Labour markets

Nagore Iriberri, Pedro Rey Biel, 24 October 2016

The underrepresentation of women in top positions within firms is well documented. One potential contributing factor could be that men and women respond differently to the competitive pressure inherent in firm hierarchies. This column investigates this idea in the context of a two-stage maths competition for students in Spain. Despite male and female students achieving similar grades at school, male students perform better in both stages of the contest. Importantly, the gender gap increases in the second stage, when the competitive pressure is greater.

Julián Messina, Oskar Nordström Skans, Mikael Carlsson, 23 October 2016

While standard microeconomic theory suggests that firms have no power over setting wages when markets are perfectly competitive, this view obviously clashes with the perceptions of the casual observer. This column uses data from Sweden to investigate the extent to which differences in firms’ pay are related to differences in physical productivity. It finds that firms that benefit from positive productivity shocks increase the wages of incumbent workers, and in particular firms among which there is substantial labour mobility. The evolution of productivity among such firms appears to be a crucial determinant of workers’ wages.

Isamu Yamamoto, 14 October 2016

There is ample empirical evidence showing that poor mental health is increasing, but the impact of this on long-run productivity and its implications for the labour market are not well researched. This column outlines two ways in which labour market research can contribute to the study of the impact on mental health of working conditions. It also identifies several channels related to working conditions that affect mental health, and argues that deteriorating mental health adversely affects corporate performance in the long run.

Hie Joo Ahn, James Hamilton, 10 October 2016

Understanding why the long-term unemployed have so much more trouble finding work is fundamental for characterising what happens during recessions. This column argues that rather than a change in the probability of any given unemployed individual finding a job, it was a change in the composition of people newly flowing into unemployment – which can arise for example from mismatch between idiosyncratic worker characteristics and available jobs – that was the key reason unemployment went so high and took so long to come down during the Great Recession.

Reamonn Lydon, Matija Lozej, 02 October 2016

The evolution of earnings over the business cycle has important implications for consumption and welfare. This column shows that the earnings of new hires in Ireland – and in particular, new hires with less valuable outside options – are substantially more flexible than those of incumbents during a recession. The results indicate that search and matching models that rely on the rigidity of wages of new hires to generate realistic volatility in job creation and unemployment may not be appropriate for strong business cycles.

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