Technical Education, Non-cognitive Skills and Labor Market Outcomes: Experimental Evidence from Brazil

This paper describes the results from an evaluation of a public policy that offers scholarships to current and former public high school students, so that they can attend technical and vocational education courses free of charge. We use a waiting list randomized controlled trial in four municipalities in a southern Brazilian State (Santa Catarina) to quantify the effects of the program on school progression, labor market outcomes and non-cognitive skills. Our intention-to-treat estimates reveal substantial gender heterogeneity two years after program completion. Women experienced large gains in labor market outcomes and non-cognitive skills. Employment rose by 21 percentage points (or approximately 33%) and the gains in earnings are of more than 50%. Also, women who received the offer scored 0.5σ higher on the synthetic index of non-cognitive skills and 0.69σ higher on an extraversion indicator. We find no effects on the male sub-sample. These findings corroborate the evidence on gender heterogeneity in the labor market effects of technical and vocational education programs. We also perform a series of exercises to explore potential channels through which these effects arise.

The unequal impact of raising the retirement age: Employment response and program substitution

Using high-frequency Italian administrative data, the author studies the heterogeneous effects of a reform raising the normal retirement age (NRA) from 60 years to 65 years for private-sector male employees. The analysis, based on a difference-in-differences (DD) method, shows that the NRA raise reduces pension benefit claims but does not lead to a one-to-one increase in the employment rate since workers also apply for more disability and unemployment benefits. Moreover, most of them simply retire without any benefit. The extent of the effects varies substantially across socio-economic groups, as individuals with poorer health, with lower occupational grades and lower pay levels are the most constrained by the reform, experiencing the highest delay in pension claims, increase in employment, and inactivity. All in all, this paper shows that raising the NRA could have unintended effects as it affects more negatively the most vulnerable in the labor market.

The bilingual gap in children's language, emotional, and pro-social development

In this paper we examine whether – conditional on other child endowments and family inputs – bilingual children achieve different language, emotional, and pro-social developmental outcomes. Our data, which allow us to analyze children's development in a dynamic framework, are extracted from the UK Millennium Cohort Study (MCS). We model the development production functions for bilingual children using cumulative value-added specifications, which account for parental investments and children's own ability. Analysis based on child age confirms that bilingual children initially have worse language skills than their monolingual peers. The commencement of schooling appears to attenuate these differences, and by age seven, bilingual children have a developmental advantage. We find evidence of a positive relationship between bilingualism and some aspects of emotional development, and it is mainly boys who appear to benefit from their bilingual background.

The effects of recreational cannabis access on labor markets: evidence from Colorado

Recreational cannabis markets possibly increase labor demand through investments in facilities for growing, processing, and retail sales of cannabis, as well as through other industries such as manufacturing, leisure, and hospitality. However, this increase in labor demand may vary substantially across counties within a state as most states with legal recreational cannabis allow individual counties to ban commercial cannabis sales. Meanwhile, labor supply may change through positive and negative effects from cannabis use. Using county-level Colorado data from 2011 to 2018 and exploiting variation across counties in the existence and timing of the start of dispensary sales, we test for changes in the unemployment rate, employment, and wages, overall and by industry subsector. Consistent with an increase in labor demand, we estimate that the sale of recreational cannabis through dispensaries is associated with a 0.7 percentage point decrease in the unemployment rate with no effect on the size of the labor force. We also find a 4.5% increase in the number of employees, with the strongest effects found in manufacturing. We find no effect on wages. Given the lack of a reduction in labor force participation or wages, negative effects on labor supply are likely limited, in line with the existing literature. The decrease in unemployment, coupled with an increase in the number of employees, indicates that labor demand effects likely dominate effects on labor supply. Our results suggest that policymakers considering recreational access to cannabis should anticipate a possible increase in employment.

Business Income Dynamics and Labor Market Fluidity

The share of the U.S. population that receives business income has increased substantially in recent decades. At the same time, worker hire and separation rates declined, with worrying implications for productivity and wage growth. In this paper, we explore the relationship between business income (BI) receipt and labor reallocation. We show that BI recipients are largely excluded from existing measures of labor reallocation. Including BI recipients reduces the measured decline from 1994 to 2014 in the hire and separation rates by 8.3–8.7%, respectively, primarily among jobs that were secondary sources of income or short in duration. We present evidence that worker transitions between wage and salary jobs and BI represent labor reallocation, as opposed to reclassification of employees as independent contractors.

Decomposition of co-worker wage gains

We address the presence, magnitude, and composition of wage gains related to former co-workers and discuss the mechanisms that could explain their existence. Using Hungarian linked employer–employee administrative data and proxying actual co-workership with overlapping work histories, we show that the overall wage gain attributable to former co-workers consists of multiple elements: a contact-specific, an individual-specific, a firm-specific and a match-specific component. Former co-workers, besides the direct effect of their presence, may funnel individuals into high-paying firms, enhance the sorting of good quality workers into firms, and may contribute to the creation of better employer–employee matches. By introducing and applying a wage-decomposition technique, we demonstrate that there are non-negligible differences between linked and market hires in all empirically separable wage elements. By focusing on specific scenarios, we provide additional empirical evidence in favor of employee referral and information transmission as the main drivers of co-worker gains.

Minimum wages in monopsonistic labor markets

Over the last 30 years, researchers have disputed the mixed evidence of the effect of the minimum wage on teenage employment in the United States. Whenever the minimum wage has positive or no effects on employment, they appeal to monopsony models to explain their results. However, very few of these studies have empirically tested whether their results are due to monopsonistic characteristics in the labor markets. In this article, I estimate the effects of the minimum wage for the United States under concentrated labor markets and low-mobility jobs (two variables that measure monopsony), identify heterogeneous effects among different scenarios derived from the monopsony model, and provide a plausible explanation of the mixed results about the minimum wage effects in the literature. My main findings indicate that minimum wages have an elasticity to teenage employment of −0.418 under perfect competition, which is, as expected, much higher than the usual results in the literature. If the monopsony variable is one standard deviation higher than the baseline, it implies a positive change in elasticity of 0.05. The minimum wage has a positive insignificant effect between 0.04 and 0.29 under full monopsonistic labor markets. The results are consistent among different specifications and in controlling for possible external shocks and omitted variables.

Assortative preferences in choice of major

The primary objective of this study is to examine the contribution of available information constrained by parents’ fields of study to the observed assortative preferences in their children’s choice of major. Comparable to panel models, we define within-family transmission functions with 1-to-2 matches (1 for each parent). Using the confidential major file of the 2011 National Household Survey from Canada, the results show that children’s choice of field of study exhibits significant assortative preferences isolated from ability sorting and unobserved differences across majors and other family characteristics. With some caution, we attribute this persisting assortative tendency to the information asymmetry across alternative majors built on by parents’ educational backgrounds within families.

No extension without representation? Evidence from a natural experiment in collective bargaining

In many countries, collective bargaining coverage is enhanced by government-issued extensions that widen the reach of collective agreements beyond their signatory parties to all firms and workers in the sector. This paper analyzes the causal impact of extensions using a natural experiment in Portugal that resulted in a sharp and unanticipated decline in the extension probability of agreements. Our results, based on a regression discontinuity design, indicate that extensions had a negative impact on employment growth. This effect is concentrated among nonaffiliated firms, which may reflect the limited representativeness of employer associations.

Who helps the unemployed? Workers’ receipt of public and private transfers

I use longitudinal data from the Panel Study of Income Dynamics (PSID) to measure the extent to which an unemployment spell increases the likelihood that a worker receives a cash transfer from family. I examine the prevalence of cash transfers from family, the demographic distribution of unemployed receivers, and the variation between family supported and not family supported spells. I further investigate how this informal, private assistance relates to public transfers from Unemployment Insurance using state-by-year variation in the UI program. I find that unemployment increases the probability a worker receives financial assistance from their family, inclusive of all demographic subgroups, that family cash transfer receipt is growing over time, and is weakly related to UI availability.