Documents IZA 1 368 results

"Artificial intelligence (AI) is expected to reshape labor markets, yet causal evidence remains scarce. We exploit a novel Swedish subsidy program that encouraged small and mid-sized firms to adopt AI. Using a synthetic difference-in-differences design comparing awarded and non-awarded firms, we find that AI subsidies led to a sustained increase in job postings over five years, but with no statistically detectable change in employment. This pattern reflects hiring signals concentrated in AI occupations and white-collar roles. Our findings align with task-based models of automation, in which AI adoption reconfigures work and spurs demand for new skills, but hiring frictions and the need for complementary investments delay workforce expansion."

This work is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/).

"Research in Economics on COVID-19 posits an economy subject to disease dynamics, which are often seriously misspecified in terms of speed and scale. Using a social planner problem, we show that such misspecifications lead to misguided policy. Erroneously characterizing a relatively slow-moving disease engenders dramatically higher death tolls and excessive output loss relative to the correct benchmark. We delineate the latter, employing epidemiological evidence on the timescales of COVID-19 transmission and clinical progression. The resulting sound model is simple, transparent, and novel in Economics."

"In this paper, we examine the incidence of skill gaps among European employees. We identify the worker and firm level characteristics most commonly associated with skill gaps and investigate the extent to which this particular form of skill mismatch is associated with wage penalties. In 2021, we find that 16.2% of EU employees had essential and non-essential general skill gaps. The incidences for competency specific skill gaps were 29.5% for numeracy skills, 39.7% for technical skills and 49.4% for social skills. Among employees we find that general skill gaps were highly correlated with numeracy, social and technical skills gaps. The more complex the job, the higher the probability for workers to report having a general skill gap or a domain specific skill gap. We find no evidence that skill gaps are associated with negative productivity impacts (proxied by wages). We find that, where skill gaps exist, they are likely to be driven by workers motivated to keep pace with evolving requirements in more complex jobs. This is very different from the usual view of skill gaps as being concentrated among poorly educated workers in low value-added employment lacking essential skills."

"We consider the contribution of the intensive margin of labor supply (hours worked above zero) to the gender wage gap across four economies (Germany, France, US, UK) over a long time-horizon. We first build a model in which firms offer two wage contracts – one that pays a fixed wage but allows workers to choose their preferred number of hours up to “full time”, and a second in which wages are relative to imperfectly observable productivity but hours can be limitless. The former includes part- and full-time work, while the latter represents a class of workers who often must supply very long hours but who can then earn potentially unlimited remuneration. We then apply a Oaxaca decomposition for part-, full-, and over-time workers to observe the relative contribution of sorting and remuneration across these hours “regimes” over time and across countries. Through this, we show that while female employment in over-time work increased and the gender wage decreased, this was not driven by increasing selection but rather by a decrease in the unexplained portion of the wage gap over time. We conclude by considering the contribution of unions and labor market flexibility to these cross-country differences."

"All explorations of the future of the Euro show serious risks for its survival in the present form. The road map of the Five EU Presidents presented in 2015 is far from sufficient to reduce the risks of the Euro zone falling apart by Brexit type developments or new economic shocks. The EU Presidents rely too much on high international economic growth smoothing the convergence in labor productivity between EU member states, while the more likely low growth scenario shows a serious risk of the Euro?area falling apart in a chaotic way, through further divergence in labor productivity, through new Banking crises or through the popular vote in response to fiscal and labor market reform. The Presidents argue for strengthening the Banking union with an independent watchdog, with a single resolution mechanism for Bank defaults and for a European credit deposit insurance system. The support for these proposals is overwhelming. They also argue for more transfer of sovereignty on financial policy and for debt mutualisation (sharing of the risks of country debt among all EU countries). This is unlikely to happen, while at the same time the urgency for dealing with the drag imposed by the high debt levels of many EU countries on economic growth is high. We propose that the EU negotiates a New Deal between the highly indebted Euro countries and the other Euro countries. In this deal the trust is built that the richer countries agree on debt mutualization against the assurance of an automatic exit from the Euro area at non?compliance with the agreed (and simplified) rules."

"Using 18 waves of the British Household Panel Study, this paper examines state dependence and stepping stone effects of low pay. A distinguishing feature is that five types of transition- not in the labour force (NILF), unemployment, self-employment, low pay and higher pay are modelled separately. The results show that both state dependence and stepping stone effects of low pay are present. However, there is no evidence to support a low-pay no-pay cycle. The introduction of the national minimum wage does not appear to have affected state-dependence and stepping stone effects of low pay."

"In this paper we study the associations between educational policies, distributions of educational attainments and income distributions. By matching inequality measures on test scores, years of education and labour earnings by country, birth cohorts and gender, we show that inequality in education (measured both at quality and quantity levels) affect earnings inequality. We then consider potential endogeneity of educational distributions and we resort to instrumental estimation using information on government reforming activity in the field of education. By controlling for country-specific and time fixed effects, and by separating age and cohorts effects, we prove that educational inequality respond to educational reforms, identifying educational policies (like later entry into compulsory education or introduction of standardised tests) capable to reduce income inequalities thirty years later."

"Using administrative records data from Spanish Social Security, we analyse the pattern and the determinants of individual unemployment benefit spell durations. We compare a period of expansion (2005-2007) and the recent recession (2009-2011), allowing us to determine the impact of the current crisis. In line with the duality that characterizes the Spanish labour market, we distinguish between exits to a stable job and exits to an unstable job. We estimate a Multivariate Mixed Proportional Hazard Model for each time period. We find similar effects of the crisis for stable and unstable jobs, which are particularly strong in the first year of the spell. Moreover, slight negative duration dependence is found, especially for stable jobs in the expansion period until the time of unemployment benefit expires. Individuals who are most affected by the financial crisis tend to be males, those aged 16-24 and 40-51 years, those living in regions with higher unemployment rates, individuals who are less qualified or work in manual occupations (particularly construction) and immigrants."

"Measures of Active Labor Market Policy are widely used in European countries, but despite many econometric evaluation studies no conclusive cross-country evidence exists regarding "what program works for what target group under what (economic and institutional) circumstances?". This paper results from an extensive research project for the European Commission aimed at answering that question using a meta-analytical framework. The empirical results are surprisingly clear-cut: Rather than contextual factors such as labor market institutions or the business cycle, it is almost exclusively the program type that matters for program effectiveness. While direct employment programs in the public sector appear detrimental, wage subsidies and "Services and Sanctions" can be effective in increasing participants' employment probability."