We propose an easily computable measure called the Major Complexity Index (MCI) that captures the latent skills taught in different majors. By applying the Method of Reflections to the major-to-occupation network, we construct a scalar measure of the relative complexity of majors. Our measure provides strong explanatory power of major average earnings and employment. Further evidence suggests that the MCI is strongly associated with advanced skills such as quantitative problem-solving, and the use of computing technology. We also provide a two-stage algorithm to partial out selection on observables which opens up possibilities of applying the complexity measure in various contexts.
{"title":"Major Complexity Index and College Skill Production","authors":"Xiaoxiao Li, S. Linde, Hajime Shimao","doi":"10.2139/ssrn.3791651","DOIUrl":"https://doi.org/10.2139/ssrn.3791651","url":null,"abstract":"We propose an easily computable measure called the Major Complexity Index (MCI) that captures the latent skills taught in different majors. By applying the Method of Reflections to the major-to-occupation network, we construct a scalar measure of the relative complexity of majors. Our measure provides strong explanatory power of major average earnings and employment. Further evidence suggests that the MCI is strongly associated with advanced skills such as quantitative problem-solving, and the use of computing technology. We also provide a two-stage algorithm to partial out selection on observables which opens up possibilities of applying the complexity measure in various contexts.","PeriodicalId":210669,"journal":{"name":"Labor: Human Capital eJournal","volume":"19 4","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120913512","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the intergenerational income mobility using XGBoost and SHAP. We show that child's educational attainment is more important than parents' income or other family characteristics for predicting child's income and it is still being the second most important variable after conditional on these characteristics. We also show that educational attainment can reduce the impacts of parents' income on child's income and has more impacts on income for non-white children. The findings imply that working hard to earn higher educational attainment can be more important than being born in a rich and white family (i.e., kind of destiny).
{"title":"Hard Working Is More Important than Destiny","authors":"Weige Huang","doi":"10.2139/ssrn.3772061","DOIUrl":"https://doi.org/10.2139/ssrn.3772061","url":null,"abstract":"This paper studies the intergenerational income mobility using XGBoost and SHAP. We show that child's educational attainment is more important than parents' income or other family characteristics for predicting child's income and it is still being the second most important variable after conditional on these characteristics. We also show that educational attainment can reduce the impacts of parents' income on child's income and has more impacts on income for non-white children. The findings imply that working hard to earn higher educational attainment can be more important than being born in a rich and white family (i.e., kind of destiny).","PeriodicalId":210669,"journal":{"name":"Labor: Human Capital eJournal","volume":"35 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122019151","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Governments have repeatedly adjusted fiscal policy during the past decades. We examine the political effects of these adjustments in Western countries since the early 1990s using both district-level election outcomes and individual-level voting data. We expect that austerity increases populist votes, but only among economically vulnerable voters, who are hit most by austerity. Following the political economy literature, we identify economically vulnerable regions, looking at the share of low-skilled workers and share of manufacturing production. The results from a difference-in-differences analysis show that austerity increases support for populist parties in economically vulnerable regions, but austerity has little effect on voting in economically less vulnerable regions. These findings are confirmed by the analysis at the individual level. Our results suggest that the success of populist parties across Europe critically hinges on the governments failure to protect the losers of structural economic change. The economic origins of populism, therefore, are not purely external, but the populist backlash is triggered by internal factors, notably public policies.
{"title":"Austerity, Economic Vulnerability, and Populism","authors":"Leonardo Baccini, T. Sattler","doi":"10.2139/ssrn.3766022","DOIUrl":"https://doi.org/10.2139/ssrn.3766022","url":null,"abstract":"Governments have repeatedly adjusted fiscal policy during the past decades. We examine the political effects of these adjustments in Western countries since the early 1990s using both district-level election outcomes and individual-level voting data. We expect that austerity increases populist votes, but only among economically vulnerable voters, who are hit most by austerity. Following the political economy literature, we identify economically vulnerable regions, looking at the share of low-skilled workers and share of manufacturing production. The results from a difference-in-differences analysis show that austerity increases support for populist parties in economically vulnerable regions, but austerity has little effect on voting in economically less vulnerable regions. These findings are confirmed by the analysis at the individual level. Our results suggest that the success of populist parties across Europe critically hinges on the governments failure to protect the losers of structural economic change. The economic origins of populism, therefore, are not purely external, but the populist backlash is triggered by internal factors, notably public policies.<br>","PeriodicalId":210669,"journal":{"name":"Labor: Human Capital eJournal","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114284021","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study how becoming an entrepreneur affects academic scientists’ research. We propose that entrepreneurship will shift scientists’ attention away from intradisciplinary research questions and tow...
{"title":"Attention to Exploration: The Effect of Academic Entrepreneurship on the Production of Scientific Knowledge","authors":"R. Fini, M. Perkmann, Jan Michael Ross","doi":"10.1287/ORSC.2021.1455","DOIUrl":"https://doi.org/10.1287/ORSC.2021.1455","url":null,"abstract":"We study how becoming an entrepreneur affects academic scientists’ research. We propose that entrepreneurship will shift scientists’ attention away from intradisciplinary research questions and tow...","PeriodicalId":210669,"journal":{"name":"Labor: Human Capital eJournal","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116311749","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper looks at the gender wage gap throughout the transition from communism to capitalism and throughout fast economic convergence. The case of Estonia is used, and the labour force survey micro data is employed from 1989 to 2020. The communist regimes were characterized by highly regulated wage determination and the high educational attainment and labour market participation of women. Despite a formally egalitarian regime, the raw gender wage gap was as large as 41% in 1989. The large gender wage gap under communist rule diminished quickly during the transition to a capitalism, mainly due to the erosion of distortions in the labour market, such as low returns to education. The paper has two main messages, first, the position of women in the labour market has improved over the last three decades. The mechanism behind their gains is similar to those in other formerly centrally planned economies, the education of women is even better now, they are employed in better occupations and their returns to education are higher. Second, the gender wage gap was large already three decades ago and the unexplained part has been resistant to decline. This points to strong inertia in the gender wage gap and to the importance of longer-term factors in it. The decline in the gap is related to the overall decline in wage inequality, minimum wages have also contributed to this process. While gender attitudes have become much more egalitarian, it is difficult to prove their role.
{"title":"The Gap that Survived the Transition: The Gender Wage Gap Over Three Decades in Estonia","authors":"J. Meriküll, Maryna Tverdostup","doi":"10.2139/ssrn.3756782","DOIUrl":"https://doi.org/10.2139/ssrn.3756782","url":null,"abstract":"This paper looks at the gender wage gap throughout the transition from communism to capitalism and throughout fast economic convergence. The case of Estonia is used, and the labour force survey micro data is employed from 1989 to 2020. The communist regimes were characterized by highly regulated wage determination and the high educational attainment and labour market participation of women. Despite a formally egalitarian regime, the raw gender wage gap was as large as 41% in 1989. The large gender wage gap under communist rule diminished quickly during the transition to a capitalism, mainly due to the erosion of distortions in the labour market, such as low returns to education. The paper has two main messages, first, the position of women in the labour market has improved over the last three decades. The mechanism behind their gains is similar to those in other formerly centrally planned economies, the education of women is even better now, they are employed in better occupations and their returns to education are higher. Second, the gender wage gap was large already three decades ago and the unexplained part has been resistant to decline. This points to strong inertia in the gender wage gap and to the importance of longer-term factors in it. The decline in the gap is related to the overall decline in wage inequality, minimum wages have also contributed to this process. While gender attitudes have become much more egalitarian, it is difficult to prove their role.","PeriodicalId":210669,"journal":{"name":"Labor: Human Capital eJournal","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129197948","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the dispersion in cybersecurity risk across firms. Using new, proprietary data on the Fortune 500 firms, We show that higher productivity firms exhibit abnormal returns. We subsequently document three new facts: (a) higher productivity firms have fewer cybersecurity vulnerabilities, (b) vulnerabilities are highly persistent within-firm, and (c) vulnerabilities are associated with data breaches. Our results suggest that higher productivity firms gain access to more technical human capital resources that are capable of mitigating cybersecurity vulnerabilities.
{"title":"Abnormal Returns and Dispersion in Cybersecurity Exposure","authors":"Tim Liu, C. Makridis","doi":"10.2139/ssrn.3746589","DOIUrl":"https://doi.org/10.2139/ssrn.3746589","url":null,"abstract":"This paper examines the dispersion in cybersecurity risk across firms. Using new, proprietary data on the Fortune 500 firms, We show that higher productivity firms exhibit abnormal returns. We subsequently document three new facts: (a) higher productivity firms have fewer cybersecurity vulnerabilities, (b) vulnerabilities are highly persistent within-firm, and (c) vulnerabilities are associated with data breaches. Our results suggest that higher productivity firms gain access to more technical human capital resources that are capable of mitigating cybersecurity vulnerabilities.","PeriodicalId":210669,"journal":{"name":"Labor: Human Capital eJournal","volume":"69 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115033472","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper shows that capital-skill complementarity provides a quantitatively significant rationale to tax capital for redistributive governments. The optimal capital income tax rate is 60%, which is significantly higher than the optimal rate of 48% in an identically calibrated model without capital-skill complementarity. The skill premium falls from 1.9 to 1.67 along the transition following the optimal reform in the capital-skill complementarity model, implying substantial indirect redistribution from skilled to unskilled workers. These results show that a government that cares about redistribution should take into account capital-skill complementarity in production when setting the tax rate on capital income.
{"title":"Redistributive Capital Taxation Revisited","authors":"Amilis Kina, Ctirad Slav́ık, Hakkı Yazıcı","doi":"10.2139/ssrn.3750376","DOIUrl":"https://doi.org/10.2139/ssrn.3750376","url":null,"abstract":"This paper shows that capital-skill complementarity provides a quantitatively significant rationale to tax capital for redistributive governments. The optimal capital income tax rate is 60%, which is significantly higher than the optimal rate of 48% in an identically calibrated model without capital-skill complementarity. The skill premium falls from 1.9 to 1.67 along the transition following the optimal reform in the capital-skill complementarity model, implying substantial indirect redistribution from skilled to unskilled workers. These results show that a government that cares about redistribution should take into account capital-skill complementarity in production when setting the tax rate on capital income.","PeriodicalId":210669,"journal":{"name":"Labor: Human Capital eJournal","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127695146","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We show in the world trade data that countries with more progressive personal income tax system are less likely to have comparative advantage in industris that employ a greater share of high-income occupations, such as high tech and professional service sectors. Moreover, when countries increase their income tax progressivity over time, they further lose comparative advantage in sectors that use high-paying occupations intensively. We propose two theoretical mechanisms to explain these empirical observations: one is the occupational choice model based on the trade-o¤ between the wage and the hours worked in the Heckscher-Ohlin framework; the other is the Heckscher-Ohlin model with international immigration of skilled workers. Both models demonstrate that progressive income tax pushes workers away from high-income long- hours occupations and undermines the comparative advantage in industries that rely heavily on these occupations.
{"title":"Progressive Income Tax and Comparative Advantage in Trade","authors":"Jie Cai, Andrey Stoyanov","doi":"10.2139/ssrn.3783380","DOIUrl":"https://doi.org/10.2139/ssrn.3783380","url":null,"abstract":"We show in the world trade data that countries with more progressive personal income tax system are less likely to have comparative advantage in industris that employ a greater share of high-income occupations, such as high tech and professional service sectors. Moreover, when countries increase their income tax progressivity over time, they further lose comparative advantage in sectors that use high-paying occupations intensively. We propose two theoretical mechanisms to explain these empirical observations: one is the occupational choice model based on the trade-o¤ between the wage and the hours worked in the Heckscher-Ohlin framework; the other is the Heckscher-Ohlin model with international immigration of skilled workers. Both models demonstrate that progressive income tax pushes workers away from high-income long- hours occupations and undermines the comparative advantage in industries that rely heavily on these occupations.","PeriodicalId":210669,"journal":{"name":"Labor: Human Capital eJournal","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116885418","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The H-1B program allows firms in the United States to temporarily hire high-skilled foreign citizens. H-1B workers are highly concentrated among a small number of firms. We develop a theoretical model demonstrating that this phenomenon is an artifact of policy design: When the government restricts foreign labor inflows and allocates H- 1B status by random lottery, it creates a negative externality by incentivizing firms to search for more workers than can actually be hired. Some firms rationally move toward specializing in hiring foreign labor and contracting out those workers' services to third- party sites. This outsourcing behavior further exacerbates total search costs and lottery externalities, resulting in an annual economic loss in the hundreds of millions of dollars.
{"title":"Buying Lottery Tickets for Foreign Workers: Search Cost Externalities Induced by H-1b Policy","authors":"Rishi R. Sharma, Chad Sparber","doi":"10.2139/ssrn.3734760","DOIUrl":"https://doi.org/10.2139/ssrn.3734760","url":null,"abstract":"The H-1B program allows firms in the United States to temporarily hire high-skilled foreign citizens. H-1B workers are highly concentrated among a small number of firms. We develop a theoretical model demonstrating that this phenomenon is an artifact of policy design: When the government restricts foreign labor inflows and allocates H- 1B status by random lottery, it creates a negative externality by incentivizing firms to search for more workers than can actually be hired. Some firms rationally move toward specializing in hiring foreign labor and contracting out those workers' services to third- party sites. This outsourcing behavior further exacerbates total search costs and lottery externalities, resulting in an annual economic loss in the hundreds of millions of dollars.","PeriodicalId":210669,"journal":{"name":"Labor: Human Capital eJournal","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126700675","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
English Abstract: Researches of the strategies of an economic behavior of the workers in the market of labor were conducted, in which outcome the dates were obtained, which have allowed to evaluate a condition of a labor potential. Besides by us were revealed representative of performance of each kind of the strategy of an economic behavior, the condition of many branches is described point of view; from the point of view of quality of labor forces, are revealed of system dependence, which allow to construct a control system of an economic behavior of the worker in the labor market and will allow to construct more effective system of the help by the unemployed. To operate an economic behavior of the person signifies to operate many economic processes, which are to have a possibility to predict a condition of the labor market, employment of the population, development or decline of the certain orbs of economic activity. To know the reasons of economic activity of the person signifies to have a possibility to evaluate efficiency and expediency of social support; a possibility to optimize social costs for want of high degree of their productivity and personalization’s. This entire means, that it is necessary to consider problems of employment and labor market, it is necessary to investigate from the point of view of an economic behavior of the person.
Russian Abstract:: проведены исследования стратегий экономического поведения работников на рынке труда, в результате которых были получены данные, позволившие оценить состояние трудового потенциала рынка труда. Кроме того, были выявлены репрезентативные показатели эффективности каждого вида стратегии экономического поведения, описано состояние многих отраслей с точки зрения качества рабочей силы. Выявлены системные зависимости, которые позволяют построить систему управления экономическим поведением работника на рынке труда и позволит построить более эффективную систему помощи безработным. Управлять экономическим поведением человека означает управлять многими экономическими процессами, которые должны иметь возможность прогнозировать состояние рынка труда, занятость населения, развитие или упадок определенных сфер экономической деятельности. Знать причины хозяйственной деятельности человека означает иметь возможность оценить эффективность и целесообразность социальной поддержки; возможность оптимизировать социальные расходы благодаря высокой степени их продуктивности и персонализация. Все это означает, что необходимо рассматривать проблемы занятости и рынка труда с точки зрения экономического поведения человека.
{"title":"Strategy of Economic Behavior on the Labor Market: Practical Research Experience","authors":"O. Elkina, S. Elkin","doi":"10.2139/ssrn.3726101","DOIUrl":"https://doi.org/10.2139/ssrn.3726101","url":null,"abstract":"<b>English Abstract:</b> Researches of the strategies of an economic behavior of the workers in the market of labor were conducted, in which outcome the dates were obtained, which have allowed to evaluate a condition of a labor potential. Besides by us were revealed representative of performance of each kind of the strategy of an economic behavior, the condition of many branches is described point of view; from the point of view of quality of labor forces, are revealed of system dependence, which allow to construct a control system of an economic behavior of the worker in the labor market and will allow to construct more effective system of the help by the unemployed.<br>To operate an economic behavior of the person signifies to operate many economic processes, which are to have a possibility to predict a condition of the labor market, employment of the population, development or decline of the certain orbs of economic activity. To know the reasons of economic activity of the person signifies to have a possibility to evaluate efficiency and expediency of social support; a possibility to optimize social costs for want of high degree of their productivity and personalization’s. This entire means, that it is necessary to consider problems of employment and labor market, it is necessary to investigate from the point of view of an economic behavior of the person. <br><br><b>Russian Abstract:</b>: проведены исследования стратегий экономического поведения работников на рынке труда, в результате которых были получены данные, позволившие оценить состояние трудового потенциала рынка труда. Кроме того, были выявлены репрезентативные показатели эффективности каждого вида стратегии экономического поведения, описано состояние многих отраслей с точки зрения качества рабочей силы. Выявлены системные<br>зависимости, которые позволяют построить систему управления экономическим<br>поведением работника на рынке труда и позволит построить более эффективную<br>систему помощи безработным.<br>Управлять экономическим поведением человека означает управлять многими экономическими процессами, которые должны иметь возможность прогнозировать состояние рынка труда, занятость населения, развитие или упадок определенных сфер экономической деятельности. Знать причины хозяйственной деятельности человека означает иметь возможность оценить эффективность и целесообразность социальной поддержки; возможность оптимизировать социальные расходы благодаря высокой степени их<br>продуктивности и персонализация. Все это означает, что необходимо рассматривать проблемы занятости и рынка труда с точки зрения экономического поведения человека.<br><br><br>","PeriodicalId":210669,"journal":{"name":"Labor: Human Capital eJournal","volume":"97 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127189117","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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