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.

Age, Experience, and Wage Growth

Abstract: During the past decade, much has been said about the role that on-the-job training plays in augmenting one's stock of human capital. Up to this point, little has been done to distinguish the effect of on-the-job training from that of aging on the increase in human wealth. The reason rests primarily on the fact that it is difficult to observe or even define in some appropriate way the amount of on-the-job training that an individual possesses. In this paper, a method is developed by which one may compare the effects of work experience to those of aging per se. The difference is then attributed to on-the-job training.

Unemployment Benefits and Immigration: Evidence from the EU

Abstract: The paper studies the impact of unemployment benefits on immigration. A sample of 19 European countries observed over the period 1993 to 2008 is used to test the hypothesis that unemployment benefit spending (UBS) is correlated with immigration flows from EU and non-EU origins. While OLS estimates reveal the existence of a moderate correlation for non-EU immigrants only, IV and GMM techniques used to address endogeneity issues yield, respectively, a much smaller and an essentially zero causal impact of UBS on immigration. All estimates for immigrants from EU origins indicate that flows within the EU are not related to unemployment benefit generosity. This suggests that the so-called 'welfare migration' debate is misguided and not based on empirical evidence.

The French Zones D'Education Prioritaire: Much Ado About Nothing?

Abstract: We provide an assessment of the French ZEP (Zones d'Education Prioritaire), a program started in 1982 that channels additional resources to schools in disadvantaged areas and encourages the development of new teaching projects. Focusing on middle-schools, we first evaluate the impact of the ZEP status on resources, their utilization (teacher bonuses versus teaching hours) and key establishments characteristics such as class sizes, school enrollments, teachers' qualifications and experience, and student composition and mobility. We then estimate the impact of the ZEP program on four measures of individual student achievement: obtaining at least one diploma by the end of schooling, reaching 8th grade, reaching 10th grade and success at the Baccalaureat. We take into account the endogeneity of the ZEP status by using both differences in differences and instrumental variables based on political variables. The results are the same in all cases: there is no impact on student success of the ZEP program.

Distrust - The Hidden Cost of Control

Abstract: We show experimentally that a principal's distrust in the voluntary performance of an agent has a negative impact on the agent's motivation to perform well. Before the agent chooses his performance, the principal in our experiment decides whether he wants to restrict the agents' choice set by implementing a minimum performance level for the agent. Since both parties have conflicting interests, restriction is optimal for the principal whenever the latter expects the agent to behave opportunistically. We find that most principals in our experiment do not restrict the agent's choice set but trust that the agent will perform well voluntarily. Principals who trust induce, on average, a higher performance and, hence, earn higher payoffs than principals who control. The reason is that most agents lower their performance as a response to the signal of distrust created by the principal's decision to limit their choice set. Our results shed new light on dysfunctional effects of explicit incentives, as well as, the puzzling incompleteness of many economic contracts.

The Personnel Economics of the State

Abstract: Governments play a central role in facilitating economic development. Yet while economists have long emphasized the importance of government quality, historically they have paid less attention to the internal workings of the state and the individuals who provide the public services. This paper reviews a nascent but growing body of field experiments that explores the personnel economics of the state. To place the experimental findings in context, we begin by documenting some stylized facts about how public sector employment differs from that in the private sector. In particular, we show that in most countries throughout the world, public sector employees enjoy a significant wage premium over their private sector counterparts. Moreover, this wage gap is largest among low-income countries, which tends to be precisely where governance issues are most severe. These differences in pay, together with significant information asymmetries within government organizations in low-income countries, provide a prima facie rationale for the emphasis of the recent field experiments on three aspects of the state–employee relationship: selection, incentive structures, and monitoring. We review the findings on all three dimensions and then conclude this survey with directions for future research.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.