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.

/pdf/entrepreneurship-and-the-process-of-firms-entry-survival-and-2riyn34i46.pdf

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

In many countries unemployed people are helped to become self-employed. Self-employment, however, does not necessarily lead to success. Many leave self-employment after a short period and the economic outcome varies greatly. It is important to learn more about the economic outcome for unemployed who become self-employed. In the first part of the paper we analyse who became self-employed in the period from 1999 to 2002 of Swedish-born men aged 20 to 60 years who were either wage-earners, unemployed or inactive in 1998. We find that the unemployed, and even more the inactive, are overrepresented among those who become self-employed. In the second part of the paper we study the economic outcome of self-employment in 2002 for Swedish-born men who were either unemployed, inactive or wage-earners in 1998. Economic outcome in 2002 is measured using income from self-employment and having employees in the firm. The estimations show that those who were wage earners in 1998 have higher incomes and are also employing other people in their business to a much higher extent in 2002 than those who in 1998 were unemployed or inactive. This indicates that support to unemployed to become self-employed should be implemented with great care.

/pdf/do-the-unemployed-become-successful-entrepreneurs-a-3lp64919us.pdf

Do the Unemployed Become Successful Entrepreneurs? A Comparison between the Unemployed, Inactive and Wage-Earners

The starting point of this study is the seemingly striking similarity in the number of youth-oriented labour market policies adopted by the Nordic and the Baltic EU member states in 2013–14 despite markedly different welfare regimes. The similarities remain when concentrating on active labour market policies (ALMPs) and extending the observation period to 2007–15, but the application of a more refined coding scheme suggests that there are also notable cross-country differences. Estonia, Finland and Sweden are found to exhibit a relatively similar approach to youth-oriented ALMPs, while Denmark, Latvia and Lithuania are more distinct cases. The similarities in the policy effort can be explained by similar problem pressure, EU-guided policy learning and the provision of EU funding. Lastly, the policy approaches of the Nordic states indicate a path-dependency. Thus, while the youth-oriented policy effort may appear to be quite similar, important differences remain.

https://onlinelibrary.wiley.com/doi/epdf/10.1111/spol.12315

Youth-oriented Active Labour Market Policies: Explaining Policy Effort in the Nordic and the Baltic States

Sweden was the only country that did not apply any transitional rules for migrants coming from the ten new European Union member states in May 2004. The number of immigrants arriving in Sweden from these countries also increased, especially from Poland and the Baltic states, although not to the same extent as was found in Ireland and the UK (two countries with transitory rules of only minor importance). The composition of the migrants changed compared with that of migrants who had arrived earlier from the same countries. Immigrants are represented in all sectors of the economy but overrepresented in some sectors, and while earlier many more women than men arrived, now the gender composition is much more even. The wages of the new immigrants from EU10 countries, controlling for education and age, are somewhat lower than for those born in Sweden. This contrasts with the wages for new immigrants from EU14 countries being higher than for those for those born in Sweden.

Post-Enlargement Migration and Labor Market Impact in Sweden

Immigration and net transfers within the public sector in Denmark

We study immigrants in temporary employment agencies in Sweden using a unique data set that covers all aged 16-64 who were employed by temporary employment agencies (TEAs) in Sweden in November 1999, with information on their employment status in 1998 and 2000. We find that young people, women, people living in big cities, and immigrants are overrepresented in the TEAs. Grouping immigrants after origin shows that immigrants from Africa, Asia and South America are greatly overrepresented in the sector. Immigrants are on average slightly older than the natives who work in TEAs, they are more often married, and women are less overrepresented among those born outside of Sweden. The immigrants are overrepresented among those with the lowest education and those with higher education. The mobility between employment status (employed in a TEA, other type of employment, unemployed, studying) differs between immigrants and natives in several respects. One result is that immigrants more often leave a TEA for another type of employment, which could be interpreted as employment in a TEA being used as a stepping stone to the labour market.

/pdf/temporary-employment-agencies-a-route-for-immigrants-to-3pfc4ys70n.pdf

Eskil Wadensjö

Papers

Do the Unemployed Become Successful Entrepreneurs? A Comparison between the Unemployed, Inactive and Wage-Earners

Youth-oriented Active Labour Market Policies: Explaining Policy Effort in the Nordic and the Baltic States

Post-Enlargement Migration and Labor Market Impact in Sweden

Immigration and net transfers within the public sector in Denmark

Temporary Employment Agencies: A Route for Immigrants to Enter the Labour Market? ∗