ESSLE 2001 Report

The Third IZA/CEPR European Summer Symposium in Labor Economics (ESSLE) took place April 24-28, 2001, at the Deutsche Post World Net Management Training Center at Buch/Ammersee in Bavaria.
For one week, renowned scholars in the field of labor economics from around the world presented and discussed their current research results.

View complete program

IZA program director Torben M. Andersen (Aarhus University, CEPR and IZA) opened the conference with an analysis of the different channels through which integration between economies can affect the elasticity of employment with respect to wages, and the subsequent implications for the labor market.
Pierre Cahuc (EUREQua, CNRS, Université de Paris I, CREST-INSEE and IZA) used a unified framework that was able to mimic both flexible as well as rigid labor markets, to analyze the effects of introducing experience rating to (co-)finance the unemployment program of a stereotypical European labor market.
Regina Riphahn (University of Mainz, CEPR and IZA) presented evidence on the effect of job protection on absenteeism by comparing employees who started working for a large Italian bank during and after their probation period. Simulations showed that substantial reductions in absenteeism could be obtained by relaxing job protection laws, but only so for men.
In his presentation Wolfgang Schwerdt (CREST, Université de Paris I and IZA) used two matched French INSEE firm level surveys and an extraction of the German IAB firm panel to estimate the productivity of apprentices during their training in French and German firms respectively. A structural difference in productivity of apprentices in small and large firms was identified, particularly in German firms.
Staying within the context of German firms, IZA program director Thomas Bauer (IZA and CEPR) used matched employer-employee data to look at the effect of organizational changes - such as the introduction of self managed teams or reduction in hierarchy levels - on wage inequality across and within firms.
Using a French matched employer-employee panel data set, Jean-Marc Robin (INRA-LEA, CREST-INSEE and CEPR) estimated an equilibrium job search model with on-the-job search and unobserved worker?s productivity. On the demand side, firms differed in their (observable) marginal productivity of labor and were able to counter outside offers from competing firms.
Rudolf Winter-Ebmer (University of Linz, WIFO Vienna, CEPR and IZA) evaluated an Austrian manpower training program that was created to accommodate the large number of redundancies after the privatization and downsizing of nationalized steel firms. The success of the project provided valuable lessons for the development of future programs.
Shoshana Neuman (Bar Ilan University, Ramat Gan, CEPR and IZA) used data from 2,220 Israeli firms to investigate in how far macroeconomic factors were able to explain delays in contract renewal. About 86% of new contracts are signed after the expiration date and the average delay is about one third of the stated contract duration, underlining the need for an analysis.
Daniela Del Boca (University of Turin and IZA) examined the impact of employment changes for both men and women on inequality in the distribution of family income. She showed how this relationship has changed over time and across regions using Bank of Italy survey data on household income and wealth.
The focus shifted to North America with James R. Walker (University of Wisconsin, Madison and IZA). To determine the extent to which people move for the purpose of improving their income prospects, he built a structural dynamic model to describe individual migration decisions. Empirical results using the NSLY show a significant effect of income differentials on migration, for unskilled single women with dependent children who are eligible for public assistance.
Staying with migration, Don DeVoretz (Simon Fraser University, Burnaby and IZA) addressed Canada?s brain drain by reversing conventional logic and investigating under what conditions highly skilled Canadians would stay in Canada given the substantial returns of moving to the United States.
IZA program director Rainer Winkelmann (IZA and CEPR) introduced a new count data model that outperformed all existing models when applied to the evaluation of the effect of the 1997 German health care reforms on the number of individual doctor visits.
"Health" was the bridge to the presentation by Maarten Lindeboom (Free University of Amsterdam and IZA) who used Dutch longitudinal data to tackle the problem of the interrelation between health and work decisions of elderly workers by specifying and estimating an integrated model for work, health and health reporting mechanisms.
Returning to the old tradition of economic fieldwork and data collection Lorenz Götte (University of Zurich) used data from a field experiment on bike messengers in Zurich to investigate if stronger financial incentives increase effort. Stronger incentives did indeed increase work hours but also reduced per hour effort.
Christopher J. Flinn (New York University and IZA) reported on the equilibrium effects of minimum wage changes on labor market outcomes by building upon a continuous-time model of search with bargaining in a stationary environment. He showed that recent minimum wage increases resulted in welfare improvements for young labor market participants.
John P. Haisken-DeNew (DIW and IZA) explored several different matching techniques to reconstruct PC usage in the German economy from 1984 to 1997, thereby showing how PC technology has been differentially incorporated into industries and occupations over time.
Variation in high school completion rates among former West-German Laender was exploited by Sascha O. Becker (European University Institute and IZA), to estimate the returns to schooling by using an instrumental variable approach.
Eswar Prasad (IMF) presented his work in which he related reservation wages of unemployed German workers to macroeconomic factors - including e.g. aggregate and local unemployment rates and the generosity of the unemployment compensation system - as well as individual specific determinants, as e.g. the length of the unemployment spell.
Co-organizer of ESSLE Juan José Dolado (University Carlos III, CEPR and IZA) provided a deeper understanding of the recent trends in the evolution and composition of female employment in labor markets across both the EU and US, with special emphasis on the implications for occupational segregation.
Avner Ahituv (The Hebrew University of Jerusalem) used a simple growth model with different sectors each requiring a specific technology and human capital to illuminate the different effects of technological change on older and younger workers.
Patrick Puhani (University of St. Gallen, CEPR, ZEW and IZA) proposed a methodology that makes less restrictive identifying assumptions than some previous studies, in order to test the hypothesis that rising unemployment rates of the low-skilled in Europe are related to the development of wages in this group.
Laszlo Goerke (University of Konstanz and IZA) showed that in a world with tax evasion by firms and workers, a change in the legal incidence of taxes has consequences for the economic incidence - violating the "most basic theorem of public finance" - when the penalty for evasion depends on the level of undeclared income or if evasion opportunities are restricted.
.