Klaus F. Zimmermann

A new GLO Discussion Paper studies the implications of Artificial Intelligence (AI) in an endogenous growth model. It can explain why advanced countries tend to experience, despite much AI hype, the simultaneous existence of rather high employment with stagnating wages, productivity, and GDP.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 632, 2020

Artificial Intelligence, Income Distribution and Economic Growth – Download PDF
by Gries, Thomas & Naudé, Wim

GLO Fellow Wim Naudé

Author Abstract: The economic impact of Artificial Intelligence (AI) is studied using a (semi) endogenous growth model with two novel features. First, the task approach from labor economics is reformulated and integrated into a growth model. Second, the standard representative household assumption is rejected, so that aggregate demand restrictions can be introduced. With these novel features it is shown that (i) AI automation can decrease the share of labor income no matter the size of the elasticity of substitution between AI and labor, and (ii) when this elasticity is high, AI will unambiguously reduce aggregate demand and slow down GDP growth, even in the face of the positive technology shock that AI entails. If the elasticity of substitution is low, then GDP, productivity and wage growth may however still slow down, because the economy will then fail to benefit from the supply-side driven capacity expansion potential that AI can deliver. The model can thus explain why advanced countries tend to experience, despite much AI hype, the simultaneous existence of rather high employment with stagnating wages, productivity, and GDP.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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A new GLO Discussion Paper finds that the pandemic and the lockdown increased underemployment and job search efforts significantly. Immigrants and individuals with shorter job tenure or occupations unsuitable for remote work were hit the hardest in terms of unemployment.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 635, 2020

Short-term Labour Market Effects of COVID-19 and the Associated National Lockdown in Australia: Evidence from Longitudinal Labour Force Survey – Download PDF
by Guven, Cahit & Sotirakopoulos, Panagiotis & Ulker, Aydogan

GLO Fellow

Author Abstract: We examine the short-term labor market effects of COVID-19 and the associated national lockdown in Australia by estimating person-fixed-effects models using the Longitudinal Labour Force Survey. COVID-19 decreased labor force participation (LFP) by 2.1%, increased unemployment by 1.1% and reduced weekly working hours by 1.1. The national lockdown decreased LFP by 3.3%, increased unemployment by 1.7%, and decreased weekly working hours by 2.5. The probability of working on Fridays decreased by 10% while working fewer hours due to being on leave, work shifts, not having enough work and losing jobs all increased due to the lockdown. The pandemic and the lockdown increased underemployment and job search efforts significantly. In terms of heterogeneity of these effects, our analysis shows that those with up to high-school education experienced larger reductions in their LFP and working hours than others. However, immigrants and individuals with shorter job tenure or occupations unsuitable for remote work were hit the hardest in terms of unemployment.

More from the GLO Coronavirus Cluster

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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A new GLO Discussion Paper finds that public sector employment is affected significantly.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 637, 2020

The intensity of COVID-19 Non-Pharmaceutical Interventions and labor market outcomes in the public sector – Download PDF
by Marcén, Miriam & Morales, Marina

GLO Fellow Miriam Marcén

Author Abstract: This paper examines whether the intensity of Non-Pharmaceutical Interventions (NPIs) during the COVID-19 pandemic has differentially impacted the public sector labor market outcomes. This extends the analysis of the already documented negative economic consequences from COVID-19 and their dissimilarities with a typical economic crisis. To capture the intensity of the NPIs, we build a novel index (COVINDEX) using daily information on NPIs merged with state level data on out of home mobility (Google data) to show that among individuals living in a typical state, the NPIs enforcement during the COVID-19 reduces the likelihood of being employed (at work) by 5% with respect to the pre-COVID period and the hours worked by 1.3% using data on labor market outcomes from the monthly Current Population Survey and difference-in-difference models. This is a sizable amount representing the sector with the higher job security during the pandemic. Public sector workers in a typical state are 4 percentage points more likely to be at work than salaried workers in the private sector and 7 percentage points more likely than self-employed workers (the worst so far). Our results are robust to endogeneity of the NPIs measures and present empirical evidence of heterogeneity in the response to the NPIs with those in the local employment being the hardest hit.

More from the GLO Coronavirus Cluster

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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A new GLO Discussion Paper argues that there is a strong possibility that the unintended damage of anti-COVID-19 measures to entrepreneurship, innovation and growth could be persistent.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 631, 2020

Entrepreneurial Recovery from COVID-19: Decentralization, Democratization, Demand, Distribution, and Demography – Download PDF
by Naudé, Wim

GLO Fellow Wim Naudé

Author Abstract: This paper studies the social and economic responses to the COVID-19 pandemic in a large sample of countries. I stress, in particular, the importance of countries’ interconnections to understand the spread of the virus. I estimate a Global VAR model and exploit a dataset on existing social connections across country borders. I show that social networks help explain not only the spread of the disease, but also cross-country spillovers in perceptions about coronavirus risk and in social distancing behavior. In the early phases of the pandemic, perceptions of coronavirus risk in most countries are affected by pandemic shocks originating in Italy. Later, the U.S., Spain, and the U.K. play sizable roles. Social distancing responses to domestic and global health shocks are heterogeneous; however, they almost always exhibit delays and sluggish adjustments. Unemployment responses vary widely across countries. Unemployment is particularly responsive to health shocks in the U.S. and Spain, while unemployment fluctuations are attenuated almost everywhere else.

More from the GLO Coronavirus Cluster

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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A new GLO Discussion Paper demonstrates how to use administrative data to estimate the number of deaths, the number of infections, and mortality rates from Covid-19 in Lombardia, the hot spot of the disease in Italy and Europe.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 630, 2020

True Covid-19 mortality rates from administrative data – Download PDF
by Depalo, Domenico

Forthcoming: Journal of Population Economics

GLO Fellow Domenico Depalo

Author Abstract: In this paper I use administrative data to estimate the number of deaths, the number of infections, and mortality rates from Covid-19 in Lombardia, the hot spot of the disease in Italy and Europe. The information is relevant for the policy maker, to make decisions, and for the public, to adopt appropriate behaviors. As the available data suffer from sample selection bias I use partial identification to derive these quantities. Partial identification combines assumptions with the data to deliver a set of admissible values, or bounds. Stronger assumptions yield stronger conclusions, but decrease the credibility of the inference. Therefore, I start with assumptions that are always satisfied, then I impose increasingly more restrictive assumptions. Using my preferred bounds, during March 2020 in Lombardia there were between 10,000 and 18,500 more deaths than before 2020. The narrowest bounds of mortality rates from Covid-19 are between 0.1% and 7.5%, much smaller than the 17.5% discussed for long time. This finding suggests that the case of Lombardia may not be as special as some argue.

More from the GLO Coronavirus Cluster

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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A new GLO Discussion Paper shows in a theoretical model that firms have incentives to fight against infections and can do so very effectively by increasing teleworking and rotating employees between on-site work, teleworking, and leave.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 629, 2020

Firm behavior during an epidemic – Download PDF
by Brotherhood, Luiz & Jerbashian, Vahagn

GLO Fellow Vahagn Jerbashian

Author Abstract: We derive a model in which firms operate in an epidemic environment and internalize infections among their employees in the workplace. The model is calibrated to fit the properties of the Covid-19 epidemic. We show that firms have incentives to fight against infections and can do so very effectively by increasing teleworking and rotating employees between on-site work, teleworking, and leave. Subsidies to sick leave reduce the cost of sick workers and raise workplace infections. Furlough policies are successful in reducing infections and saving lives. Firms delay and weaken the fight against infections during economic downturns.

More from the GLO Coronavirus Cluster

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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A new GLO Discussion Paper finds that social networks help explain not only the spread of the disease, but also cross-country spillovers in perceptions about coronavirus risk and in social distancing behavior.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 626, 2020

COVID-19 Outbreak, Social Response, and Early Economic Effects: A Global VAR Analysis of Cross-Country Interdependencies – Download PDF
by Milani, Fabio

GLO Fellow Fabio Milani

Author Abstract: This paper studies the social and economic responses to the COVID-19 pandemic in a large sample of countries. I stress, in particular, the importance of countries’ interconnections to understand the spread of the virus. I estimate a Global VAR model and exploit a dataset on existing social connections across country borders. I show that social networks help explain not only the spread of the disease, but also cross-country spillovers in perceptions about coronavirus risk and in social distancing behavior. In the early phases of the pandemic, perceptions of coronavirus risk in most countries are affected by pandemic shocks originating in Italy. Later, the U.S., Spain, and the U.K. play sizable roles. Social distancing responses to domestic and global health shocks are heterogeneous; however, they almost always exhibit delays and sluggish adjustments. Unemployment responses vary widely across countries. Unemployment is particularly responsive to health shocks in the U.S. and Spain, while unemployment fluctuations are attenuated almost everywhere else.

More from the GLO Coronavirus Cluster

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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A new GLO Discussion Paper reviews new insights on the economics of sexual orientation, gender identity and their consequences at work.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 627, 2020

Sexual Orientation, Gender Identity and Labour Market Outcomes: New Patterns and Insights – Download PDF
by Drydakis, Nick & Zimmermann, Klaus F.

GLO Fellow Nick Drydakis

Author Abstract: The paper initiates a research agenda to study new developments of the effects of sexual orientation and gender identity on the labor market performance of individuals. It presents a selection of the small previous literature to establish the important spectrum of topics and identify important challenges to compare them to the papers in the special issue of the International Journal of Manpower (Volume 41, Issue 6) dedicated to Sexual Orientation and the Labor Market. We rely on quantitative empirical studies and compare findings along a variety of topics such as, earnings patterns, occupational access constraints, relationships between subjective well-being indicators and marriage status, workplace experiences and family support all along the sexual orientation and gender identity issues. Contrary to the earlier literature, the most recent studies have found that gay men received either the same wages or higher wages compared to heterosexual men, while lesbian women have been found to receive lower wages in comparison to heterosexual women. We reveal the new evidence on this emerging puzzling pattern of sexual orientation and wages, but highlight also other innovations in the special issue: (i) the first ever meta-analysis of field experiments on occupational access discrimination based on sexual orientation, (ii) utilizing the moderating role of marital status and family support, (iii) studying occupational access discrimination based on gender identity, and (iv) evaluate how distastes, stereotypes, and positive workplace actions affect trans people’s labor market performance. The article attempts to provide a fast and insightful guidance to the major challenges, received wisdom and open issues in the field of sexual orientation and gender identity at work and in the labor market. We summarize the implications provided in all chapters to develop the best evidence-based policy making.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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A new GLO Discussion Paper studies conscription in the Republic of Cyprus and finds that an increase in the length of the army service has a positive effect on academic performance.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 628, 2020

Conscription and Educational Outcomes: Quasi-Experimental Evidence from the Republic of Cyprus – Download PDF

by Savčić, Ružica & Theodoropoulos, Nikolaos & Xefteris, Dimitrios

GLO Fellow Nikolaos Theodoropoulos

Author Abstract: Peacetime military service has both positive and negative effects on human capital. While it depreciates academic abilities it also enhances non-cognitive skills. The net effect of conscription is hard to identify due to issues of self-selection, endogenous timing and omitted variables bias. We exploit the compulsory service of men in the Republic of Cyprus prior to university enrollment, to deal with the first two problems. After controlling for prior academic performance, admission age, and other relevant controls, we find that the duration of service has a positive effect on university test scores. Two exogenous reforms on the duration of the service allow us to deal with omitted variables bias. We estimate difference-in-difference models, where female students act as a control group, and show that a reduction (increase) in the length of the army service has a negative (positive) effect on male academic performance.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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