Imperfect goods and labor markets, and the union wage gap

Existing theoretical literature fails to explain satisfactorily the differences between the pay of workers who are covered by collective agreements and others who are not. This study aims at providing a model framework that is amenable to an analysis of this issue. Our general-equilibrium approach integrates a dual labor market and a two-sector product market. The results suggest that the so-called “union wage gap” is largely determined by the degree of centralization of the bargains and, to a somewhat lesser extent, by the expenditure share of the unionized sector's goods.

Labor market transitions of immigrants with emphasis on marginalization and self-employment

In developed countries, immigrants are more likely to be nonemployed and self-employed compared to natives. Based on register data of male immigrants in Denmark, we performed a detailed investigation of the immigrant–native difference in transition patterns across labor market states. We find that a high proportion of immigrants from non-Western countries tend to be marginalized relative to natives, and they tend to use self-employment to escape marginalization.

The effect of immigration on the labor market performance of native-born workers: some evidence for Spain

This paper provides an approximation to the labor market effects of immigrants in Spain, a country where labor market institutions and immigration policy exhibit some peculiarities, during the second half of the 1990s, the period in which immigration flows accelerated. By using alternative data sets, we estimate both the impact of legal and total immigration flows on the employment rates and wages of native workers, accounting for the possible occupational and geographical mobility of immigrants and native-born workers. Using different samples and estimation procedures, we have not found a significant negative effect of immigration on either the employment rates or wages of native workers.

Natives, the foreign-born and high school equivalents: new evidence on the returns to the GED

We explore the labor market returns to the General Education Development (GED) exam for US natives and the foreign-born. We find that foreign-born men with a GED who received all of their formal schooling abroad earn significantly more than either foreign-schooled high school dropouts or graduates. In contrast, among US natives, GED recipients earn less than high school graduates but significantly more than dropouts. The returns for natives become larger over the life cycle and are not due to cohort effects. Our findings indicate that the GED may be more valuable in the labor market than some previous research suggests.

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.

Birth and Fortune Revisited: A Cohort Analysis of Underemployment, 1974–2004

The cohort is a key concept in the study of social demography and social change. The enduring influence of cohort membership can arise from history-based and/or size-based effects. The most prominent proponent of size-based cohort effects is Easterlin (Birth and fortune: The impact of numbers on personal welfare, 1980) who argues that individuals hailing from unusually large cohorts will experience adverse labor market conditions relative to the members of the smaller cohorts that bracket them. Drawing on data from the March Current Population Survey for the period spanning 1974–2004, we examine the influence of relative cohort size on underemployment. The results provide modest support for the Easterlin thesis, showing the odds of underemployment to be greatest among members of relatively large cohorts, net of other significant predictors. The results also show that the impact of relative cohort size differs by educational level, suggesting that adverse economic conditions produced by large cohort size can be offset by broader changes in the labor market and other social institutions.

Assimilation effects on poverty among immigrants in Norway

This paper discusses the question of whether or not the high incidence of poverty among immigrants in Norway persists even after immigrants have been in the country for a long period, i.e. after they have had the opportunity to integrate and adapt their skills to the expectations in their new home. While similar to traditional studies of wage assimilation, a study of assimilation in relation to poverty propensity nevertheless measures something different than labor market assimilation, and this represents the main innovation of this study. Analysis of assimilation with respect to poverty focuses on welfare for the lower end of the income distribution and for all individuals, regardless of their relationship with the labor market. It can therefore be seen to better reflect the degree to which immigrants as a whole are able to achieve at least the minimum necessary to participate in the life of their new home and avoid difficulties later on.

A discrete choice model for labor supply and childcare

A discrete choice model for labor supply and childcare for mothers of preschoolers is presented. The mothers are assumed to make choices from a finite set of job possibilities and from a finite set of childcare options. Options in the markets for childcare are characterized by opening hours, fees and quality attributes. Similarly, jobs are characterized by a fixed wage rate, working hours and a number of variables related to job satisfaction. In the estimation of the model, we take into account that the number of options available might vary across work/care combinations and that some mothers are rationed in the market for care at day care centers. The model is employed to simulate the female labor supply effects of the Norwegian home care allowance reform.

Nonmarket networks among migrants: evidence from metropolitan Bangkok,Thailand

This paper examines the nonmarket interactions among migrants in the urban labor market of Bangkok, Thailand. We test whether the population size and the labor-market performance of previous migrants have externalities to new migrants who have moved from the same province of origin. Our empirical results, which control origin fixed effects, time fixed effects, and origin- and year-specific correlated shocks, show that (1) the relative population size of previous migrants in the market decreases the employment probability of new migrants (substitution effect), (2) the employment probability of previous migrants increases that of new migrants (positive externalities), and (3) when the employment probability of previous migrants is high, however, the scale effect becomes positive, which demonstrates a threshold in the informational scale economies. The results imply that positive informational scale effect dominates negative substitution effect when the efficiency of previous migrants is sufficiently high in the destination labor market.

The political economy of social exclusion, with implications for immigration policy

Minorities such as ethnic and immigration groups have often been subject to exclusion through labor market discrimination, residential and employment segregation policies, business ownership regulations, restrictions on political participation, access to public services, and more. This paper studies the dynamics of minority exclusion. From the viewpoint of the dominant majority, the exclusion decision balances the motive to redistribute income in its favor and the interest in avoiding potential civic unrest or even violent confrontation with the minority. The analysis also has implications for immigration policies, suggesting that they have to take this group dynamics into account.

Dropping out of post-compulsory education in the UK: an analysis of determinants and outcomes

We analyse the decision to drop out of post-compulsory education over the period 1985–1994 using data from the Youth Cohort Surveys. We show that the dropout rate declined between 1985 and 1994, in spite of the rising participation rate in education, but is still substantial. Dropping out is more or less constant over the period of study, though the risk of dropout does vary with young people’s prior attainment, ethnicity, family background and the state of the labour market. The course of study has a substantial effect on the risk of dropout.

Physical capital taxation and labor income taxation in an endogenous growth model with new generations

This paper examines the growth and welfare effects of physical capital taxation and labor income taxation. It is found that the impact of a rise in the physical capital tax rate on the balanced growth rate is crucially related to the birth rate, but a rise in the labor income tax rate definitely reduces the balanced growth rate regardless of the birth rate. It is also found that an increase in the physical capital income tax rate will harm the older but will benefit the younger, while an increase in the labor income tax rate will benefit the older but will harm the younger.

The impact of the labour market on the timing of marriage and births in Spain

This paper investigates how education and the labour market affect Spanish individual decisions on the timing of marriage and births, using a Cox hazard approach. It disentangles men and women, and two groups, Cohort 1945–1960 and Cohort 1961–1977. Results show that female employment delays marriage in Cohort 1945–1960, but it has a reverse effect in Cohort 1961–1977. We also find evidence that employment is a barrier for family formation since employed women postpone births in both cohorts. The precarious Spanish labour markets, captured by female unemployment rates, delay family formation, especially by putting off marriage. Male unemployment, at the individual level, impacts negatively on fertility only through delaying marriage.

Immigrant assimilation pre and post labour market entry: evidence from the UK Labour Force Survey

We estimate models of employment an earnings for a sample of white and non-white male immigrants drawn from the Labour Force Survey between 1993 and 2004. Immigrants who arrived to enter the labour market (labour market entrants) are distinguished from those who arrived to complete their education (education entrants). Diverse patterns of labour market assimilation are found depending on ethnicity and immigrant type. Amongst labour market entrants, whites do better than non-whites, whilst amongst education entrants, highly qualified prime-age non-whites perform as well as their white counterparts. Relative to white natives, labour market outcomes for all immigrant groups have a tendency to decline with age.

Population aging and legal retirement age

This paper analyzes the effects of population aging on the preferred legal retirement age. What is revealed is the crucial role that the indirect ‘macro’ effects resulting from a change in the legal retirement age play in the optimal decision. Two social security systems are studied. Under a defined contribution scheme, aging lowers the preferred legal retirement age. However, under a defined pension scheme, the retirement age is delayed. This result shows the relevance of correctly choosing the parameter affected by the dependency ratio in the design of the social security programme.

Measuring the value of statistical life: estimating compensating wage differentials among workers in India

Policy makers confronted with the need to introduce health and safety regulations often wonder how to value the benefits of these regulations. One way that a monetary value could be placed on reductions in health risks, including risk of death, is through understanding how people are compensated for the different risks they take. While there is an extensive literature on VSL and compensating wage differentials for the developed countries, few such studies exist when it comes to developing countries. Our study is an attempt at obtaining estimates of VSL that reflects Indian risk preferences. Based on a survey of 550 workers in Chennai and 535 workers in Mumbai, we find the value of a statistical life in India to be approximately Rs. 15 million. The value of statistical injury ranges from Rs. 6,000 to Rs. 9,000. Policy makers interested in programs to decrease environmental and health risks could use these numbers as one bench-mark against which costs can be assessed.

An Analysis of Educational Inequality in Taiwan After the Higher Education Expansion

Two major educational expansions in Taiwan have resulted in a remarkable improvement of human capital accumulation for the last three decades, which is consistent with the long-run goal of education in improving individual well-being and international competitiveness. This study focuses on the expansion of higher education starting from the late 1980s. As the number of higher-educated workers entering the labor market each year has increased rapidly, this higher education expansion policy has encountered some critiques from the public. Evidence shows that the incidence of over-educated workers in the labor market has been continuously increasing after the expansion, which is considered to be a short-run problem from the policy. We also find that the overall educational inequality drops sharply, which is mainly contributed by the within age group component after decomposing educational inequality using the decomposable Theil index. Along with a larger increase in average schooling for women, a larger reduction in educational inequality for women than for men implies women have benefited more than men from the policy and the educational inequality between men and women is narrowing.

Fertility, child care outside the home, and pay-as-you-go social security

We examine the long-run effects of the pay-as-you-go (PAYG) social security scheme on fertility and welfare of individuals in an overlapping generations model, assuming that child-care services are available in the market. We show that the impact of a tax increase on fertility depends on the relative magnitudes of the standard intergenerational redistribution effect through the social security system, the (implicit) subsidy effect through tax-exemption of child rearing at home, and the price effect through changes in the relative price of market child care, and that if parental child-rearing time is inelastic, a tax cut could bring about a Pareto-improving allocation.

Job loss and family adjustments in work and schooling during the Mexican peso crisis

We use individual data from a panel of families during the depth of the peso crisis in Mexico to investigate whether the transition of the male household head from employment into unemployment affects the labor force participation of his spouse and children. We find that significant added-worker effects are in operation especially for adult females (wives), but no evidence that the labor force participation, the school attendance, and the likelihood of advancing to the next school grade of teenage males are influenced by the event of unemployment of the household head. The head's unemployment is significantly associated with a higher probability that teenage females do not attend school. However, lower attendance does not appear to impede their advancement to the next grade.

The Differentiation of Social Demands in Europe. The Social Basis of the European Models of Capitalism

This paper tests the impact of various determinants of the preference for two key elements of the European social models: redistribution and trade unions, using individual data from the first round of the European Social Survey. The basic hypothesis is that the main determinant of an individual’s support for these elements of the European models is the social position of the individual in terms of income, status and risks attached to their labour market insertion. The paper also considers the relative importance of less ‘materialist’ influences such as religion or other cultural determinants. The estimations show that ‘materialist’ determinants are by far the most important influences on individual preferences, contrary to what most social theories of modernisation contend.

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