Research in Labor Economics: Volume 33

How individuals allocate their time between work and leisure has important implications regarding worker well-being. For example, more time at work means a greater return to human capital and a greater proclivity to seek more training opportunities. At the same time, hours spent at work decrease leisure and depend on one's home environment (including parental background), health, past migration, and government policies. In short, worker well-being depends on trade-offs and is influenced by public policy. These decisions entail time allocation, effort, human capital investment, health, and migration, among other choices. This volume considers worker well-being from the vantage of each of these alternatives. It contains ten chapters. The first three are on time allocation and work behavior, the next three on aspects of risk in the earnings process, the next two on aspects of migration, the next one on the impact of tax policies on poverty, and finally the last chapter on the role of labor market institutions on sectoral shifts in employment.

We investigate how household disadvantage affects the time use of 15–18 year olds using 2003–2006 data from the American Time Use Survey. Applying competing-risk hazard models, we distinguish between the incidence and duration of activities and incorporate the daily time constraint. We find that teens living in disadvantaged households spend less time in nonclassroom educational activities than other teens. Girls spend some of this time in work activities, suggesting that they are taking on adult roles. However, we find more evidence of substitution into unsupervised activities, suggesting that it may be less-structured environments that reduce educational investment.

Using data from the U.S. Census in conjunction with data from the Current Population Survey (1980–2009), I find little support for the opt-out revolution – highly educated women, relative to their less-educated counterparts, are exiting the labor force to care for their families at higher rates today than in earlier time periods – if one focuses solely on the decision to work a positive number of hours irrespective of marital status or race. If one, however, focuses on both the decision to work a positive number of hours and the decision to adjust annual hours of work (conditional on working), I find some evidence of the opt-out revolution, particularly among white college educated married women in male-dominated occupations.

The objective of this chapter is to estimate the parameters defining female labor participation and occupation decisions in mexico. Based on a theoretical framework, we use micro data to estimate the wage-participation elasticity in urban Mexico. Consistency between the selectivity-adjusted wages and the multinomial participation equations is achieved via a two-step estimation procedure following Lee (1983). We use the results of our model to test and quantify three hypotheses explaining recent increases in female labor participation in urban mexico. Our results show that the observed 12 percent increase in female labor participation in mexico between 1994 and 2000 is explained by the combination of a negative income shock caused by the 1994–1995 participation; wage differentiaeso crisis, the increase in expected wages taking place in the manufacturing sector during the post-North American Free Trade Agreement (NAFTA) period, and a reduction in female reservation wage.

We survey the literature on the Risk Augmented Mincer equation that seeks to estimate the compensation for uncertainty in the future wage to be earned after completing an education. There is wide empirical support for the predicted positive effect of wage variance and the negative effect of wage skew. We discuss robustness of the findings across specifications, potential bias from unobserved heterogeneity and selectivity and consider the core issue of students' information on benefits from education.

This chapter examines whether changes in return to education affect workers’ mobility between jobs. Employee panel data are used to study staff movement from the public sector to the private sector or vice versa from 1995 to 2005. It is found that in line with the situation in other advanced economies, the wage structure in the public sector in Israel is more compressed than that in the private sector, for employees with similar characteristics and in general, and that the difference widened during the period reviewed. Hence, the findings support the contention that the public sector compensates employees less for their skills than does the private sector. In addition, it is found that during that period the return to education increased in the private sector by about 1 percentage point more than in the public sector. In an analysis of those who switched from one sector to the other, our findings imply that if the return to education changed at the same rate in both sectors, the probability of highly educated workers moving from the public sector to the private sector would be 5 percent lower, and the probability of highly educated workers moving from the private sector to the public sector would be 2 percent higher.

This chapter estimates the negative effect of smoking on earnings in the context of a developing country. Using data from the 2005 Albania Living Standards Measurement Survey, models are estimated by parametric and semi-parametric methods to account for the effect of observable and unobservable characteristics that could affect individual smoking decisions and earnings. Information on the smoking behaviour of parents is used to address the endogeneity of the smoking decision. The results show that, after controlling for observed individual characteristics and parental education and taking into account unobserved heterogeneity in personal characteristics, smoking is found to have a substantial negative impact on earnings. The main results are robust to a range of alternative specifications. On average, smokers’ earnings are 19–23 percent lower than the earnings of similar non-smokers.

Temporary and circular migration programs have been devised by many destination countries and supported by the European Commission as a policy to reduce welfare and social costs of immigration in destination countries. In this chapter, we present an additional reason for proposing temporary migration policies based on the characteristics of the foreign labor-effort supply. The level of effort exerted by migrants, which decreases over their duration in the host country, positively affects production, real wages, and capital owners' profits. We show that the acceptance of job offers by migrants results in the displacement in employment of national workers. However, it increases the workers' exertion, decreases prices, and thus can counter anti-immigrant voter sentiment. Therefore, the favorable sentiment of the capital owners and the local population toward migrants may rise when temporary migration policies are adopted.

This chapter enquires whether family migration experience affects the probability of high school graduation of children once unobserved heterogeneity is properly accounted for. Bivariate dynamic random effects probit models for cluster data are estimated to control for the potential endogeneity of education and migration outcomes of elder members of a family in a regression for the education and migration of younger children. Correlation of unobservables across migration and education decisions as well as within groups of individuals such as the family are explicitly modeled. Results show that children from households headed by a migrant are less likely to graduate from high school than children from households headed by a non-migrant. However, as the number of migrants in the family increase, a larger number of migrants in the family is associated with a higher probability of graduation from high school in México. Negative migrant selection in unobservables is detected.

In-work transfers are often seen as a good trade-off between redistribution and efficiency as they alleviate poverty among low-wage households, while increasing financial incentives to work. In the context of the recent economic downturn, they have been advocated to offset the disincentive effect of wage cuts and to cushion the negative redistributive impact of earnings losses and cuts in the minimum wage. We study this double effect for Ireland, a country deeply affected by the economic crisis, and for which existing in-work support policies are of limited scope. The employment and poverty effects of alternative policies are analysed thanks to counterfactual simulations built using a micro-simulation model, the Living in Ireland Survey 2001 and labour supply estimations. We focus on an extension of the existing scheme, the Family Income Supplement and its replacement by the refundable tax credit in force in the United Kingdom.

Over recent decades both Europe and the United States have experienced an increase in the share of service-related jobs in total employment. Although narrowing in all European countries, a significant gap in the share of service jobs relative to the United States still persists. The aim of the chapter is to identify the main drivers of the service sector employment share in the EU-15 as well as its gap relative to the United States. The analysis is carried out for the aggregate service sector, 4 sub-sectors and 12 service sector branches over the period 1970–2003. We find some evidence to support the hypothesis that a number of labour market regulations – such as union density and the degree of centralisation of wage bargaining – together with the mismatch between workers' skills and job vacancies, have affected Europe's ability to adjust efficiently to the reallocation of labour from manufacturing into services. Furthermore, we find significant heterogeneity in the relative weight of the various determinants of the employment share across sub-sectors and branches.