Employ
Quantitative and empirical demonstration of the Matthew effect in a study of career longevity
Alexander Petersen, Woo-Sung Jung, Jae-Suk Yang & Eugene Stanley
Proceedings of the National Academy of Sciences, 4 January 2011, Pages 18-23
Abstract:
The Matthew effect refers to the adage written some two-thousand years ago in the Gospel of St. Matthew: "For to all those who have, more will be given." Even two millennia later, this idiom is used by sociologists to qualitatively describe the dynamics of individual progress and the interplay between status and reward. Quantitative studies of professional careers are traditionally limited by the difficulty in measuring progress and the lack of data on individual careers. However, in some professions, there are well-defined metrics that quantify career longevity, success, and prowess, which together contribute to the overall success rating for an individual employee. Here we demonstrate testable evidence of the age-old Matthew "rich get richer" effect, wherein the longevity and past success of an individual lead to a cumulative advantage in further developing his or her career. We develop an exactly solvable stochastic career progress model that quantitatively incorporates the Matthew effect and validate our model predictions for several competitive professions. We test our model on the careers of 400,000 scientists using data from six high-impact journals and further confirm our findings by testing the model on the careers of more than 20,000 athletes in four sports leagues. Our model highlights the importance of early career development, showing that many careers are stunted by the relative disadvantage associated with inexperience.
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Jason Taylor
Economica, January 2011, Pages 133-158
Abstract:
The President's Reemployment Agreement (PRA) of 1933 directed firms to reduce workweeks during the Great Depression so existing jobs could be spread into additional employment opportunities. Similar ‘work-sharing' policies have recently been implemented across Europe in hopes of reducing unemployment. I find that, ceteris paribus, the work-sharing aspects of the PRA created nearly 2.5 million new employment opportunities in around four months. However, the programme also required firms to raise hourly wage rates, offsetting close to half of these gains. Furthermore, most of the remaining employment gains were wiped out after cartel-oriented industry-specific codes of fair competition supplanted the PRA.
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The Wage Effects of Immigration and Emigration
Frédéric Docquier, Çaǧlar Özden & Giovanni Peri
NBER Working Paper, December 2010
Abstract:
In this paper, we simulate the long-run effects of migrant flows on wages of high-skilled and low-skilled non-migrants in a set of countries using an aggregate model of national economies. New in this literature we calculate the wage effect of emigration as well as immigration. We focus on Europe and compare the outcomes for large Western European countries with those of other key destination countries both in the OECD and outside the OECD. Our analysis builds on an improved database of bilateral stocks and net migration flows of immigrants and emigrants by education level for the years 1990 through 2000. We find that all European countries experienced a decrease in their average wages and a worsening of their wage inequality because of emigration. Whereas, contrary to the popular belief, immigration had nearly equal but opposite effects: positive on average wages and reducing wage inequality of non-movers. These patterns hold true using a range of parameters for our simulations, accounting for the estimates of undocumented immigrants, and correcting for the quality of schooling and/or labor-market downgrading of skills. In terms of wage outcomes, it follows that prevalent public fears in European countries are misplaced; immigration has had a positive average wage effect on native workers. Some concerns should be focused on the wage effect of emigration, instead.
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Start-Up Subsidies for the Unemployed: Long-Term Evidence and Effect Heterogeneity
Marco Caliendo & Steffen Künn
Journal of Public Economics, forthcoming
Abstract:
Turning unemployment into self-employment has become an increasingly important part of active labor market policies (ALMP) in many OECD countries. Germany is a good example where the spending on start-up subsidies for the unemployed accounted for nearly 17% of the total spending on ALMP in 2004. In contrast to other programs-like vocational training, job creation schemes, or wage subsidies-the empirical evidence on the effectiveness of such schemes is still scarce; especially regarding long-term effects and effect heterogeneity. This paper aims to close this gap. We use administrative and survey data from a large sample of participants in two distinct start-up programs and a control group of unemployed individuals. We find that over 80% of participants are integrated in the labor market and have relatively high labor income five years after start-up. Additionally, participants are much more satisfied with their current occupational situation compared to previous jobs. Based on propensity score matching methods we estimate the long-term effects of the programs against non-participation and take great care in assessing the sensitivity of our results with respect to deviations from the identifying assumption. Our results turn out to be robust and show that both programs are effective with respect to income and employment outcomes in the long-run, i.e. five years after start-up. Moreover, we consider effect heterogeneity with respect to several dimensions and show that start-up subsidies for the unemployed tend to be most effective for disadvantaged groups in the labor market.
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Comparing the effectiveness of employment subsidies
Alessio Brown, Christian Merkl & Dennis Snower
Labour Economics, forthcoming
Abstract:
This paper examines the implications of employment subsidies for employment, welfare, and inequality. In particular, it investigates how these effects depend on which groups these subsidies are targeted at. Our analysis focuses on policies that are "approximately welfare efficient" (AWE), i.e. policies that that (a) improve employment and welfare, (b) do not raise earnings inequality and (c) are self-financing. We construct a microfounded, dynamic model of hiring and separations and calibrate it with German data. The calibration shows that hiring vouchers can be AWE, while low-wage subsidies are not AWE. Furthermore, hiring vouchers targeted at the long-term unemployed are more effective than those targeted at low-ability workers.
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Isaac Galatzer-Levy, George Bonanno & Anthony Mancini
Journal of Neuroscience, Psychology, and Economics, November 2010, Pages 116-125
Abstract:
Job-loss is a rapidly growing concern as we witness the greatest and most rapid economic downturn in a century. The negative psychological effect of unemployment has increasingly garnered attention. Previous literature has offered a formidable prognosis, stating that in response to job-loss, people typically follow a pattern of rapid decline in life satisfaction and never return to preunemployment levels. In this paper, we attempt to search for individual differences in response to job-loss using Latent Growth Mixture Modeling (LGMM) framework. By building homogeneous trajectories within a prospective design from 3 years before to 4 years after job-loss, we find that the majority of individuals (82%) demonstrate no long-term effects on life satisfaction in response to unemployment. We also examine the roll of larger market forces on levels of life satisfaction during and around the event of job-loss. Using a correlation model, demonstrated that life satisfaction is positively influenced by the regional unemployment rate. Clark (2003) argues that people report higher well-being when they lose their job if those in proximity to them are also becoming unemployed. Using the national and local unemployment rate in a regression model nested in the Latent Growth Model, we found that a social comparison effect is present immediately before unemployment but not once individuals became unemployed. This implies that people reference national and local employment trends in an attempt to anticipate their own course of employment rather than referencing those trends after job-loss.
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Is Child Labor Harmful? The Impact of Working Earlier in Life on Adult Earnings
Patrick Emerson & André Portela Souza
Economic Development and Cultural Change, January 2011, Pages 345-385
Abstract:
This paper explores the question: is working as a child harmful to an individual in terms of adult outcomes in earnings? Although this is an extremely important question, little is known about the effect of child labor on adult outcomes. Estimations of an instrumental variables earnings model on data from Brazil show that child labor has a large negative impact on adult earnings for male children even when controlling for schooling and that the negative impact of starting to work as a child reverses at around ages 12-14.
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Jerald Bachman et al.
Developmental Psychology, forthcoming
Abstract:
Long hours of paid employment during high school have been linked to a variety of problem behaviors, but questions remain about whether and to what extent work intensity makes any causal contribution. This study addresses those questions by focusing on how 12th-grade work intensity is associated with substance use and educational attainment in the years following high school. It uses 2 nationally representative longitudinal data sets from the Monitoring the Future project, spanning a total of 3 decades. One data set tracks 8th graders for 8 years (modal ages 14-22) and provides extensive controls for possible prior causes; the second, larger data set tracks 12th graders for up to 12 years (to modal ages 29-30) and permits assessment of possible short-term and longer term consequences. Findings based on propensity score matching and multivariate regression analyses are highly consistent across the 2 sets of data. All findings show that more fundamental prior problems, including low academic performance and aspirations, make substantial contributions to substance use and long-term academic attainment (selection effects), but the findings also suggest that high work intensity during high school has long-term costs in terms of college completion and perhaps cigarette use.
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Andrea Bassanini
Industrial and Corporate Change, December 2010, Pages 2097-2134
Abstract:
Many studies suggest that idiosyncratic firm-level characteristics shape both job and worker flows in a similar way in all countries. Others argue that cross-country differences in terms of gross job flows are minor. However, these statements are usually based on the comparison of national estimates, typically collected on the basis of different definitions and collection protocols. In contrast, in this article, we use cross-country comparable data on both job and worker flows to examine key determinants of these flows and of their cross-country differences. We find that idiosyncratic firm characteristics (industry, age, and size) play an important role for both gross job and worker flows in all countries. Nevertheless, in contrast with part of the literature, we find that, even controlling for these idiosyncratic factors, cross-country differences concerning both gross job and worker flows appear large and of a similar magnitude. Both job and worker flows in countries such as the USA and the UK exceed those in certain continental European countries by a factor of two. Moreover, the variation of worker flows across different dimensions is well explained by the variation of job flows. Consistently, churning flows, that is flows originating by firms churning workers and employees quitting and being replaced, display much less variation across countries.
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Reconciling Findings on the Employment Effect of Disability Insurance
John Bound, Stephan Reinhard Lindner & Timothy Waidmann
University of Michigan Working Paper, October 2010
Abstract:
Over the last 25 years the Social Security Disability Insurance Program (DI) has grown dramatically. During the same period of time employment rates for men with work limitations showed substantial declines in both absolute and relative terms. While the timing of these trends suggests that the expansion of DI was a major contributor to employment decline and raises questions about the targeting of disability benefits, studies using denied applicants suggest a more modest role for DI expansion. In order to reconcile these findings, we decompose total employment changes into population and employment changes for three categories: DI beneficiaries, denied applicants and non-applicants. Our results show that during the early 1990s, the growth in DI can fully explain the employment decline for men only under an extreme assumption about the employment potential of beneficiaries. For the period after the mid-1990s, we find little role for the DI program in explaining the continuing employment decline for men with work limitations.
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John Ham, Charles Swenson, Ayşe İmrohoroğlu & Heonjae Song
Journal of Public Economics, forthcoming
Abstract:
Federal and state governments spend well over a billion dollars a year on programs that encourage employment development in disadvantaged labor markets through the use of subsidies and tax credits. In this paper we use an estimation approach that is valid under relatively weak assumptions to measure the impact of State Enterprise Zones (ENTZs), Federal Empowerment Zones (EMPZs), and Federal Enterprise Community (ENTC) programs on local labor markets. We find that all three programs have positive, statistically significant, impacts on local labor markets in terms of the unemployment rate, the poverty rate, the fraction with wage and salary income, and employment. Further, the effects of EMPZ and ENTC designation are considerably larger than the impact of ENTZ designation. We find that our estimates are robust to allowing for a regression to the mean effect. We also find that there are positive, but statistically insignificant, spillover effects to neighboring Census tracts of each of these programs. Thus our positive estimates of these program impacts do not simply represent a transfer from the nearest non-treated Census tract to the treated Census tract. Our results are noteworthy for several reasons. First, our study is the first to jointly look at these three programs, thus allowing policy makers to compare the impacts of these programs. Second, our paper, along with a concurrent study by Neumark and Kolko (2008), is the first to carry out the estimation accounting for overlap between the programs. Third, our estimation strategy is valid under weaker assumptions than those made in many previous studies; we consider three comparison groups and let the data determine the appropriate group. Fourth, in spite of our conservative estimation strategy, by looking at national effects with disaggregated data, we show that ENTZ designation generally has a positive effect on the local labor market, while most previous research on ENTZs, much of which used more geographically aggregated data to look at state-specific effects, did not find any significant impacts. Fifth, we note that there is little or no previous work on ENTCs. Overall, our results strongly support the efficacy of these labor market interventions.
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Minimum Wages and Firm Profitability
Mirko Draca, Stephen Machin & John Van Reenen
American Economic Journal: Applied Economics, January 2011, Pages 129-151
Abstract:
We study the impact of minimum wages on firm profitability, exploiting the changes induced by the introduction of a UK national minimum wage in 1999. We use pre-policy information on the distribution of wages to implement a difference-in-differences approach. Minimum wages raise wages, but also significantly reduce profitability (especially in industries with relatively high market power). This is consistent with a simple model where wage gains from minimum wages map directly into profit reductions. There is some suggestive evidence of longer run adjustment to the minimum wage through falls in net entry rates.
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International Comparison of Age Discrimination Laws
Joanna Lahey
Research on Aging, November 2010, Pages 679-697
Abstract:
European age discrimination legislation is discussed in the context of the U.S. Age Discrimination in Employment Act (ADEA) and related state laws. U.S. law was originally introduced to protect productive older workers from age stereotypes, but more recently preventing age discrimination has become important as a means of keeping costs down on entitlement programs as the population ages. Changes in enforcement, penalties, exemptions, length of time to file, and burden of proof have changed the effects of the laws over time. The ADEA has had both positive effects on currently employed older workers and negative effects on the hiring of older workers. Enforcement and publicity are offered as possible explanations for the strength of these positive and negative effects. Age discrimination legislation in Europe, indicated in the Framework Directive 2000/78, is driven by economic and political considerations. European legislation calls for less enforcement and more exemptions than the corresponding U.S. cases that could lead to smaller effects on employment. However, pensions, disability, unemployment, and social security potentially have a stronger effect on social norms for retirement age than does anti-discrimination legislation.
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Facilitating Longer Working Lives: International Evidence on Why and How
David Wise
Demography, November 2010, Pages S131-S149
Abstract:
The article advances the view that social and economic choices in societies can reasonably adjust as the age structure of the population changes; in particular, some of the bounty of longer lives can reasonably be allocated to prolonging the labor force participation of older workers. Data on reductions in mortality and, in some countries, declines in disability are presented in ways that help to clarify that prolonged working lives may be a natural concomitant of living longer. The article reviews the problems inherent in the combination of living longer and reducing labor force participation at older ages. It discusses two ways to facilitate longer working lives: (1) eliminating penalties on work at older ages - inherent in the provisions of the social security programs in many countries - that induce older persons to leave the labor force at younger ages; and (2) correcting a false rationale - the "boxed economy" view of the labor market - that is often used to support retention of the provisions that induce older persons to leave the labor force.
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Working at McDonalds: Some redeeming features of McJobs
Anthony Gould
Work, Employment & Society, December 2010, Pages 780-802
Abstract:
Within much critical research literature, fast-food jobs are presented as offering few employee advantages. Indeed the disparaging term ‘McJob' has come to describe low-skill, low-pay, dead-end, routine service industry employment in general. In contrast, there is employer-oriented literature that portrays fast-food jobs more positively and even presents them as beneficial for the workforce. This study analyses survey data from a sample of Australian McDonald's outlets to determine employee and employer experiences and attitudes towards these so-called McJobs. Findings indicate that employees view their jobs as consisting of repeatedly doing a limited range of non-complex tasks whereas managers perceive aspects of the job more positively. Evidence is presented that fast-food jobs offer human resource advantages, potential career opportunities and, for some, desirable forms of work organisation. These findings suggest that the current, dominant portrayal of McJobs is inaccurate, with the reality more nuanced.
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Minimum Wage Impacts in China: Estimates from a Prespecified Research Design, 2000-2007
Jing Wang & Morley Gunderson
Contemporary Economic Policy, forthcoming
Abstract:
We use a prespecified research design to estimate the employment effect of minimum wages in China over the period 2000 to 2007. Our results are consistent with theoretical expectations and institutional realities of Chinese labor markets. These include: negative employment effects in slower growing regions; larger negative effects in non-state-owned organizations that tend to be more responsive to market pressures; much larger lagged effects reflecting the time needed for adjustments to occur; no adverse employment effects in the prosperous and growing Eastern region; and a positive employment effect in state-owned enterprises in the East - consistent with monopsonistic behavior.
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Mary Fischer
Social Science Quarterly, December 2010, Pages 1264-1287
Objective: This study examines whether the use of institutional (school-based) networks may help students from disadvantaged backgrounds secure summer employment opportunities that are on a par with those of their more advantaged classmates who may possess more resource-rich personal and familial networks.
Methods: The study draws on unique data from the National Longitudinal Survey of Freshmen to examine the strategies that a national representative sample of nearly 4,000 white, black, Asian, and Hispanic students on 28 campuses used to obtain summer employment and the characteristics of these summer jobs. Multinomial logistic regression techniques are applied to examine the types of contacts students used and jobs they found, while OLS regression is employed to examine the wages and occupational prestige of summer positions.
Results: The study reveals that students who obtained their summer jobs through institutional contacts had significantly higher earnings and held positions with higher occupational prestige than students using most other methods (controlling for race/ethnicity, prior work experience, and parental education). I also found that minority students are at least as likely as white students to draw on these institutional networks. In addition, there were no differences by SES, suggesting that this type of capital is both accessible and accessed by a wide range of students.
Conclusions: This study provides evidence that summer jobs obtained through institutional networks are more likely to be in desirable sectors, on average pay better, and have higher occupational prestige scores than jobs obtained by most other methods.