits and entries for different ethnic groups, as well as difference-in-differences analyses, shows no sign of increased discrimination toward these minorities. A possible explanation for this result is that employers act rationally in their hiring decisions and do not respond to changes in attitudes toward immigrants as a group.

The substitutability of labor between immigrants and natives in the Canadian labor market: circa 1995

This paper examines the substitutability or complementarity between Canadian-born and immigrant workers. These are examined by estimating a set of wage equations using a generalized Leontief production function. The paper finds that, in general, there is no displacement of Canadian-born workers by immigrants. Recent immigrants affect the native-born positively, while older immigrants are neither substitute nor complement for natives. However, the effects differ across industries. Overall, the evidence that immigrants harm the opportunities of native-born workers is scant.

Ageing and the labor market

Generation size and structure may have substantial effects on the labor market. This perspective is crucial for the German economy which is one of the most rapidly ageing societies. The paper studies the effects of relative cohort size and relative cohort age on unemployment. The time-series analysis employs cointegration techniques to discriminate between short-run and long-run developments. The econometric investigations suggest that in the long-run, there is no sufficient evidence that young cohorts experience higher unemployment rates if their cohort size is relatively high. In the short-run, there is in general a positive impact of relative cohort size and relative cohort age on unemployment.Revised version of Discussion Paper No. 90-25, University of Munich. A first draft of this paper was written, when I was visiting CentER, Tilburg University. I wish to thank Sijbren Cnossen, John De New, Horst Krämer, Walter Krämer, Winfried Schmahl, Christoph M. Schmidt, Bernard M. S. van Praag, Michael R. Veall, Jürgen Wolters, the participants of the ISPE-conference and three referees of this journal for helpful comments, John De New, Lucie Merkle and Martin Milhleisen for able research assistance, and the German Science Foundation (DFG) for financial support. The paper has also benefited from a research visit to Université Catholique de Louvain, Louvain-la-Neuve.     

Public policy and the labor market adjustment of new immigrants to Australia

Two separate cohorts of immigrants to Australia are compared in order to assess the potential role of immigrant selection criteria, labor market conditions, and income-support policy in facilitating the labor market adjustment of new arrivals. Although these two cohorts entered Australia only five years apart, their initial labor market outcomes varied dramatically. The results indicate that changes in immigration policy may have led to increased human capital endowments that in turn resulted in higher participation rates and reduced unemployment. At the same time, improvement in Australian labor market conditions and changes in income-support policy over the 1990s – which most likely altered the returns to human capital – were probably instrumental in reinforcing the effects of tighter immigrant selection criteria. As much as half of the fall in unemployment rates among women and one third the decline among men appears to have occurred as the result of changes in the returns to demographic and human capital characteristics. Responsible editor:Christoph M. Schmidt     

The labor supply of Latinas in the USA: Comparing labor force participation, wages, and hours worked with Anglo and Black women

This study explores the determinants of labor supply patterns among Latinas in the USA. We use recent microeconomic data from the Panel Study on Income Dynamics/Latino National Political Survey (PSID-LNPS) to estimate models of labor force participation, wages, and hours worked for a sample of Cuban, Mexican, and Puerto Rican women. We estimate the same models for Anglo and Black women in order to explore ethnic differences in the impact of characteristics affecting both the reservation and the market wage. We find that differences exist in the return to characteristics, such as education, but that there are also substantial differences in the levels of those characteristics across ethnic groups. The low wage rates and labor market activity of Latinas relative to Anglo and Black women are thus likely to be the combined result of lower investments in human capital and larger family size, the greater negative impact of macroeconomic conditions, and a stronger responsiveness to wages. Among Latinas, we find that there are differences in labor market outcomes between national origin and nativity groups. We also find that age at arrival and years in the USA play a role in labor supply, and that this is particularly true for Puerto Rican women.     

The dynamics of immigrant welfare and labor market behavior

This paper analyzes transitions into and out of social assistance, unemployment, and employment. We estimate a dynamic multinomial logit model, controlling for endogenous initial condition and unobserved heterogeneity, using a large representative Swedish panel data set. The empirical results suggest that particularly refugee immigrants display a greater degree of “structural” state dependence than natives. The high welfare participation rates among refugee immigrants may be due to the existence of a “welfare trap”, while participation among natives and non-refugee immigrants is largely due to permanent unobserved characteristics. These results suggest that welfare reforms may have differential effects on refugee immigrants and natives.

Pension reform and labor market incentives

This paper investigates how parametric reform in a pay-as-you-go pension system with a tax–benefit link affects retirement and work incentives of prime-age workers. We find that postponed retirement tends to harm incentives of prime-age workers in the presence of a tax–benefit link, thereby creating a policy trade-off in stimulating aggregate labor supply. We show how several popular reform scenarios are geared either towards young or old workers or, indeed, both groups under appropriate conditions. We characterize the excess burden of pension insurance and show how it depends on the supply elasticities of both decision margins and the effective tax rates.     

Interregional migration and labor market imbalances

This paper investigates the effects of internal migration in developed countries on widening wage inequality and high unemployment, and it addresses the geographical dimension of both problems. A two-region dynamic model is developed, which accounts for the skill composition of recent internal migration flows; it also innovates on the existing literature on migration by introducing capital-skill complementarity in the production function. The main conclusion is that migration can actually aggravate labor market imbalances. In a competitive set-up, migration temporarily amplifies the geographical dispersion of unskilled workers wages and raises the average wage premium of the economy. When wage rigidities are introduced, labor mobility increases regional dispersion of unskilled workers employment. In the short-run it may even reduce the total employment of the economy.A previous version of this paper circulated with the title Migration Flows and Interregional Labor Market Disequilibrium. I would like to thank Samuel Bentolila, Federico Biagi, Fabio Canova, Alessandra Casarico, Rosa Maria Fernandez, Juan Francisco Jimeno, Adriana Kugler, Javier Ortega, Ferdinando Regalia, Gilles Saint-Paul, Etsuro Shioji, Marco Vannini, two anonymous referees, participants at UPF Macro Workshop, 1997 ASSET meeting, Marseille, 1998 ESPE Annual Conference, Amsterdam, and 1999 Winter Meeting of the European Econometric Society, Rotterdam, for helpful comments and suggestions; Alix Beith for her friendly help. The usual disclaimer applies. Responsible editor: Allessandro Cigno.     

Oppositional identities and the labor market

We develop a model in which nonwhite individuals are defined with respect to their social environment (family, friends, and neighbors) and their attachments to their culture of origin (religion or language), and in which jobs are mainly found through social networks. We find that depending on how strong peer pressures are, nonwhites choose to adopt “oppositional” identities because some individuals may identify with the dominant culture and others may reject that culture, even if it implies adverse labor market outcomes.      

The H-1B visa: Free market solutions for business and labor

The H-1B visa program opened the US information technology labor market to temporary, skilled immigrant labor. But the immigrant worker was bound to a specific employer for the duration of the visa. The non-portability of the H-1B visa has benefitted the employer at the expense of immigrant and domestic workers. Much of the political debate surrounding the H-1B program has focused on raising the annual visa cap based on inconclusive evidence of a domestic IT labor shortage. The labor shortage question has obscured the more importantissue of reforming the H-1B program to level the playing field between business and labor.     

The influence of market wages and parental history on child labour and schooling in Egypt

This paper examines the influence of adult market wages and having parents who were child labourers on child labour, when this decision is jointly determined with child schooling, using data from Egypt. The empirical results suggest that low adult market wages are key determinants of child labour; a 10% increase in the illiterate male market wage decreases the probability of child labour by 22% for boys and 13% for girls. The findings also indicate the importance of social norms in the intergenerational persistence of child labour: parents who were child labourers themselves are on average 10% more likely to send their children to work. In addition, higher local regional income inequality increases the likelihood of child labour.

The labor market effects of national health insurance: evidence from Taiwan

This paper investigates the impacts of national health insurance on the labor market, by considering the case of Taiwan, which implemented national health insurance in March 1995. Taiwan’s national health insurance is financed by premiums, which are proportional to an employee’s salary. These premiums may introduce distortions to the labor market. Based on repeated cross-sections of individual data we find that, on average, private sector employees’ work hours declined relative to their public sector counterparts, whereas their relative wage rates were almost unchanged with the introduction of national health insurance. The results suggest that neither private sector employers nor their employees were able to shift their premium burden to each other.      

Immigration,skills and the labor market: International evidence

Using the 1994–1998 International Adult Literacy Survey, this paper compares cognitive skills and employment of immigrants in Canada, New Zealand, Switzerland, and the United States. Immigrants had lower cognitive test scores than natives in each country, with the largest gaps in the US, and small gaps in Canada and New Zealand. Male immigrants in the US were no less likely to work than natives, while in the other countries, male immigrants were less likely to be employed. Female immigrants were less likely in each country to be employed than natives, with an especially large gap for the US.The author thanks Francine D. Blau and two anonymous referees for helpful comments and suggestions and Katsuhide Yamashita for excellent research assistance. Responsible editor: Christoph M. Schmidt.     

The performance of immigrants in the Norwegian labor market

This paper tests the assimilation hypothesis with Norwegian data. Using both cross-section and cohort analyses, the results show that the 1970–1979 immigrant cohort experienced an earnings growth of about 11% between 1980 and 1990, when their earnings profile was compared to that of natives. This is lower than the 19% assimilation rate predicted by the cross-section method. On the contrary, the results reveal a rapid earnings divergence across cohorts, and between the 1960–1969 cohort and natives. It is also shown that the „quality” of successive immigrant waves has declined over time, thus biasing the cross-section estimates of assimilation. Received: 8 August 1995 / Accepted: 7 January 1997     

Gender-specific labor market conditions and family formation

Slack labor market conditions for women relative to men increase the marriage rate in the USA. This paper examines the long-term consequences of such marriages. Despite the significant effect on marriage timing, labor market conditions experienced in youth do not affect the probability that a woman will marry by the age of 30. Further, labor market conditions at the time of marriage are uncorrelated with the probability of divorce, spouses?? characteristics, or the number of children. These findings suggest that labor market fluctuations induce only intertemporal adjustments for marriage timing without affecting reservation match quality or total fertility.     

Male-female differences in labor market outcomes during the early transition to market: The cases of Estonia and Slovenia

Changes in women's relative wages and employment are analyzed, using social security data from Slovenia (1987–1992) and a retrospective labor force survey in Estonia (1989–1994). Estonia adopted liberal labor market policies. Slovenia took an interventionist approach. Nevertheless, relative wages for women rose in both countries. Factors favoring women included: returns to human capital rose in transition, benefiting women; relative labor demand shifted toward predominantly female sectors; low-wage women had a disproportionate incentive to exit the labor market, especially in Estonia. However, women were less mobile across jobs in both countries, so men disproportionately filled new jobs in expanding sectors. Received: 27 November 1997/Accepted: 20 December 1998     

Immigrants at new destinations: how they fare and why

We explore matched employer–employee data for a new destination of international migrants in Europe—Portugal. We conclude that the difference between the earnings of immigrants and natives with similar personal characteristics is for the most part due to the characteristics of the matches they form, immigrants being penalized on two different counts: absence of match-specific human capital and occupational downgrading. Moreover, we show that non-random sorting across workplaces has a significant detrimental effect on immigrants’ wages. This is the flip side of joining migrant-crowded workplaces.     

Asian-born scientists and engineers: their immigration flow and labor market adjustment

"This paper examines the flow of Asian-born scientists and engineers and their labor market adjustment. First, main elements to affect their immigration flow are described: supply, demand, and institution....The scarcity of domestic workers is the most important factor affecting demand of immigration. Institution, such as immigration policies, is another element to influence the immigration flow....Second, by using the 1980 U.S. Census data set, their labor market adjustment is explored in terms of hourly wages. Compared to the native-born white, there is no evidence that Asian-born scientists and engineers receive lower wages or lower return on human capital."