Trade and Jobs in Portugal: A Microeconomic Approach. CEPS Working Document No. 160, January 2001

The Portuguese economy presents a low unemployment rate when compared to its European counterparts and it has been claimed that this is partly due to the slow restructuring of the economy, which has been keeping its specialisation in traditional industries, some of them major exporting industries. This study analyses job creation and job destruction at the firm level across skill groups, during the 1980s and the 1990s. The major aim is to explore the role of international trade against alternative explanations of job flows, providing an answer to the question: did international trade help sustain the employment of particular groups of workers, namely the least skilled, in the Portuguese economy? Could conditions in international markets therefore have contributed to keep a low unemployment rate? A matched data set on workers and firms is used, which includes a direct measure of the skill of the worker. Results indicate that technology indicators are more relevant determinants of job flows than conditions in international product markets. Indeed, import prices have no impact on job creation or job destruction for the unskilled or on job creation for the skilled. Higher export prices lead to job creation for the skilled labour force, thus pointing to a certain skill upgrading

Long-Term Impact of Youth Minimum Wages: Evidence from Two Decades of Individual Longitudinal Data

This paper quantifies the long-run impact of exposure to youth minimum wages and sheds light on its mechanisms. It uses remarkable longitudinal data spanning for twenty years and explores legislative changes that define groups of teenagers exposed for different durations. After controlling for the contemporaneous impact of the minimum wage, its long-run impact translates into: an overall wage premium, consistent with an upgrading in the quality of jobs offered; a flatter tenure-earnings profile, consistent with lower initial investment in firm-specific training. Interestingly, the overall wage premium increases with exposure and the tenure-earnings profile is flatter the longer the exposure.skill formation, human capital investment, on-the-job-training, career, long-term, linked employer-employee data

The provision of wage insurance by the firm: evidence from a longitudinal matched employer-employee dataset

We evaluate the impact of product market uncertainty on workers wages, addressing the questions: To what extent do firms provide insurance to their workforce, insulating their wages from shocks in product markets? How does the amount of insurance provided vary with firm and worker attributes? We use a longitudinal matched employer-employee dataset of remarkable quality. The empirical strategy is based on Guiso et al. (2005). We first estimate dynamic models of sales and wages to retrieve consistent estimates of shocks to firms’ sales and to workers’ earnings. We are then able to estimate the sensitivity of wages to permanent and transitory shocks to firm performance. Results point to the rejection of the full insurance hypothesis. Workers’ wages respond to permanent shocks to firm performance, whereas they are not sensitive to transitory shocks. Managers are not fully insured against transitory shocks, while they receive the same protection against permanent shocks as workers in other occupations. Firms with higher variability in their sales, and those operating in di?erent industries, o?er more insurance against permanent shocks. Comparison with Guiso et al. (2005) indicates that Portuguese firms provide less insurance than Italian firms, corroborating evidence on the high degree of wage flexibility in Portugal.

Youth risk-taking behavior in Brazil : drug use and teenage pregnancy

Using an extensive survey that addresses risk factors faced by the population in the shantytowns (favelas) of Fortaleza, Brazil, the aim of this paper is to study risk-taking behavior by youth, focusing on drug use and teenage pregnancy. The paper analyzes the impact of factors such as exposure to mass media, the existence of support networks, self-esteem, and the occurrence of violence at home and in the neighborhood, on the probability of risk-taking behavior. A bivariate probit model is estimated. The findings indicate that reliance on support networks and exposure to mass media are associated with a lower probability of either type of risk behavior. Living in a violent home increases drug consumption. Race does not have a significant impact on either type of behavior.Adolescent Health,Population Policies,Health Monitoring&Evaluation,Youth and Governance,Gender and Health

Can Compulsory Military Service Raise Civilian Wages? Evidence from the Peacetime Draft in Portugal

Although the practice of military conscription was widespread during most of the past century, credible evidence on the effects of mandatory service is limited. Angrist (1990) showed that the Vietnam-era draft in the U.S. lowered the early-career wages of conscripts, a finding he attributed to the low value of military experience. More recent studies have found a mixed pattern of effects, with both negative (the Netherlands) and positive (in Sweden) earnings impacts. Even among Vietnam era draftees, Angrist and Chen (2011) find that the net effect on earnings by age 50 is close to zero. We provide new evidence on the long-term impacts of peacetime conscription in a "low education" labor market, using longitudinal data for Portuguese men born in 1967. These men were inducted at a relatively late age (21), allowing us to use pre- conscription wages as a control for potential ability differences between conscripts and non- conscripts. Our estimates of the average impact of military service for men who had entered the labor market by age 21 are slightly positive (1-2 percent) but not significantly different from zero throughout the period from 2 to 20 years after their service. These small average effects arise from a significantly positive later-life impact for men with only primary education, coupled with a zero-effect for men with higher education. The positive impacts for less-educated men suggest that mandatory service can be a valuable experience for poorly-educated men who might otherwise spend their careers in low-level jobs.quasi-differences, longitudinal earnings, military conscription, sensitivity analysis

Can Compulsory Military Service Increase Civilian Wages? Evidence from the Peacetime Draft in Portugal

Although military conscription was widespread during most of the past century, credible evidence on the effects of mandatory service is limited. We provide new evidence on the long-term effects of peacetime conscription, using longitudinal data for Portuguese men born in 1967. These men were inducted at a relatively late age (21), allowing us to use pre-conscription wages to control for ability differences between conscripts and non-conscripts. We find that the average impact of military service for men who were working prior to age 21 is close to zero throughout the period from 2 to 20 years after their service. These small average effects arise from a significant 4-5 percentage point impact for men with only primary education, coupled with a zero-effect for men with higher education. The positive impacts for less-educated men suggest that mandatory service can be a valuable experience for those who might otherwise spend their careers in low-level jobs.

Temporary Help Services Employment in Portugal, 1995-2000

Whereas there is widespread belief that workers in temporary help services (THS) are subject to poorer working conditions, in particular pay, than comparable workers in the rest of the economy, there is little evidence on whether that is driven by the sector per se or by the workers' characteristics. The first aim of this analysis is to quantify the wage penalty, if any, for workers in THS firms. Secondly, we analyze the wage profile of workers right before and after spells of THS. Linked employer-employee data for Portugal enable us to account for observable as well as unobservable worker quality. Our results show that workers in THS firms earn lower wages than their peers and that this difference is mostly due to the workers' characteristics. We estimate that workers in THS firms earn on average 9% less than comparable workers in the rest of the economy if we control for the workers' observable attributes only. This difference is reduced to about 1% when we control for unobservable characteristics as well. However, interesting differences emerge across groups. Younger workers, both men and women, earn higher wages in TAW than their peers in other firms, while the opposite holds for prime-age and older workers. Moreover, for young workers THS firms is not associated with a stigma effect that slows their wage progression after they work for THS, as opposed to prime-age and older workers, in particular males. Also before entering THS the wage trends are different. Prime-age and older workers, both male and female, see their wages deteriorate relative to their peers before entering THS, suggesting that adverse labor market conditions may motivate them to search for a THS job. On the contrary, for young workers we do not detect any pre-THS wage trend.

Bargained Wages, Wage Drift and the Design of the Wage Setting System

This paper aims at answering the question: How does a typically European bargaining system - with collective bargaining, extension mechanisms and national minimum wage - coexist with low unemployment rate and high wage flexibility? A unique data set on workers, firms and collective bargaining contracts in the Portuguese economy is used to analyze the determinants of both the bargained wage and the wage drift. Results indicate that wage drift stretches the returns to every worker and firm attribute, whereas it shrinks the returns to union bargaining power. Therefore, firm-specific arrangements, in the form of wage drift, partly offset collective bargaining, granting firms a high degree of freedom when setting wages. Union bargaining power raises the overall wage level, but lowers the returns on worker attributes, an outcome of the egalitarian policy pursued.