Institute for the Study of Labor

About: Institute for the Study of Labor is a nonprofit organization based out in Bonn, Germany. It is known for research contribution in the topics: Wage & Unemployment. The organization has 2039 authors who have published 13475 publications receiving 439376 citations.

Wage Differentials and Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico

Abstract: We analyze wage differentials mobility between the formal and informal sector in urban Mexico, using panel data on five quarters drawn from Mexico's Urban Employment Survey. We develop a dynamic random effects panel data model. It consists of two separate wage equations for the two sectors and a multinomial logit part explaining the labor market state, in which wages are included as explanatory variables. The model is estimated using simulated maximum likelihood. The estimates show that wage differentials increase with education level. The probability of formal sector employment strongly increases with the wage differential. Simulated transition probabilities show that for male workers, the choice between formal and informal sector is driven by wage differentials and unobserved heterogeneity, while true state dependence is much less important. For women, nonparticipation is the most common labor market state, and true state dependence plays a much larger role.

Does the Expansion of Higher Education Increase the Equality of Educational Opportunities? Evidence from Italy

Abstract: This paper studies the role of the expansion of higher education (HE) in increasing the equality of tertiary education opportunities. It examines Italy's experience during the 1990s, when policy changes prompted HE institutions to offer a wider range of degrees and to open new sites in neighbouring provinces. Our analysis focuses on non-mature full-time students and the results suggest that the expansion might have had only limited effects in terms of reducing existing individual inequality in HE achievement as the greater availability of courses had a significantly positive impact only on the probability of university enrolment but not on that of obtaining a university degree.

The role of real wage rigidity and labor market frictions for unemployment and inflation dynamics

Abstract: In this paper we incorporate a labor market with matching frictions and wage rigidities into the New Keynesian business cycle model. In particular, we analyze the effect of a monetary policy shock and investigate how labor market frictions affect the transmission process of monetary policy. The model allows real wage rigidities to interact with adjustments in employment and hours affecting inflation dynamics via marginal costs. We find that the response of unemployment and inflation to an interest rate innovation depends on the degree of wage rigidity. Generally, more rigid wages translate into more persistent movements of aggregate inflation. Moreover, the impact of a monetary policy shock on unemployment and inflation depends also on labor market fundamentals such as bargaining power and the flows in and out of employment.

Schooling and Labor Market Consequences of the 1970 State Abortion Reforms

Abstract: This study uses the 1970 state abortion reforms to estimate the effect of teen and out-of-wedlock childbearing on the schooling and labor market outcomes of mothers observed in 1980 and 1990 Census microdata. Reduced-form estimates suggest that state abortion reforms had a negative impact on teen marriage, teen fertility, and teen out- of-wedlock childbearing. The teen marriage effects are largest and most precisely estimated for white women while the teen fertility and out-of-wedlock childbearing effects are largest and most precisely estimated for black women. The relatively modest fertility and marriage consequences of abortion reform for white women do not appear to have changed schooling or labor market outcomes. In contrast, black women who were exposed to abortion reforms experienced large reductions in teen fertility and teen out-of-wedlock fertility that appear to have led to increased schooling and employment rates. Instrumental variables estimates of the effects of teen and out-of- wedlock childbearing on the schooling and employment status of black women, using measures of exposure to abortion reform as instruments, are marginally significant and larger than the corresponding OLS estimates.

Risk, Entrepreneurship, and Human-Capital Accumulation

Abstract: ideas, products, and ways of doing things, while professionals utilize their accumulated knowledge to facilitate economic transactions. Both skills are necessary for a healthy economy. Yet, while professional and entrepreneurial skills can complement each other in aggregate production, they can compete for an individual's time in their accumulation. In addition, while both entrepreneurial and professional skills can arguably be defined as "human capital" there are important dimensions along which entrepreneurship and professionalism differ. We find that considering these differences leads to important implications for the dynamic behavior of an economy's human-capital stock. In particular, we show that entrepreneurial human capital plays a relatively more important role in intermediate-income countries, whereas professional human capital is relatively more abundant in higher-income economies. We also show that, in an economy where both entrepreneurial and professional human capital affect the future level of technology, the initial stocks of both types of human capital are important for development. Finally, we demonstrate an important implication of considering more than one means of accumulating human capital: an inefficient allocation of time between schooling and gaining entrepreneurial experience may occur. Our model is premised on one fundamental idea: as an economy develops, improvements in the aggregate production technology broaden an individual's opportunities within the economy. These changing opportunities alter the relative costs of individual choices, thus affecting the outcome of individual decision