IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/20245.html
   My bibliography  Save this paper

Can labour supply explain the rise in unemployment and intergroup wage inequality in the OECD?

Author

Listed:
  • Wasmer, E.

Abstract

This paper investigates how labour supply trends might have affected the OECD labour markets in the last decades. It is argued that changes in supply cannot be considered as homogenous: they involve more young and more adult female workers, who are complements with skilled men and substitutes with low-wage groups (young, unskilled). Such labour supply trends since the ''50s may have increased competition between women, young workers and low skilled workers in some segments of the labour force. These mechanisms are described by a model and an empirical strategy is undertaken to test its predictions. Disaggregation by gender is necessary. Endogeneity of participation levels with respect to unemployment is treated in two ways, by instrumental variables estimators, and with time series techniques. Significant causal relations between participation and unemployment cannot be rejected.

Suggested Citation

  • Wasmer, E., 1998. "Can labour supply explain the rise in unemployment and intergroup wage inequality in the OECD?," LSE Research Online Documents on Economics 20245, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:20245
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/20245/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90, National Bureau of Economic Research, Inc.
    2. Bean, Charles R, 1994. "European Unemployment: A Survey," Journal of Economic Literature, American Economic Association, vol. 32(2), pages 573-619, June.
    3. Pissarides, Christopher A., 1989. "Unemployment consequences of an aging population: An application of insider-outsider theory," European Economic Review, Elsevier, vol. 33(2-3), pages 355-366, March.
    4. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107, Decembrie.
    5. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 35-78.
    6. Mark C. Berger, 1983. "Changes in Labor Force Composition and Male Earnings: A Production Approach," Journal of Human Resources, University of Wisconsin Press, vol. 18(2), pages 177-196.
    7. Welch, Finis, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 65-97, October.
    8. Daniel S. Hamermesh & James Grant, 1979. "Econometric Studies of Labor-Labor Substitution and Their Implications for Policy," Journal of Human Resources, University of Wisconsin Press, vol. 14(4), pages 543-562.
    9. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, Decembrie.
    10. Mincer, Jacob, 1985. "Intercountry Comparisons of Labor Force Trends and of Related Developments: An Overview," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 1-32, January.
    11. Blanchard, Olivier J. & Summers, Lawrence H., 1987. "Hysteresis in unemployment," European Economic Review, Elsevier, vol. 31(1-2), pages 288-295.
    12. David Card & Francis Kramarz & Thomas Lemieux, 1995. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," Working Papers 734, Princeton University, Department of Economics, Industrial Relations Section..
    13. Hendry, David F., 1995. "Dynamic Econometrics," OUP Catalogue, Oxford University Press, number 9780198283164, Decembrie.
    14. Kim B. Clark & Lawrence H. Summers, 1982. "Labour Force Participation: Timing and Persistence," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(5), pages 825-844.
    15. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    16. Kevin M. Murphy & Robert H. Topel, 1987. "The Evolution of Unemployment in the United States: 1968–1985," NBER Chapters, in: NBER Macroeconomics Annual 1987, Volume 2, pages 11-68, National Bureau of Economic Research, Inc.
    17. David Card & Francis Kramarz & Thomas Lemieux, 1995. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," Working Papers 734, Princeton University, Department of Economics, Industrial Relations Section..
    18. repec:bla:econom:v:53:y:1986:i:210(s):p:s197-217 is not listed on IDEAS
    19. Jacob Mincer, 1962. "Labor Force Participation of Married Women: A Study of Labor Supply," NBER Chapters, in: Aspects of Labor Economics, pages 63-105, National Bureau of Economic Research, Inc.
    20. David Card & Francis Kramarz & Thomas Lemieux, 1999. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 843-877, August.
    21. Nickell, S., 1991. "Wages, Unemployment and Population Change," Economics Series Working Papers 99122, University of Oxford, Department of Economics.
    22. Topel, Robert H, 1994. "Regional Labor Markets and the Determinants of Wage Inequality," American Economic Review, American Economic Association, vol. 84(2), pages 17-22, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wasmer, Etienne, 2001. "Between-group Competition in the Labor Market and the Rising Returns to Skill: US and France 1964-2000," IZA Discussion Papers 292, Institute of Labor Economics (IZA).
    2. Wasmer, Etienne, 1998. "Labor Supply Dynamics, Unemployment and Human Capital Investments," Seminar Papers 651, Stockholm University, Institute for International Economic Studies.
    3. Lawrence F Katz, 1998. "Reflections on US Labour Market Performance," RBA Annual Conference Volume (Discontinued), in: Guy Debelle & Jeff Borland (ed.),Unemployment and the Australian Labour Market, Reserve Bank of Australia.
    4. David R. Howell & Margaret Duncan & Bennett Harrison, 1998. "Low Wages in the US and High Unemployment in Europe: A Critical Assessment of the Conventional Wisdom," SCEPA working paper series. 1998-01, Schwartz Center for Economic Policy Analysis (SCEPA), The New School, revised Aug 1998.
    5. Olivier Blanchard & Lawrence F. Katz, 1997. "What We Know and Do Not Know about the Natural Rate of Unemployment," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 51-72, Winter.
    6. Peter Gottschalk & Mary Joyce, 1998. "Cross-National Differences In The Rise In Earnings Inequality: Market And Institutional Factors," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 489-502, November.
    7. repec:hal:spmain:info:hdl:2441/9081 is not listed on IDEAS
    8. Wasmer, E., 1997. "Can Labour Supply Explain the Rise in Unemployment and Inter-Group Wage Inequality in the OECD?," Papers 629, Stockholm - International Economic Studies.
    9. repec:spo:wpecon:info:hdl:2441/9081 is not listed on IDEAS
    10. Wasmer, Etienne, 2001. "Measuring human capital in the labor market: The supply of experience in 8 OECD countries," European Economic Review, Elsevier, vol. 45(4-6), pages 861-874, May.
    11. repec:hal:wpspec:info:hdl:2441/9081 is not listed on IDEAS
    12. repec:spo:wpmain:info:hdl:2441/9081 is not listed on IDEAS
    13. Ravi Balakrishnan & Claudio Michelacci, 1998. "Unemployment Dynamics Across OECD Countries," Working Papers wp1998_9806, CEMFI.
    14. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
    15. David Kucera, 1998. "Unemployment and External and Internal Labor Market Flexibility: A Comparative View of Europe, Japan, and the United States," SCEPA working paper series. 1998-21, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    16. Verdugo, Gregory, 2014. "The great compression of the French wage structure, 1969–2008," Labour Economics, Elsevier, vol. 28(C), pages 131-144.
    17. Odile Chagny & Frédéric Reynès & Henri Sterdyniak, 2002. "The equilibrium rate of unemployment : a theoretical discussion and an empirical evaluation for six OECD countries," SciencePo Working papers Main hal-01027421, HAL.
    18. Walde, Klaus, 2000. "Egalitarian and elitist education systems as the basis for international differences in wage inequality," European Journal of Political Economy, Elsevier, vol. 16(3), pages 445-468, September.
    19. Matteo Lanzafame, 2010. "The nature of regional unemployment in Italy," Empirical Economics, Springer, vol. 39(3), pages 877-895, December.
    20. Sonja Jovicic, 2015. "Wage Inequality, Skill Inequality, and Employment: Evidence from PIAAC," Schumpeter Discussion Papers SDP15007, Universitätsbibliothek Wuppertal, University Library.
    21. Ryo Kambayashi & Daiji Kawaguchi & Izumi Yokoyama, 2008. "Wage distribution in Japan, 1989–2003," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(4), pages 1329-1350, November.
    22. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2001. "Factor Price Equality and the Economies of the United States," NBER Working Papers 8068, National Bureau of Economic Research, Inc.
    23. Jeff Borland, 2000. "Economic Explanations of Earnings Distribution Trends in the International Literature and Application to New Zealand," Treasury Working Paper Series 00/16, New Zealand Treasury.
    24. Alfred Stiassny, 1998. "Wage Setting and Hysteresis in Unemployment," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 25(1), pages 79-107, January.

    More about this item

    Keywords

    Labour Supply; Unemployment;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:20245. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.