Publications by PSE researchers

Frictional labor markets impose a fundamental trade-off: individuals may work on their own at any time, but can only take a potentially better-paid wage job after spending some time looking for it, suggesting that intertemporal considerations affect how people choose their occupation. We formalize this intuition under the job search framework and show that a sufficiently high subjective discount rate can justify the choice for own-account work even when it pays less than wage work. With this simple model, we estimate the lowest discount rate that is consistent with the occupational choice of urban own-account workers in Brazil. We find that at least 65 percent of those workers appear to discount the future at rates superior to those available in the formal credit market, which suggests constrained occupational choice. Finally, we show that our estimated lower bound of the time preference is positively associated with food, clothing, and housing deprivation.

This paper contests the traditional view of layoffs as solely reactive to negative economic conditions. Using survey and administrative French data, we provide evidence on how firms strategically utilize mass layoffs to restructure their workforce composition. First, we investigate if firms use layoffs to shift their skill requirements. Analyzing both layoff and matched non-layoff firms, we find firms significantly increase the requirements for social skills while decreasing dependence on manual and cognitive skills requirements after layoffs. This suggests a premeditated reshaping of the workforce instead of a costcutting practice. Secondly, we explore the factors influencing selection into displacement during layoffs. We focus on three key aspects: skills mismatch, relative worker quality, and perceived monetary cost. Our findings highlight the significant role of skill mismatch and worker quality in determining dismissal, suggesting firms actively select based on strategic needs. By revealing the strategic nature of mass layoffs and their impact on skills composition and worker selection, this paper offers valuable insights into the understanding of workforce adjustment. Such insights are relevant for policy design.

We assess the effect of the introduction of a minimum wage policy of 8.50 EUR/hour in Germany in January 2015 on the probability of transitioning from fixed-term to open-ended contracts. Utilizing administrative data from social security records, we compare ex-ante affected (i.e., those earning below the minimum wage) workers against unaffected ones during the pre-implementation period, and find a significant decline in the probability that ex-ante affected workers employed under fixed-term contracts transition to open-ended contracts as the ending month of their fixed-term contract approaches January 2015, when the minimum wage policy was enforced. We interpret our empirical results through the lens of a job search model where firms use fixed-term contracts as a probation phase to learn about the matchspecific productivity with a given worker. In this model, firms sign open-ended contracts based on a productivity threshold rule. A sufficiently high minimum wage can push this threshold up, thus reducing the probability at which workers transition from fixed-term to open-ended contracts.

Frictional labor markets impose a fundamental trade-off: individuals may work on their own at any time, but can only take a potentially better-paid wage job after spending some time looking for it, suggesting that intertemporal considerations affect how people choose their occupation. We formalize this intuition under the job search framework and show that a sufficiently high subjective discount rate can justify the choice for own-account work even when it pays less than wage work. With this simple model, we estimate a lower bound for the discount rate that is implicit in the occupational choice of urban own-account workers in Brazil. We find that at least 65 percent of those workers appear to discount the future at rates superior to those available in the credit market, which suggests constrained occupational choice. Finally, we show that the estimated lower bound of the preference for the present is positively associated with food, clothing, and housing deprivation.

This paper studies why PhDs in France take longer to find stable jobs than engineers. Using data from CEREQ’s “Génération 2004” survey, we show that job finding rates of PhDs are lower than those of engineers and document the differences in their observable characteristics and fields of study. We show that this phenomenon is due to multiple factors: heterogeneity in student characteristics along observable and unobservable dimensions and fields of study, directed search toward public sector positions (especially professors) among PhDs and, in all likelihood, reservation wages of PhDs for private sector jobs that are “too high” relative to their value of marginal product.

This paper studies why PhDs in France take longer to find stable jobs than engineers. Using data from CEREQ’s “Génération 2004” survey, we show that job finding rates of PhDs are lower than those of engineers and document the differences in their observable characteristics and fields of study. We show that this phenomenon is due to multiple factors: heterogeneity in student characteristics along observable and unobservable dimensions and fields of study, directed search toward public sector positions (especially professors) among PhDs and, in all likelihood, reservation wages of PhDs for private sector jobs that are “too high” relative to their value of marginal product.

This paper studies why PhDs in France have more difficulty entering the job market than engineers. Using data from CEREQ's " Génération 2004 " survey, we show that job finding rates of PhDs are lower than those of engineers and situate them among post-secondary graduates as a whole. We show that this phenomenon holds even when restricting attention to R & D jobs, and that the difference is mainly due to differences in the fields of study of PhDs and engineers. We also show that the relative demand for PhDs is only moderately sensitive to cost, as only the large employment subsidies inherent in the most recent reform of the " dispositif jeunes docteurs " of France's research tax credit were able to significantly improve placement of young PhDs

Jobs are critical to poverty reduction and inclusive growth in Sierra Leone, where more than half the population is poor and most are dependent on labor earnings. The country will require substantial job creation to accommodate its young and growing population, coupled with low labor intensity in the mining sector that has been driving recent growth. Adding to this challenge is the need to improve the quality of jobs in a context where most workers are engaged in low productivity activities. Given that Sierra Leone is a post-conflict country, jobs are also central to sustained stability. Yet, despite the importance of jobs for Sierra Leone, the design of policies and interventions to promote these opportunities has been constrained by a limited knowledge base. The 2014 Labor Force Survey report seeks to contribute to solutions to the jobs challenge in Sierra Leone through a foundational analysis of the country's first dedicated labor survey in nearly three decades. The report provides an overview of the employment situation in Sierra Leone, ranging from labor force participation to the types of employment among the working-age population. Through analysis of specialized modules, the report sheds light on key constraints to self-employment in agricultural activities and non-farm household enterprises, which are, respectively, the first-and second-largest sources of jobs in the economy. It also highlights the extent of informality in both wage employment and non-farm self-employment as well as how an individual's status in the labor market relates to poverty. The report also presents information on skills levels and how basic skills are acquired by the working age population. Finally, the report discusses issues related to youth employment and the specific constraints faced by youth in gaining access to productive job opportunities.

In this paper, using an original survey, we analyze the distributional impact of international migration across two regions of Algeria. A semi-parametric descriptive analysis is complemented with a parametric model. Remittances do not significantly change the Gini coefficient in nearly any of the counterfactual scenarios. However, migration reduced poverty by 40 percent, with different effects across regions for extreme poverty. Foreign transfers, especially foreign pensions, have a strong positive impact on very poor families in one region. Poor families in the other region suffer from a “double loss”: their migrants do not provide local income and they do not send much money home.

The motivation for introducing statutory minimum wages in many developing countries is often threefold: poverty-reduction, social justice and growth. How well the policy succeeds in attaining these goals will depend on the national context and the numerous choices made when designing the policy. Institutional capacity in developing countries tends to be limited, so institutional arrangements must be adapted. Nevertheless, a statutory minimum wage appears to have the potential to help low- and middle-income countries advance toward the aforementioned development objectives, even in the face of weak enforcement capacity and pervasive informality.

L'entrée dans la seconde décennie du XXIe siècle est l'occasion de procéder à des évaluations et à des bilans rétrospectifs, dans la mesure où le tournant du siècle a été marqué par d'importantes réformes. De l'introduction du revenu minimum d'insertion (RMI) à la fin des années 1980 à celle du revenu de solidarité active (RSA) vingt ans plus tard, en passant par l'instauration de l'abaissement des cotisations sociales sur les bas salaires – dont le dispositif a été plusieurs fois réformé – et de la prime pour l'emploi, la politique publique en direction des bas salaires et des bas revenus a été particulièrement active en France au cours des vingt dernières années. Ce numéro rassemble des travaux qui abordent tous, dans une perspective d'évaluation et d'étude d'impact, un dispositif public intervenant sur ce segment du marché du travail. Cette introduction se propose de les replacer dans le contexte plus large des travaux et des débats qui ont porté sur cette thématique au cours des dix dernières années. Adoptant une classification simple, nous examinerons successivement l'impact des dispositifs publics sous l'angle de la demande – avec, notamment, les évaluations de la réforme de 2003 portant sur les exonérations de cotisations sociales – puis du côté de l'offre – avec l'évocation de l'impact des minima sociaux sur les comportements d'activité et d'emploi. Au-delà de l'impact quantitatif – effectif ou potentiel – sur l'offre et la demande, une troisième série de travaux abordent les effets de certains dispositifs publics sur la qualité de l'emploi par le biais de la question de l'existence d'éventuelles trappes à bas salaire.

Book review of "The Natural Survival of Work: Job Creation and Job Destruction in a Growing Economy". By Pierre Cahuc and André Zylberberg.