Publisher Summary The chapter presents a survey on the economics of labor market discrimination, motivated by two fundamental problems associated with income and wage differences among groups classified by sex, race, ethnicity, and other characteristics. The first is the inequity of long-lasting differences in economic well-being among the groups; in particular, differences in household or family income. The second is the inequity of long-lasting differences in the average wage rates among groups of workers classified by these demographic traits, when the groups may be presumed to be either equally productive or to have equal productive capacity. The second problem also raises the question of whether a labor market that pays unequal wages to equally productive workers is inefficient. Economic discrimination is defined in terms of income differences among families and wage differences among workers. The chapter discusses these definitions and presents data from the United States on the income and earnings differences of blacks, Hispanics, whites, women, and men. The chapter surveys theories of economic discrimination in the labor market. The theories are classified into competitive and monopolistic neoclassical models with (essentially) complete information, competitive neoclassical models with imperfect information-leading to “statistical discrimination,” and institutional theories. The chapter concludes with a discussion of the policy implications of the economic research on discrimination.

Chapter 13 The economic analysis of labor market discrimination: A survey

Internal migration in developed countries

This survey article aims at critically discussing the recent literature on firm formation and survival and the growth of new-born firms. The basic purpose is to single out the microeconomic entrepreneurial foundations of industrial dynamics (entry and exit) and to characterise the founder’s ex-ante features in terms of likely ex-post business performance. The main conclusion is that entry of new firms is heterogeneous with innovative entrepreneurs being found together with passive followers, over-optimist gamblers and even escapees from unemployment. Since founders are heterogeneous and may make “entry mistakes,” policy incentives should be highly selective, favouring nascent entrepreneurs endowed with progressive motivation and promising predictors of better business performance. This would lead to the least distortion in the post-entry market selection of efficient entrepreneurs.

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Entrepreneurship and the process of firms’ entry, survival and growth

The diffusion of Temporary Work Agency (TWA) jobs originated a harsh policy debate and ambiguous empirical evidence. Results for the US, based on quasi-experimental evidence, suggest that a TWA assignment decreases the probability of finding a stable job, while results for Europe, based on the Conditional Independence Assumption (CIA), typically reach opposite conclusions. Using data for two Italian regions, we use a matching estimator to show that TWA assignments can be an effective springboard to permanent employment. We also propose a simulation-based sensitivity analysis, which highlights that only for one of these two regions our results are robust to specific failures of the CIA. We conclude that European studies based on the CIA should not be automatically discarded, but should be put under the scrutiny of a sensitivity analysis like the one we propose.

https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=905551

From Temporary Help Jobs to Permanent Employment: What Can We Learn from Matching Estimators and their Sensitivity?

To estimate the causal effect of refugee migration on voting outcomes in parliamentary and municipal elections in Denmark, our study is the first that addresses the key problem of immigrant sorting by exploiting a policy that assigned refugee immigrants to municipalities on a quasi-random basis. We find that in all but the most urban municipalities, allocation of larger refugee shares between electoral cycles leads to an increase in the vote share for right-leaning parties with an anti-immigration agenda, and we show large differences in voters’ responses to refugee allocation according to pre-policy municipal characteristics. However, in the largest and urban municipalities, refugee allocation has—if anything—the opposite effect on vote shares for anti-immigration parties. This coincides with a sharp divide in attitudes to refugees between urban and rural populations, which may be partly explained by distinctive interactions between natives and those with different background in cities and rural areas. Refugee allocation also has a large impact on the anti-immigration parties’ choice of where to stand for municipal election, and we provide some evidence that it influences voter turnout.

/pdf/refugee-migration-and-electoral-outcomes-31oevx8cw3.pdf

Refugee Migration and Electoral Outcomes

Purpose – Many unemployed people become self‐employed. Self‐employment, however, does not necessarily lead to success. The main objective of the paper is to compare the economic outcome and success as self‐employed between those who entered self‐employment from paid employment, unemployment and inactivity. The question is if individuals who enter self‐employment from a weak position on the labour market are equally successful as those who enter self‐employment from a stronger position.Design/methodology/approach – Micro‐econometric methods are used to estimate first the propensity to become self‐employed in the period 1998‐2002 among Swedish‐born men aged 20‐60 years who were unemployed, inactive or wage earners in 1998, and second, the economic outcome of self‐employment. Economic outcome in 2002 is measured using income from self‐employment and having employees in the firm.Findings – The study finds that the unemployed, and even more the inactive, are overrepresented among those who become self‐employed...

/pdf/do-the-unemployed-become-successful-entrepreneurs-1e7nnoz90k.pdf

Do the unemployed become successful entrepreneurs

A comparative study of net transfers for different immigrant groups: Evidence from GermanyThis paper analyzes determinants of net transfers for immigrants living in Germany in 2002, coming from five different countries. Net transfers refer to the net amount of costs and tax payments in the public budget account. The study focuses on differences/similarities between outcomes. The results suggest that employment situation and family composition explain a major part of the differences, but also that legal immigration status granted on arrival in Germany seem to matter.The impact of immigration on the size of government: Empirical evidence from Danish municipalitiesThis study examines whether the influx of immigrants of non-Western origin in Danish municipalities in the period from 1995 to 2001 affected the size of public spending. In the paper three measures of public expenditure are examined. The resulting regression estimates do not support those scholars who propose/predict a negative link between government spending and immigration in Western welfare states. On the contrary, an increase in the share of non-Western immigrants led to a small but significant increase in income tax payments.The impact of immigration on election outcomes in Danish municipalitiesIn this paper we study the effects of changes in the share of immigrants of non-Western origin in Danish municipalities on the support for different political parties in the period from 1989 to 2001. Regression estimations show that anti-immigration parties gained support as a reaction to a larger immigrant share, but so did also a pro-immigration party on the left. Our results point to that Danish citizens voice their displeasure over immigration within their neighborhoods; nevertheless, we do not find indications of a weakening of support for the welfare state as such, as predicted by several authors.

/pdf/the-impact-of-immigration-on-election-outcomes-in-danish-3ptnyyf52p.pdf

The impact of immigration on election outcomes in Danish municipalities

This paper analyzes self-employment entry among Swedish-born male wage-earners. Is it the best and the brightest or the least successful that become self-employed? The residual from an income regression is used as an indicator of who belongs to which group. We find that both wage-earners who receive a lower income than predicted, i.e. have a negative residual, and those who receive a higher income than predicted, i.e. have a positive residual, are more likely to become self-employed than those who receive an income close to the predicted one. However, splitting self-employment into different types depending on corporate form and number of employees, we find that the self-employed are drawn from both tails of the residual distribution only if it is a matter of unincorporated firms. Wage-earners who become self-employed and start an incorporated firm are only drawn from the top of the residual distribution. Using self-employment income and turnover as measures of self-employment performance, we find a positive linear relationship between the income residual and performance.

The best and the brightest or the least successful? Self-employment entry among male wage-earners in Sweden

Immigrants have a weak position in the labour market in most European countries. Many have difficulties in establishing themselves in the labour market, the employment rate is low and the hourly wages are generally lower than what could be expected from characteristics (age, gender, education). Many have to rely on the social transfer payments including social assistance. One way to avoid the problems in getting a job is to become self-employed. In this paper we make use of two large data-sets to study self-employment among immigrants in Denmark and Sweden. The three main issues covered are 1) if the immigrants are overrepresented among the self-employed, 2) the characteristics of self-employed immigrants, and 3) the incomes of the self-employed immigrants. In each case we compare the situation in the two countries. The immigrants, especially immigrants from non-Western countries, are overrepresented among the self-employed in both countries. The self-employed immigrants in both countries have relatively low incomes, lower than natives with the corresponding characteristics.

/pdf/self-employed-immigrants-in-denmark-and-sweden-a-way-to-1iggyarkkq.pdf

Eskil Wadensjö

Papers

Do the unemployed become successful entrepreneurs

The impact of immigration on election outcomes in Danish municipalities

The best and the brightest or the least successful? Self-employment entry among male wage-earners in Sweden

Self-Employed Immigrants in Denmark and Sweden: A Way to Economic Self-Reliance?

Unequal Treatment: A Study in the Neoclassical Theory of Discrimination