IZA Newsroom

IZA – Institute of Labor Economics

briq/IZA Workshop on Behavioral Economics of Education

by

Can behavioral insights be used to shape educational decision-making and student achievement? How should we design education policy, teacher incentives or interventions to address the shortcomings in decision-making by parents, students and teachers? To answer these questions, the briq/IZA Workshop on Behavioral Economics of Education brought together 26 researchers in Bonn to present their work.

Feedback on teacher performance

The first presentation of the workshop ,“Repeated Praise – Evidence from a Field Experiment”, studies how providing teachers with relative performance feedback affects changes in teaching effectiveness. Maria Cotofan shows that teachers who receive repeated recognition of their work become better at preparing students for centralized exams. The study suggests that such feedback could be an effective policy tool to raise student performance.

Mentoring programs for children

The paper “(In)Equality of Opportunity, Mentoring, and Critical Educational Decisions”, presented by Armin Falk, shows that parental education is a key determinant of educational success and that intergenerational educational mobility is particularly low in Germany. According to the study, a one-year child mentoring intervention effectively increases equality of opportunity. Children from disadvantaged family backgrounds especially benefit from the mentoring intervention and become more likely to attend the academic high school track (Gymnasium) in Germany. The paper highlights that educational careers are malleable and that the social environment can have lasting effects on student lives.

Female math teachers as role models

Alex Eble presented his paper “Stereotypes, role models, and the formation of beliefs”, which establishes that girls in Chinese middle schools perform better when having a female math teacher. He shows that this effect can be explained by changes in beliefs and aspirations as well as parental investments. Given that women remain underrepresented in math-intensive subjects, this research suggests that gender equality could be increased by providing girls with same-gender role models.

Fourth Annual IZA Junior/Senior Symposium held in Austin, Texas

by

Reflecting IZA’s mission to provide mentoring and guidance to young labor economists, this symposium gave four scholars located at European/Middle Eastern universities and five located in North America the opportunity to present and discuss their current work. Organizers Andrea Ichino and Daniel S. Hamermesh had to choose from among over 100 submissions. Two of the papers are summarized below.

Role models in STEM fields

In his co-authored paper “Female Science Advisors and the STEM Gender Gap”, Pierre Mouganie (American University of Beirut) analyzed the results of an experiment at one university in which first-year students were randomly assigned to advisors. Female students who had female advisors were more likely than other women to choose to major in STEM fields; they were more likely to graduate; and their performance in science courses was better.  The results suggest that role models play an important part in reducing female-male disparities in entrance to and performance in science fields.

Publication bias in labor economics

Abel Brodeur (University of Ottawa), in “Methods Matter: P-Hacking and Causal Inference in Economics”, examined all empirical studies published in 25 leading journals in 2015. The purpose was to see how methods designed to vitiate endogeneity differ in their implicit publication bias—in the extent to which tests of statistical significance depart from what would be expected in the absence of selective publication. The study demonstrates that double-difference and instrumental variables methods are much more subject to publication bias and to “p-hacking” than those using regression discontinuity designs or randomized controlled trials. The results raise concern about both methodology and the validity of large numbers of recent research results in labor economics.

Download all the presented papers from the symposium’s online program.

IZA Fellow Alan Krueger passes away

by

With profound shock and sadness we announce the passing at age 58 of Alan B. Krueger, IZA Research Fellow and co-winner in 2006 of the IZA Prize in Labor Economics.

Alan spent his academic career at Princeton University, most recently as the James Madison Professor of Political Economy. His all-too-short time was studded with fundamental contributions to a variety of central topics in our sub-specialty, including the minimum wage, the economics of education and others.

His public career included service as Assistant Secretary of the Treasury and as Chair of the President’s Council of Economic Advisors.

His newest book, Rockonomics, will be published by Random House later this year and illustrates the tremendous breadth of Alan’s interests and the depth of his scholarship.

Read the full obituary from Princeton University.

Boundaries betweeen work and leisure are blurring in both directions

by

Employees in Germany devote more than six hours per week to job-related activities outside their regular working hours. On the other hand, they spend an average of over four hours tending to private matters while at work. These are the key findings of a nationally representative survey conducted by IZA in cooperation with XING among 1,859 employees aged 25 to 54.

While digitalization creates new flexibility in terms of home office and remote working, the boundaries of work and leisure continue to dissolve. About 64 percent of the respondents stated that they spend some of their leisure time on professional activities, such as responding to office e-mails or reading business literature. Four out of ten employees spend more than two unpaid hours a week on job-related tasks.

Conversely, two-thirds of respondents said they also engage in non-work activities, such as online shopping or private e-mails, during their working hours. Around 36 percent spend more than two hours of their workweek on private matters. Overall, working after hours from home and doing private things at work roughly balances out for about half of the respondents. Mixing work and leisure, in either of these ways, is more prevalent among male employees and younger workers under age 35.

Presenting the findings at the “New Work Experience” congress in Hamburg, Hilmar Schneider pointed out that overtime work is becoming increasingly difficult to define and measure. “In the digital world of work, the trend is towards trust-based working hours, but also towards lump-sum overtime pay,” says Schneider.

For more details on the IZA/XING survey, see the German version.

The platform economy in Germany

by

The emergence of the gig or platform economy is one of the hottest topics in the context of digitalization and the future of work. While it is often regarded as an opportunity for people to enter the labor force, or to work more independently from daily routines, “crowdwork” and other forms of platform labor are also associated with the strategic circumvention of existing labor laws and the misuse of social security systems.

A new IZA Research Report provides an overview on recent trends in the platform economy in Germany, with a special focus on its challenges for social dialogue institutions. The report concludes a two-year research project “IRSDACE – Industrial Relations and Social Dialogue in the Age of Collaborative Economy” covering seven EU member states. Funded by the European Commission – DG Employment the research was carried out by:

  • CEPS – Center for European Policy Studies, Brussels, Belgium (project lead)
  • CELSI – Central European Labour Studies Institute, Bratislava, Slovakia
  • FA – Fundacion Alternativas, Madrid, Spain
  • FAOS – University Copenhagen, Copenhagen, Denmark
  • IZA – Institute of Labor Economics, Bonn, Germany

The rapidly mutating platform economy in Germany (and elsewhere) was initially driven by firms created by young, highly skilled entrepreneurs with a strong affinity for technology but often little intimate knowledge of the markets they entered. This might explain a large part of the initial frictions with social partners. Along with German trade unions beginning to address the new target group of crowdworkers, some platform owners started to organize employer federations and committed themselves to minimum labor standards (code of conduct) while others still neglect regulation as they view their firms merely as a technological service “platform” to match demand and supply.

From a policy perspective, there are strong calls for stricter regulation to avoid precarious employment and give crowdworkers access to regular social security. Reliable data is scarce, however, which makes it difficult to assess the actual scope of platform work and creates some uncertainty about its future development.

Invited by IZA, representatives from academic science, trade unions, and platform owners discussed their insights during a workshop in Bonn. In line with the conclusion of the IZA Research Report, it was argued that the relatively small size and importance of the platform economy in Germany may be due to robust labor market conditions and a tight regulatory environment. However, the experts also agreed that it is still too early to predict the future of the platform economy.

Ten years after the financial crisis

by

The impact of the financial crisis and the Great Recession on post-transition and emerging economies has varied tremendously. Some economies experienced very large recessionary shocks with long-lasting effects for the labor market, human capital formation and growth, while others benefited from policy efforts and an economic structure that alleviated negative labor market effects.

An IZA workshop jointly organized with the Higher School of Economics in Moscow took stock of labor market performance and adjustment in post-transition and emerging economies nearly ten years after the Great Recession.

Earnings inequality

In their study  “Winners and Losers After 25 Years of Transition: The Case of Slovenia”, Peter F. Orazem and co-authors review the gains to education, work experience and gender over 25 years of transition from plan to market using data on the universe of all workers in Slovenia over the period 1991–2015. They find that rates of return to education and work experience rose and remained high on average. However, the rapid expansion of tertiary education resulted in declining returns to schooling among the youngest cohorts of college graduates. The resulting decrease in earnings inequality across schooling groups among the young has been sufficient to lower overall wage inequality in Slovenia, unlike the typical rising wage inequality commonly observed in market economies since the 1990s.

Trade liberalization

The paper co-authored by Feicheng Wang on “Labor Market Reform, Firm-level Employment Adjustment and Trade Liberalization” empirically investigates whether the nature of firm-level employment adjustment is affected by the flexibility of the labor market and by an exposure to trade liberalization. It takes advantage of differences in local labor market conditions created by the non-uniform implementation of hukou reform in China to identify the employment effects of the reform. The results show that firms exposed to the hukou reform have higher employment adjustment rates on average than similar firms without reform, indicating that the labor market reform allowed more employment adjustment. Moreover, firms respond to trade shocks by adjusting employment relatively more in the presence of hukou reform. These findings offer important policy implications to the current labor market reform in China and to other developing countries with inflexible labor markets.

Minimum wages

In her paper “Do Minimum Wages Matter for Earnings Inequality? Evidence from Large Increases of Minimum Wage in Russia (2005-2017)”, Anna Lukyanova notes that little empirical work has been done on the effects of minimum wages in transition economies, where labor market institutions experienced rapid changes over the last decades. This paper presents empirical evidence on minimum wage effects for Russia, the largest transition economy. It uses regional variation in the relative level of the federal minimum wage to identify the impact of a large increase in the real value of the minimum wage on the distribution of wages in Russia between 2005 and 2015. The analysis suggests that the minimum wage can account for the bulk of the decline in the lower tail inequality, particularly for females.

The other presentations covered issues from labor supply and wage inequality to political economy aspects of the labor market (papers listed below, presenters named first).

Matching workers and jobs online

by

Market transactions, including the labor market, take place online because information and communications technology naturally optimizes the main purpose of markets: the matching of supply and demand. At the same time, it seamlessly documents these transactions so that studying and understanding markets depends heavily on access to such transaction data.

How to leverage the internet as a data source of social science, and labor economics in particular, is the main research mission of IDSC, IZA’s research data center.

Organized by Nikos Askitas and Peter Kuhn, a two-day workshop brought together economists and computer scientists from academia and practice to showcase research with data from internet job boards, one of the main modes of matching facilitation in labor markets worldwide today.

Experimenting with job boards

Online job boards can be used to perform randomized controlled trials (RCT) in a cost-efficient manner. RCTs are among the most rigorous methods to measure the control of an intervention in the labor market setting by using placebo and control groups to improve measurement accuracy and reliability. Keynote speaker Michèle Belot and Robert Mahlstedt presented papers with RCTs involving the UK Universal Jobmatch website and Jobnet, the public website for all jobseekers and employers in Denmark, respectively. The first paper redesigned the standard job search web interface by providing tailored advice and measuring the effect of the intervention while the latter designed online tools aimed at improving the understanding, by the unemployed, of the 2017 unemployment benefits reform in Denmark.

Signaling in the hiring process

When firms hire they have a horizontal and a vertical dimension along which to search for workers. The horizontal dimension involves the various skills required while the vertical dimension involves the quality of the worker they are seeking. While, when involving hard skills, the horizontal dimension is straight forward the vertical is harder to get a handle on. John Horton worked with data from job board oDesk (now part of upwork) to investigate whether or not matching between workers and firms is improved both in terms of efficiency (number of applications until match occurs) and in terms of quality (hours worked after match occurred) if employers signal along the vertical dimension the level they are willing to hire (i.e. by revealing they are seeking Entry Level, Intermediate or Expert quality). The paper finds this to be the case particularly for the lower end of the spectrum.

Corporate culture and firm performance

Stefan Pasch web scraped 550,000 employee reviews of a number of firms from glassdoor.com and using text analysis techniques constructed a measure of corporate culture for each firm. He then showed that “firms that differ strongly from the average culture of their industry show worse firm performance, supporting the hypothesis that a culture should fit to its business environment.” Moreover, he finds that “suboptimal culture choices can be partly explained by CEO characteristics, while regional culture only plays a minor role.”

Finally, besides a number of other interesting presentations and consistent with the workshop’s aim to bring academics and practitioners together, noteworthy research and data were presented by Bledi Taska (Burning Glass Technologies), Kristin Keveloh (LinkedIn) and Martha Gimbel (Indeed Hiring Lab).

For a list of all presented papers, see the workshop program. The second issue of this workshop will take place on September 21-22, 2019, in Bochum, Germany, in cooperation with the Center for Advanced Internet Studies.

15th IZA Annual Migration Meeting held at Harvard Kennedy School

by

Going into its 15th edition, this year’s IZA Annual Migration Meeting was hosted by the Harvard Kennedy School. Organized by Benjamin Elsner and George J. Borjas, the meeting brought together 20 researchers whose work covered a large variety of topics in international migration, such as the integration of refugees, the role of smugglers, the impact of migration on labor markets, or the impact of remittances on the sending communities.

Border deterrence

A highlight of this year’s meeting was the keynote by Gordon Hanson, who presented his latest work  on the impact of sanctions against illegal immigrants at the U.S.-Mexican border. Since the mid-2000s, the U.S. Border Patrol has introduced tougher sanctions for migrants who were apprehended at the border, such as prompt deportations (the so-called Alien Transfer Exit Program) or mass sentencing in temporary courts. Hanson and his team estimate that these measures reduced the likelihood of a further apprehension by 8.5 percentage points relative to an initial rate of 26%. This suggests that the sanctions achieve their goal to reduce the number of illegal entries into the United States.

Migration costs

Research presented by Mariapia Mendola sheds light on the importance of migration barriers in the decision to migrate. Her co-authored work exploits the opening and closing of the Central Mediterranean Route from Libya to Italy and investigates its impact on the migration intentions of people in Sub-Saharan Africa. The opening of this route in 2011 significantly shortened the travel time and increased the likelihood of a successful arrival in Europe. Based on survey data from all over Africa, she finds that the opening of the route significantly increased young people’s intention to migrate, while the effect was reversed when the route was closed six years later. This suggests that migration costs can be an important deterrent for migration from Africa.

Benefits of DACA

Two papers discussed the implications of DACA (Deferred Action for Childhood Arrivals), a program that has come under much criticism under the Trump administration. This program grants illegal immigrants who came to the US as children the possibility to work legally for two years, along with the possibility of obtaining regular medical treatment. The paper presented by Jakub Lonsky investigates the effect of DACA on the health of migrants. The authors show that migrants eligible for DACA are more likely to seek treatment early when a condition is developed, resulting in better health. A second paper presented by Na’ama Shenhav finds that young migrants who are eligible for DACA delay their entry into the labor market and rather invest in education. Both papers provide compelling evidence that DACA is very beneficial for migrants in the US while being a fairly cheap program.

Labor productivity and the digital economy

by

How do digitalization and automation affect labor productivity and the functioning of labor markets in general? The impact of new technologies, one of the key questions regarding the future of work, was at the focus of the second annual workshop of the IZA program area “Labor in the Macroeconomy” jointly organized with the OECD. Continuing the successful cooperation between both institutions, 18 researchers presented their work.

Keynote speeches were given by Jens Suedekum (pictured on the right) and Juan F. Jimeno, who discussed the empirical effects of robots on the evolution of German local labor markets and their theoretical impact on macroeconomic growth and distribution, respectively.

Felix Koenig presented his paper “Superstar Earners and Market Size: Evidence from the Entertainment Industry.” Exploiting the roll-out of television in the US in the post-war years as a quasi-experiment, he documents the substantial effect of entertainers’ earnings from this sudden increase in market size. The estimates imply that a doubling of the market size increases top incomes by about 10%, providing new evidence on the magnitude of the superstar effect that has been difficult to measure to date.

In “The UK Education Expansion and Technological change,” Wenchao Jin and her co-authors seek to explain the fact that despite tremendous educational expansion, UK graduate wage premiums remained largely unchanged across cohorts. They isolate different organizational firm structures as a potential explanation, rejecting several alternatives. According to this theory, firms in the UK adapted by altering their organizational structures towards less centralized firms, which are better suited to a well-educated workforce.

Duncan Roth presented the paper “Routine Tasks and Recovery from Mass Layoffs” on the long-term costs of job loss by an occupation’s degree of routine density. The authors find that workers in routine-intensive occupations suffer stronger negative effects on earnings and re-entry probabilities. This might be explained by loss of human capital in routine-intensive occupations.

Download all the presented papers below (presenting authors mentioned first).

Third Annual IZA Junior/Senior Symposium held in Bonn

by

This symposium brought together young European and American labor economists (five each from a set of 80 people who had submitted articles) to present their work and discuss each other’s papers under the guidance of two senior labor economists, Simon Burgess and Daniel S. Hamermesh. In line with IZA’s mission, each paper not only advanced scholarship but also provided implications for policy.

Resumes and the truth

For their paper “Employer Learning, Labor Market Signaling and the Value of College: Evidence from Resumes and the Truth,” Daniel Kreisman and his co-authors linked resumés from applicants at a job website to national U.S. data on people’s college attendance and graduation. The article shows that many job applicants omit their experiences at colleges and universities where they did not obtain a degree. These omissions suggest that the widely disseminated estimates of the returns to additional education are error-ridden, since the underlying measures of education are themselves error-ridden.

Longer working horizon

Francesca Carta presented her co-authored work on “The Effect of a Longer Working Horizon on Individual and Family Labour Supply.” The study examines how a sudden and substantial increase in the pensionable age in Italy altered older Italians’ attachment to the work force. The results confirm that raising the retirement age induces a big increase in the number of older people still working/not retiring, with the largest increase among those who previously would have been able to retire.

Download all the presented papers below (presenting authors mentioned first).