Labour Supply Shocks and the Dynamics of Local Wages and Employment

Date: 
Tuesday, 20 October, 2015 - 12:00 to 13:00

As part of our External Seminar series in which academics present their work to NIESR staff and special guests, on Tuesday 20th October we will have Professor Uta Schönberg (University College London) discussing work she did alongside Christian Dustmann and Jan Stuhler, on Labour Supply Shocks and the Dynamics of Local Wages and Employment, and we would be pleased for you to attend. 

By exploiting a rare commuting policy that led to a sharp, sudden, and unexpected inflow of Czech workers to areas along the German-Czech border, the authors examine the impact of a pure labor supply shock on native wages and employment in the policy’s immediate aftermath. To guide their empirical analysis, they develop a simple model that – other than the existing literature – allows for heterogeneity in labor supply elasticities or wage rigidities that different groups of workers face. Their results show that the labor supply shock leads to a moderate decline in local wages and a sharp decline in local employment. This employment response is almost entirely driven by diminished inflows of native workers into work rather than outflows into other areas or non-employment, suggesting that “outsiders” shield “insiders” from the increased competition. The authors also document large wage responses for young but strong employment responses for older natives, which they attribute to either a larger labor supply elasticity or a higher degree of wage rigidity for the latter. Such responses, while in line with their model, cannot be reconciled with a standard model where labor supply responses are homogeneous across workers.  The findings highlight the structural character of inequalities in job rewards.

 

To RSVP and for Seminar Enquiries:

Email: l.pieri [at] niesr.ac.uk

Tel: 020 7654 1931

 

Speaker: Professor Uta Schönberg (University College London)

Date: Tuesday 20th October 2015

Time: 12.00pm- 1pm, followed by a light lunch

Venue: NIESR, 2 Dean Trench St, Smith Square, London SW1P 3HE