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Begin New Search Topic Labor Issues Author Lance Lochner

1. Four Decades of Canadian Earnings Inequality and Dynamics across Workers and Firms

Author:
Audra J. Bowlus, Emilien Gouin-Bonenfant, Huju Liu, Lance Lochner, and Youngmin Park
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
This paper studies the evolution of individual earnings inequality and dynamics in Canada from 1983 to 2016 using tax files and administrative records. Linking these individuals to their employers (and rich administrative records on firms) beginning in 2001, it also documents the relationship between the earnings dynamics of workers and the size and growth of their employers. It highlights three main patterns over this period: First, with a few exceptions (sharp increase in top 1% and declining gender gap), Canada has experienced relatively modest changes in overall earnings inequality, volatility, and mobility between 1983 and 2016. Second, there is considerable variability in earnings inequality and volatility over the business cycle. Third, the earnings dynamics of individuals are strongly related to the size and employment growth of their employers.
Topic:
Labor Issues, Employment, Income Inequality, Business, History, and Earnings
Political Geography:
Canada and North America

2. Child Skill Production: Accounting for Parental and Market-Based Time and Goods Investments

Author:
Elizabeth Caucutt, Lance Lochner, Joseph Mullins, and Youngmin Park
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
This paper studies the multidimensional nature of investments in children within a dynamic framework. In particular, we examine the roles of parental time investments, purchased home goods/services inputs, and market-based child care services. We first document strong increases in total investment expenditures by maternal education; yet expenditure shares, which skew heavily towards parental time, vary little with parental schooling. Second, we develop an intergenerational lifecycle model with multiple child investment inputs to study these patterns and the impacts of policies that alter the prices of different inputs. We analytically characterize investment behavior, focusing on the substitutability of different investment inputs and the way parental skills affect the productivity of family-based inputs. Third, we develop an estimation strategy that exploits intratemporal optimality conditions based on relative demand to estimate substitutability between inputs, the relative productivity of different inputs, and the role played by parental education. This approach requires no assumptions about the dynamics of skill investment, preferences, or credit markets. We also account for mismeasured inputs and wages, as well as unobserved heterogeneity in parenting skills. We further show how noisy measures of child achievement (measured several years apart) can also be incorporated in a generalized method of moments approach to additionally identify the dynamics of skill accumulation. Fourth, we use data from the Child Development Supplement of the Panel Study of Income Dynamics to estimate the skill production technology for children ages 12 and younger. Our estimates suggest complementarity between parental time and home goods/services inputs as well as between these family-based inputs and market-based child care, with elasticities of substitution ranging from 0.2 to 0.5. We find no systematic effects of parental education on the relative productivity of parental time and other home inputs. Finally, we use counterfactual simulations to explore the extent and sources of variation in investments across families, as well as investment responses to changes in input prices. We find that variation in prices explains 48% of the overall variance in investment expenditures, and differences in wages explain more than half of the investment expenditure gap between college-educated and non-college-educated parents. We further show that accounting for the degree of input complementarity implied by our estimates has important implications for the responses of individual inputs to any price change and for the responses in total investments and skill accumulation to large (but not small) price changes.
Topic:
Economics, Labor Issues, Children, Human Capital, Economic Mobility, Credit, Productivity, Skilled Labor, and Price
Political Geography:
Global Focus

3. Returns to Skill and the Evolution of Skills for Older Men

Author:
Qian Liu, Lance Lochner, Youngmin Park, and Youngki Shin
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
This paper shows that repeated cross-section data with multiple skill measures (one continuous and repeated) available each period are sufficient to nonparametrically identify the evolution of skill returns and cross-sectional skill distributions. With panel data and the same available measurements, the dynamics of skills can also be identified. Our identification strategy motivates a multi-step nonparametric estimation strategy. We further show that if any continuous repeated measurement is shown to be linear in skills, a much simpler GMM estimator can be used. Using HRS data on men ages 52+ from 1996-2016, we show that one of the available (continuous and repeated) skill measures is linear in skills and implement our GMM estimation approach. Our estimates suggest that the returns to skill were fairly stable from the mid-1990s to the Great Recession, rising thereafter. We document considerable differences in skills and lifecycle skill profiles over ages 52–70 across cohorts, with more recent cohorts possessing lower skills in their mid-50s but experiencing much weaker skill declines with age. We also document skill differences by education and race, which are stable across ages and explain roughly one-third and one-half, respectively, of the corresponding differences in wages. We observe substantial differences in skills for men in their mid-50s choosing to retire at different ages, but no clear evidence of sharp declines in skills surrounding retirement ages. Finally, we show that individual fixed effects account for more than a third of all skill variation at age 60, with considerable persistence in year-to-year skill innovations.
Topic:
Global Recession, Labor Issues, Human Capital, Men, Productivity, Skilled Labor, and Retirement
Political Geography:
Global Focus

4. The EITC and Maternal Time Use: More Time Working and Less Time with Kids?

Author:
Jacob Bastian and Lance Lochner
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
Parents spend considerable time and resources investing in their children's development. Given evidence that the Earned Income Tax Credit (EITC) aects maternal labor supply, we investigate how the EITC aects a broad array of time-use activities, focusing on the amount and nature of time spent with children. Using 2003-2018 time-use data, we nd that federal and state EITC expansions increase maternal work time, which reduces time devoted to home production, leisure, and time with children. However, for children of all ages, almost none of the reduction comes from time devoted to investment activities, such as active learning and development activities.
Topic:
Economics, Labor Issues, Children, Women, Income Inequality, Tax Systems, Human Capital, Family, and Productivity
Political Geography:
United States