1 / 45

Labor Income Profiles

This panel discussion focuses on the development of a new methodology for estimating self-employment income, specifically in low-income countries with a large agricultural sector and a high proportion of family enterprises. The panel will analyze cross-sectional and time-series data, explore in-depth analysis approaches, discuss the impact of remittances, and address other relevant issues such as smoothing techniques. The discussion will also explore the relationship between labor income profiles and macro variables, including the level of development and sectoral composition. Additionally, the panel will examine the impact of demographic groups on labor income profiles, such as women, children, and the elderly, and explore the role of remittances, macroeconomic conditions, and labor force allocation. The panel will conclude with a discussion on refining estimation methods and analyzing the interaction between labor income, private consumption, and private transfers, as well as the role of public pension programs and education in shaping labor income profiles.

charleys
Download Presentation

Labor Income Profiles

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Labor Income Profiles Sang-Hyop Lee November 5, 2007 Prepared for NTA 5th Workshop SKKU, Seoul, Korea

  2. Outline of Panel Discussion • Development of New Methodology (self-employment income) • Analysis • Cross-Section Comparison • Time-Series Analysis (X) III. More In-Depth Analysis (from Ogawa) (X) IV. Remittances (from Salas) V. Other Issues (smoothing, etc)

  3. I. Development of New Methodology (self-employment income) • Issues in estimating self-employment income • Labor markets in low-income countries (Rosenzweig 1988) • Large proportion of agricultural sector • Low proportion of wage earners and large proportion of family enterprises or unpaid family workers • Empirical issues; especially estimating labor income for unpaid family workers

  4. Unpaid Family Workers • Old Method • Don’t impute. • It may underestimate/overestimate the share of earnings for age x • New Method • Estimate using the age profile of earnings of employees as a share to allocate household self-employed income to self-employed workers including unpaid family workers. Ex) A household (2/3 of household self-employed income = 30)

  5. II. Analysis-Comparative • Summary statistics for 18 economies • Age earnings profile for 20 economies • Suggestions for outliers (explain, estimate another year, etc) • Wages vs. self-employment income

  6. Outliers?

  7. Thick Flat Tails

  8. Cliffhanging(at a certain old age)

  9. Start late, exit late

  10. Steep in early ages

  11. The winner and the runner-up

  12. Why do they differ? • Mechanical decomposition • (Y/N) =(Y/E) * (E/N) • Per capita labor income = Earnings per employee * (effective) labor force participation rate • (Y/N) =w*(Y/N)employee+(1-w)(Y/N)self-employed • Thus per capita labor income profile depends on • Share of self-employed in the economy • Composition: Labor force participation rates (LFPRs) by age (inverse U), working hours by age (inverse U), unemployment rate by age • Productivity: Age specific productivity (concave/inverse U) (health, technological change, OJT), selection effect (hazard rate may increase over time) • Institution (minimum wage, seniority-based wage system) • Decisions made by three demographic groups (women, children, and elderly) are most important

  13. Relationship with Macro Variables • Level of development (per capita GDP) • Share of sector (e.g. agricultural sector, service sector, etc) • Enrollment of secondary schooling • Old age dependency • Pension / Tax enforcement (not done)

  14. II-2. Time Series Analysis • Has an advantage • Consistent data sets & definitions • Decomposition across years • Policy change analysis

  15. Source: provided by Ron Lee

  16. Decomposition of the Change in Per-Capita Labor Income, Chile, 1987-1997

  17. Source: provided by Ron Lee

  18. Summary • The share of self-employed income is an important factor affecting profiles for developing countries. • Decisions made by women, children, and elderly might be important in shaping the labor income profiles across countries and over time. • These decisions may be somewhat related with the level of development, but there are other factors affecting the relationship.

  19. III. More In-Depth AnalysisIV. Remittances • Age earnings profile also reflects a host of vital economic and social conditions. • Regular vs. Non-regular or Part-time vs. Full-time distinction (share of full-time, regular workers decrease in Japan) • Demand side or macro economic condition (lack of job opportunities) • Women’s labor force participation • Other sectoral allocation of the labor force • Age profile of compensation from/to ROW may be also different from those of residents.

  20. V. Other issues • Smoothing • Use SUPSMU in the R statistical package. Smoothing spans are determined on an ad hoc basis. • Any ages with a profile value of zero are left out of the calculation and added to the series after smoothing. For example when a survey only covers ages 14 and above, all values below 14 were set identically to zero.

  21. Remaining Issues • Refining estimation • Other analysis • How does labor income interact with private consumption and private transfer? • How policy matters? • Public pension programs • Education (e.g. mandatory schooling) • How does labor income profile differ by education/gender/place of residence/living arrangement?

More Related