How useful is work experience from the gig economy for labor market entrants searching for traditional wage jobs? We conducted a correspondence study in Sweden, comparing callback rates for recent high school graduates with (i) gig-experience, (ii) traditional experience, and (iii) unemployment history. We also study heterogeneous responses with respect to perceived foreign background. Our findings suggest that gig-experience is more valuable than unemployment, but less useful than traditional experience for majority applicants. Strikingly however, no form of labor market experience increases the callback rate for minority workers.
A recent literature has used surveys of those who set wages to learn about the nature of wage incentives and the sources of wage rigidity. Methodologically, we overcome many of the objections that have been raised against this work. Substantively, we find that: (i) the reasons for real wage rigidity differ significantly between large and small firms, and between the high- and low-end of the labor market; (ii) efficiency wage mechanisms reinforce rigidities due to worker bargaining power; (iii) money illusion is a widespread phenomenon across all segments of the labor market; (iv) unions reinforce nominal wage rigidities due to external pay comparisons; (v) there appears to be gender differences in pay bargaining and work morale.
Using a Difference-in-Differences approach, we evaluate the effects of a 10 percentage point reduction in the payroll tax introduced in 2002 in northern Sweden. We find no employment effects among firms existing both before and after the reform, whereas the average wage bill per employee increases by about 0.25% per percentage point reduction in the tax rate. Extending the analysis to include entry and exit of firms, we find evidence of positive effects on the number of firms and a tendency to positive employment effects. Moreover, the wage incidence estimates become insignificant when we account for entry and exit of firms.
We estimate the effects of conditioning benefits on program participation among older long-term unemployed workers. We exploit a Swedish reform which reduced UI duration from 90 to 60 weeks for a group of older unemployed workers in a setting where workers who exhausted their benefits received unchanged transfers if they agreed to participate in a work practice program. Our results show that job finding increased as a result of the shorter duration of passive benefits. The time profile of the job-finding effects suggests that the results are due to deterrence during the program-entry phase. We find no impact on ensuing job durations or wages, suggesting that the increased job-finding rate was driven by increased search intensity rather than lower reservation wages. A crude cost-benefit analysis suggests that the reform reduced the combined cost of programs and transfers.
In this paper we investigate the determinants of municipal labour demand in Sweden 1988–1995. Utilising a major grant reform in 1993, through which a switch from mainly targeted to mainly general central government grants occurred, we are able to identify which type of grants that have the largest effects on municipal employment. We find a larger municipal employment elasticity with respect to grants before the reform, which we interpret as evidence that general grants have less employment effects than specific ones. We further find a short run wage elasticity of approximately -0.5 and a long run ditto of approximately -0.9, and a quite sluggish adjustment process: only 60% of the desired change in municipal employment is implemented in the first year.
We estimate the effect of genetic variants that are associated with differences in cognitive and non -cognitive skills on labor market and education outcomes by linking genetic data from individuals in the Swedish Twin Registry to government registry data. Genes are fixed over the life cycle and genetic differences between full siblings are random, making it possible to establish the causal effects of within -family genetic variation. We show that polygenic indices associated with cognitive skills and personality traits significantly affect income, occupation, and educational attainment. By comparing estimates that use only within -family variation to OLS estimates with and without socioeconomic controls, our results also provide indications of the degree of (residual) confounding, which can be useful for research conducted in datasets that do not contain sibling pairs. Overall, our results indicate that education and labor market outcomes are partially the result of a genetic lottery.
This paper shows the results of a field experiment in which over 6000 fictitious resumes with randomly assigned information about age (35–70 years) were sent to Swedish employers with vacancies in low- and medium-skilled occupations. We find that the callback rate begins to fall substantially for workers in their early 40s and becomes very low for workers close to the retirement age. The decline in the callback rate by age is steeper for women than for men. Employer stereotypes about the ability to learn new tasks, flexibility, and ambition seem to be an important explanation for age discrimination.
Could differences in risk attitudes explain parts of the gender wage gap? We present estimates on the association between labor market outcomes and financial risk-taking using individual level administrative data on individual wealth portfolios and wage rates from year 2000, when high-quality wealth data were available in Sweden. The individual's share of risky to total financial assets is significantly and positively associated with the wage rate. However, it turns out that our risk measure explains only a small part of the observed gender difference in wages.
This study analyses whether the Swedish school choice reform, enacted in 1992, had differential effects for students from different socio-economic backgrounds. We use detailed geographical data on students' and schools' locations to construct measures of the degree of potential choice. This allows us to study the effects of choice opportunities among public schools, whereas previous studies have focused on newly opened private schools. Our results indicate that students from a socio-economically disadvantaged or immigrant background did not benefit less from more school choice than those from more advantaged backgrounds. If anything, students from low-income families benefited slightly more than those from higher-income families. However, the differences between groups of students are very small, as are the overall effects of the reform.
This study tests for forward-looking moral hazard in the sickness insurance system by exploiting a 1991 reform in Sweden. The replacement rate was reduced for short absences but not for long absences, which introduced a potential future cost of returning to work. Using this exogenous variation in the replacement rate and controlling for dynamic selection, we find that the potential future cost of returning to work decreased the outflow from long-term sickness absence. This finding suggests that long-term sickness absentees respond to economic incentives and are forward-looking, which highlights the importance of taking forward-looking behavior into account when designing and evaluating social insurance programs.
Using Danish linked employer-employee data, this study examines the importance of access to higher-paying firms in the wage assimilation process among immigrants during their 25-year tenure in Denmark. Upon their arrival, immigrant workers in Denmark earn substantially lower wages than their native counterparts. However, this wage gap diminishes rapidly within the first 5-10 years, particularly among more disadvantaged immigrant groups (non-OECD and female immigrants). Immigrants who enter the labour market early have higher earnings capacity than those who enter later, but this trend reverses after 15 years. The transition to higher-paying firms constitutes a crucial factor in wage assimilation during the initial 5 years, yet it does not account for wage growth beyond this period. Additionally, this study offers suggestive evidence that Danish firms' wage policies vary based on the duration since migration, and these differences significantly contribute to the wage assimilation process.
This article introduces the Special Issue on "Technology and the Labor Market ". We summarize the included articles and offer some lessons for policy and future research. The articles cover central issues such as how technology changes the nature of labor demand, the impact of technology on individual workers, the role of policy, as well as emerging phenomena such as Artificial Intelligence and the "Gig " economy.
We study the effects of introducing a performance-based promotion program for teachers in Sweden. The pro-gram intended to make the teaching profession more attractive by raising wages for skilled teachers and taking advantage of teachers' professional competence. Our results show that: (i) high-wage teachers are more likely to be promoted; (ii) the stipulated wage increase has full pass-through onto wages for promoted teachers; (iii) schools with promotions have lower teacher separations and an improved pool of teachers. These results suggest that performance-based promotions could be an important tool for raising teacher quality.
We document a substantial decline in cognitive and social interactive abilities and in GPAs among entering teachers. Then, using matched student-teacher data, we find that teacher abilities have a negligible impact on average student achievement This finding hides interesting heterogeneities. In particular, an increase in teachers' cognitive (social) abilities increases (reduces) the achievement gap between high- and low-aptitude students. Teacher cognitive and social abilities further appear to be complements. We also find strong positive effects of male teachers' GPAs that are uniform across students, but similar effects are not found for female teachers' GPAs.
This paper investigates how firms respond to a more generous insurance against high sick pay costs. We exploit a reform that introduced different thresholds for insurance reimbursement depending on firm size. By comparing employees in smaller firms with employees in large firms over time, we evaluate the effects of the reform. We find evidence of an increase in absence in middle-sized firms (an average 42 employees) but not in smaller firms. Our results suggest that this discrepancy may be due to the higher production costs associated with absences in smaller firms. The estimated positive effect in middle-sized firms is driven by new hires. These employees are not selected differently, but the probability of separation the following year is lower if they have reported sick. This suggests that the generosity of the insurance affected the probability of separation related to revealed absence.
We study the effects of screening stringency in the Swedish sickness insurance system by exploiting a field experiment. The experiment was conducted on 270,000 individuals in two geographical areas with the treatment group randomized by date of birth. The screening of eligibility was reduced for the treated by the postponement of the requirement for a doctor's certificate from day eight to day fifteen in a sickness benefit spell. The results show that extending the waiting period increased the length of sickness absence by on average 0.6 days. The experiment increased sickness benefit expenses but reduced the number of visits to a doctor. Our results show that postponing the requirement for a doctor's certificate increases public expenses for the sickness insurance system.
Using population-wide data on a vector of cognitive abilities and productive non-cognitive traits among Swedish male workers, we show that occupational employment growth has been monotonically skill-biased in terms of these intellectual skills, despite a simultaneous (polarizing) decline in middle-wage jobs. Employees in grow-ing low-wage occupations have more of these skills than employees in other low-wage occupations. Conversely, employees in declining, routine-task intensive, mid-wage occupations have comparably little of these skills. Em-ployees in occupations that have grown relative to other occupations with similar wages have more intellectual skills overall but are particularly well-endowed with the non-cognitive trait "Social Maturity " and cognitive abil-ities in the "Technical " and "Verbal " domains. Projections from the US Bureau of Labor Statistics about future occupational labor demand do not indicate that the relationship between employment growth and skills is about to change in the near future.
The past couple of decades have seen a huge increase in research on various labor market institutions. This paper offers a brief overview and discussion of research on the labor market impacts of minimum wages (MW), unemployment insurance (UI), and employment protection legislation (EPL). It is argued that research on UI is largely a success story, involving a fruitful interplay between search theory and empirical work. This research has established that UI matters for labor market behavior, in particular the duration of unemployment, although there remains substantial uncertainty about the magnitudes of the effects. The research on MW should have shaken economists' belief in the competitive labor market model as a result of frequent failures to find noticeable employment effects despite considerable effects on wages. EPL research has established that employment protection reduces labor and job turnover but the jury is still out regarding the impact on overall employment and productivity.
Previous research from the U.S. has suggested that black-white interaction in school can reduce prejudice and increase the prevalence of interracial relationships. We test whether this result holds also for natives and immi-grants in Europe - groups whose interaction is plausibly more constrained by religious and cultural differences. Specifically, we study whether exposure to immigrant origin peers in school affects natives' probability to have a child with a partner with non-Western background. Identification is based on variation in immigrant exposure across cohorts within schools in Sweden. We find that natives are affected by exposure to opposite-sex peers: native girls (boys) are more likely to have a child with a partner with non-Western background when exposed to immigrant origin boys (girls). In contrast to previous studies, we find no effects from same-sex peer exposure.
I estimate effects of the labor market training program “Swit” on employment using both register and survey data. Swit was initiated in an attempt to increase the supply of qualified personnel in the IT sector. Based on the register data I find a large positive effect from the Swit on employment as compared to conventional programs directed towards IT. By also using survey information I conclude that the effect was due to increased employer contacts. The result is of interest because of the relatively large effect especially for individuals with traditionally weak positions on the labor market. Furthermore, I methodologically demonstrate how information about the contents of the programs may corroborate findings based on conditional independence assumptions.
This article investigates the effects of school closures on student achievement. In contrast to previous studies that have primarily analyzed displaced students, this study also takes into account subsequent cohorts who would have attended the closed schools had they remained open. Furthermore, the study is one of the first of its kind outside the US and utilizes more detailed registry data on school quality than previous studies. The effects are investigated through a quasiexperimental study of all public middle school closures in Sweden from 2000 to 2012 utilizing family fixed effects. The results suggest that overall, the closures had no effects on student achievement. Contrary to theoretical expectations, the effects on subsequent cohorts were similar to the effects on displaced students, and the extensive Swedish school voucher system did not seem to direct displaced students to higher-quality schools.
We exploit a sharp birthday discontinuity in a large and universal Swedish cash transfer program, creating plausibly exogenous variation in the default disbursement option, while holding entitlements and other financial incentives constant. When the cash transfer is paid out to the mother by default, instead of a 50/50 default, it has a large effect (55 percentage points) on the probability that the transfer is deposited in the mother's bank account also in the long run. Surprisingly, we find that the default policy redistributes resources to separated low-income mothers. We find no indications that the 100%-to-the-mother default induces mothers to work less or to take more responsibility for the children.
This paper studies how targeted wage subsidies affect the performance of the recruiting firms. Using Swedish administrative data from the period 1998-2008, we show that treated firms substantially outperform other recruiting firms after hiring through subsidies, despite identical pre-treatment performance levels and trends in a wide set of key dimensions. The pattern is less clear from 2007 onwards, after a reform removed the involvement of caseworkers from the subsidy approval process. Overall, our results suggest that targeted employment subsidies can have large positive effects on post-match outcomes of the hiring firms, at least if the policy environment allows for pre-screening by caseworkers.
Exploiting exogenous variation in childcare prices stemming from a childcare price reform, this paper estimates effects of reductions in childcare costs on female labour supply. The reform introduced a cap on childcare prices, and lead to considerable reductions in prices depending on family type and region of residence. Since the price is determined by a handful of observed characteristics, we are able to match households that are similar in all relevant aspects, but experienced quite different price changes. Our difference-in-differences regression matching estimates are very precise, and close to zero.
In labor markets with worker and firm heterogeneity, the matching between firms and workers may be assortative, meaning that the most productive workers and firms team up. We investigate this with longitudinal population-wide matched employer-employee data from Portugal. Using panel data methods, we quantify a firm-specific productivity term for each firm, and we relate this to the skill distribution of workers in the firm. We find that there is positive assortative matching, in particular among long-lived firms. Using skill-specific estimates of an index of search frictions, we find that the results can only to a small extent be explained by heterogeneity of search frictions across worker skill groups.
We study the consequences of mothers' and fathers' job loss for parents, families, and children. Rich Swedish administrative data allow us to identify workplace closures and account for non-random selection of displaced workers. Our main conclusion is that effects on children are limited, although parents and families are negatively affected in terms of parental health, labour market outcomes and separations. We find no effects of parental job loss on childhood health. While educational and early adult outcomes are unaffected by paternal job loss, we find small negative effects of maternal job loss, which contradicts some of the earlier evidence. Limited effects on family disposable income suggest that welfare institutions successfully insure families, in particular, those with low income, thus protecting the family environment. A dual earner norm and strong incentives for female labour supply may contribute to the absence of positive effects of maternal job loss.
The paper studies the impact on actual hours worked and hourly wages of a 5% reduction in working-time for one class of shift workers in Sweden using individual level panel data from employers' payroll records during the second quarter of each year. The main results are that actual hours only declined by approximately 35% of the reduction in standard hours, while hourly wages rose sharply—almost enough to leave monthly wages unaffected. Much larger effects on hours are found when studying the effects of the employees' locally determined scheduled hours. This indicates that a low rate of actual implementation may account for the limited impact on actual hours and suggests that using variation in self-reported, rather than contractual, standard hours may have biased the results of previous studies.
Displacement is expected to decrease the reservation wage of self-employment by decreasing earnings in paid employment and increasing the probability of unemployment. This paper examines whether displacement increases the probability of self-employment using propensity score matching on Swedish register-based data. The data include all individuals displaced due to plant closures in 1987 and 1988, and a random sample of 200,000 employed individuals. The results suggest that displacement almost doubles the probability of entering self-employment the year after displacement. A sub-sample analysis indicates that individuals with a potentially worse position on the labor market react more strongly to displacement in terms of entering self-employment.
We investigate the role of information about tax incentives for the labour-leisure choice. We randomize 37,000 leaflets about the Swedish EITC, and then study the effects with pre-registered analyses and administrative data. Our focus is on the household decision to allocate between labour income and parental leave payments. The EITC and its interactions with the parental leave system is not well-known. Despite the substantial incentives involved, and the flexibility with which a person may earn labour income, we find that information about the EITC has a precisely estimated zero impact on labour supply on the extensive and the intensive margin.
Analysing a reform in the Swedish public sickness insurance, we find that an increased replacement rate for one spouse has a negative cross effect on the other spouse's labour supply. The cross effects are present in the labour supply margins that workers can easily adjust. For wives of treated husbands, the total number of sick days increases on average 9.1% per month, whereas labour earnings are unchanged. The cross effect on total sick days for husbands to treated wives is 6.1% on average, with no effect on annual labour earnings. The total number of sick days and annual labour earnings for treated spouses are estimated to be unaffected by the reform, which indicates that the cross effects stem specifically from higher insurance coverage for the couples.
Using a regression discontinuity design, I evaluate an internationally unique policy in Sweden that rewarded equal division of parental leave with a cash bonus. The policy caused a small but significant reduction in the difference in days of leave between the parents. But since parent couples responded in different directions depending on the gender of the person with the lower uptake, the average effect on the mother-father difference in uptake was insignificant. Expectedly, given this result, the bonus did not affect average gender differences in earnings or indicators of later childcare responsibility. However, mothers who lowered their uptake of parental leave in response to the bonus displayed positive point estimates with regard to earnings while mothers who increased their uptake displayed negative estimates. This indicates that we cannot rule out a potential link between the length of parental leave and later allocation of time between home and market production. While the bonus did not affect average gender differences in parental leave and earnings, a key finding is that parents' division of parental leave can be affected by economic incentives, suggesting that better calibrated bonus programs have potential to be useful policy tools.
Children's learning environments are becoming increasingly technologically advanced. Many schools today provide a personal computer to each pupil for use both in the classroom and at home. We investigate how such 1:1-programs affect school performance in lower secondary school. By surveying schools in 26 Swedish municipalities regarding the implementation of 1:1-programs and combining this information with rich administrative data, we estimate the impact on educational outcomes using a difference-in-differences design. We find no effect on average performance on standardized tests in mathematics or language, nor on upper secondary school enrollment. However, 1:1-initiatives seem to increase inequality by worsening the performance among low-SES students.
Employment and wage subsidies are used to combat long-term unemployment, yet there is little research to guide the design of such programs. Discontinuities and changes in the design and implementation of wage subsidies under the Swedish New Start Jobs-policy allow us to study effects of both subsidy rate and subsidy duration. We find that wage subsidies have substantial effect on job-finding rates for those eligible. The effect is stronger for larger subsidies and more than doubles as the length of the subsidy doubles. Although employment drops as subsidies expire, the probability of being employed remains higher for workers finding subsidized employment also after the expiry of the employment subsidies.
The paper studies the impact on actual hours worked and hourly wages of a 5% reduction in working-time for one class of shift workers in Sweden using individual level panel data from employers' payroll records during the second quarter of each year. The main results are that actual hours only declined by approximately 35% of the reduction in standard hours, while hourly wages rose sharply-almost enough to leave monthly wages unaffected. Much larger effects on hours are found when studying the effects of the employees' locally determined scheduled hours. This indicates that a low rate of actual implementation may account for the limited impact on actual hours and suggests that using variation in self-reported, rather than contractual, standard hours may have biased the results of previous studies. (C) 2003 Elsevier B.V. All rights reserved.
We examine whether economic downturns are beneficial to health outcomes of newborn infants in developed countries. For this we use merged population-wide registers on health and economic and demographic variables, including the national medical birth register and intergenerational link registers from Sweden covering 1992-2004. We take a rigorous econometric approach that exploits regional variation in unemployment and compares babies born to the same parents so as to deal with possible selective fertility based on labour market conditions. We find that downturns are beneficial; an increase in the unemployment rate during pregnancy reduces the probability of having a birth weight less than 1500 grams or of dying within 28 days of birth. Effects are larger in low socio-economic status households. Health improvements cannot be attributed to the parents' own employment status. Instead, the results suggest other pathways triggered by the economic cycle.
We aim to test whether the degree of informational search frictions in the labor market has a negative effect on wages. In a range of equilibrium search models of the labor market, this effect is predicted to be negative. Nevertheless, this has never been tested. We perform tests with matched worker-firm data. The worker data are informative on individual wages and labor market transitions, and this allows for estimation of the degree of search frictions. The firm data are informative on labor productivity. This allows us to investigate how the mean difference between labor productivity and wages in a market depends on the degree of frictions and other determinants, and to assess the quantitative relevance of frictions for wages.
This paper considers treatment evaluation in a discrete time setting in which treatment can start at any point in time. We consider evaluation under unconfoundedness and propose a dynamic inverse probability weighting estimator. A typical application is an active labor market program that can start after any elapsed unemployment duration. The identification and estimation results concern both cases with one single treatment as well as sequences of programs. The new estimator is applied to Swedish data on participants in a training program and a work practice program. The work practice program increases re-employment rates. Most sequences of the two programs are inefficient when compared to one single program episode.
We re-analyze the effects of a Danish active labor market programme social experiment, which included a range of sub-treatments, including meetings with caseworkers, job search assistance courses, and activation programmes. We use newly developed non-parametric methods to examine how the effects of the experimental treatment vary during the unemployment spell. Non-parametric techniques are important from a methodological point of view, since parametric/distributional assumptions are in conflict with the concept of experimental evidence. We find that the effects of the experiment vary substantially during the unemployment spell.
In this paper we investigate whether a relaxation in seniority rules (the "last-in-first-out" principle) had any effect on firms' employment behaviour. Seniority rules exist in several countries, but consequences of seniority rules on firms' employment behaviour have not been examined previously. The "last-in-first-out" principle in Sweden was reformed in January 2001 such that employers with ten or fewer employees were allowed to exempt two workers from the seniority rule. Using an employer-employee unbalanced panel data for the period 1996-2005, we find that both hires and separations increased in small firms relative to large firms by 5%. This also implies that there were no effects on firms' net employment. Our results show that firms reacted to changes in the seniority rules, but we argue that the effects are not overwhelmingly large.
We study how age at migration affects social integration in adulthood. Using Swedish register data, we estimate the effects of age at migration by comparing siblings arriving (as children) at the same time, but at different ages. Migrants who were older when they arrived are less likely to live close to, work with, and marry natives. We also study 2nd generation immigrants and show that parental time in the host country has similar (although somewhat weaker) effects for this group. The effects do not appear to be propagated through socioeconomic status. Instead, preferences or cultural identities appear as key mechanisms.
We study the impact of family size on intermediate and long-term outcomes using twin births as an exogenous source of variation in family size in an unusually rich dataset. Similar to recent studies, we find no evidence of a causal effect on long-term outcomes and show that not taking selection effects into account will likely overstate the effects. We do, however, find a small but significant negative impact of family size on grades in compulsory and secondary school among children who are likely to be vulnerable to further restrictions on parental investments.
We study the impact on long and short run criminal behavior from a large scale Swedish reform of vocational upper secondary education, extending programs and adding more general theoretical content. The reform directly concerns age groups where criminal activity is high and individuals who are overrepresented among criminal offenders. Using detailed administrative data we show that the reform led to a reduction in property crime, but no significant decrease in violent crime. The effect is mainly concentrated to the third year after enrollment, which suggests that being in school reduces the opportunities and/or inclinations to commit crime.
The retirement behavior of immigrants has received limited attention, despite many countries seeing rising immigrant shares in their aging populations. Population-wide data for Sweden reveals that the retirement hazard rate is higher among immigrants as early as age 50. Approaching age 65, marginal migrant groups are instead more likely to remain in the labor force rather than conform to retirement age norms. While education and family circumstances explain little of these retirement gaps, labor market history, health, and occupation are important determinants. Immigrant-native differences are more pronounced among men than women. Findings suggest that economic necessity or opportunity, rather than varying preferences, are the driving factors behind the observed retirement disparities.