The Income and Consumption Effects of Covid-19 and the Role of Public Policy
This paper provides empirical evidence on how the labour market impacts of the covid-19 pandemic vary across workers’ incomes, assets, characteristics and household structures in the UK. Using data from the UK Household Longitudinal Study, we find that less educated and young workers are most likely to be laid-off. This is particularly the case for females. Moreover, less educated workers tend to have low income and low assets, limiting their ability to maintain consumption in the face of reduced income. This is compounded at the household level by assortative partnering between workers with similar education levels. We analyse the source of these inequalities by relating employment outcomes to factors related occupational and industrial characteristics. We then conduct a quantitative assessment of the likely impact of covid-19 on households’ consumption and find that, because the adverse labour market impacts are concentrated on workers with low income and low assets, 70 percent of households in the bottom fifth of the income distribution cannot maintain their usual expenditure for even one week. Finally, we consider the effectiveness and distributional implications of two different policy interventions: the Coronavirus Job Retention Scheme in the UK and Economic Impact Payments in the US. Our findings suggest that both policies can alleviate the increase in consumption inequality that would have otherwise arisen during the pandemic. In the short term, the US-style one-off payment is most effective at providing affected households with the means to smooth consumption. However, the CJRS provides better insurance against prolonged disruption as the program provides continuous income support.
Effect of Minimum Wage on Changes in the Thai Labor Market
This study evaluates the effect of the minimum wage on changes in the Thai labor market from 2002 to 2010, when the real minimum wage gradually decreased, and 2011 to 2013 when the real minimum wage substantially increased. These changes include labor force participation, employment, dis-employment, weekly working hours, real hourly wages, real hourly total labor income, and various other types of income. This study uses the individual-level panel data generated from the Matched-Outgoing Rotation Group (Matched-ORG) of the Thai Labor Force Survey. We observed the negative effect of minimum wage on employment, where the elasticity was in the range of – 0.0029 to -0.0474. We also observed the dis-employment for the foreign workers. We found that firms adjust working hours and various types of income to mitigate minimum wage shock. We conclude that the competitive equilibrium theory can reasonably explain the effect of minimum wage on employment as well as the overall changes in the Thai labor market from 2002 to 2013.
On Covid-19: New Implications of Job Task Requirements and Spouse’s Occupational Sorting
The Covid-19 pandemic has disrupted working life in many ways, the negative consequences of which may be distributed unevenly under lockdown regulations. In this paper, we construct a new set of pandemic-related indices from the Occupational Information Network (O*NET) using factor analysis. The indices capture two key dimensions of job task requirements: (i) the extent to which jobs can be adaptable to work from home; and (ii) the degree of infection risk at workplace. The interaction of these two dimensions help identify which groups of workers are more vulnerable to income losses, and which groups of occupations pose more risk to public health. This information is crucial for both designing appropriate supporting programs and finding a strategy to reopen the economy while controlling the spread of the virus. In our application, we map the indices to the labor force survey of a developing country, Thailand, to analyze these new labor market risks. We document differences in job characteristics across income groups, at both individual and household levels. First, low income individuals tend to work in occupations that require less physical interaction (lower risk of infection) but are less adaptable to work from home (higher risk of income/job loss) than high income people. Second, the positive occupational sorting among low-income couples amplifies these differences at the household level. Consequently, low-income families tend to face a disproportionately larger risk of income/job loss from lockdown measures. In addition, the different exposure to infection and income risks between income groups can play an important role in shaping up the timing and optimal strategies to unlock the economy.
Reshaping Thailand’s Labor Market Structure: The Unified Forces of Technology and Trade
Improvements in technology can have substantial impact on the labor market both directly and indirectly via changes in global trade patterns. This paper studies the potential impact of computerization and reshoring/relocating of operations by firms on Thailand’s labor market. Specifically, the analysis is built upon Frey and Osborne’s (2017) approach and incorporates additional measures of trade-base tasks. This is so that the revised machine-learning model can account for both the impact of technology and change in global trade patterns. Our results revealed that occupations that are mostly affected are service and sales workers, and agricultural and fishery workers. In the worst-case scenario, approximately one-third of existing jobs (12.14 million jobs) could be at risk. However, in real situations, new types of jobs may be created, workers may voluntarily adjust, or other factors could drive some overseas operations back to Thailand. Therefore, the potential outlook for Thailand’s labor market may not be as severe as the model has predicted.
Labor Income Inequality in Thailand: the Roles of Education, Occupation and Employment History
Thailand’s income inequality has reportedly declined since the mid-1990s. This paper examines possible mechanisms underlying the dynamic patterns of the country’s labor income inequality. Using the Thai labor force survey between 1988 and 2017, we document that the country’s reduction in income inequality is likely driven by the fact the earnings at the bottom part of the distribution have become more similar. The median wage gap between college and non-college workers, however, still gets larger over time. Our key explanation is the changes in education-occupation composition. Recently college graduates are no longer concentrated in high skill jobs. A larger share of secondary educated workers works in low-skill jobs instead of the middle-skill ones. Using panel administrative data from the Thai Social Security Office, we find that wage disparity can also be explained by employment history. The high wage earners earn more since they enter the market, and the gap gets wider as the workers age. Additionally, the top of the group can command higher wages by working at a large firm or switching to a new job. These findings highlight the fact that to tackle the income inequality issue, the country needs to understand the underlying mechanisms behinds its dynamics.
Alternative Boomerang Kids, Intergenerational Co-residence, and Maternal Labor Supply
This study investigates the boomerang phenomenon among adult children in Thailand. We estimate the effect of having children on co-residence between parents and adult children using Socio-Economic Survey panel data. We find that adult children who have moved out tend to move back in with their parents after having children to save time and money on childcare. The presence of young children increases the likelihood of intergenerational co-residence by over 30%. This study is the first to provide empirical evidence of boomerang kids in an Asian context, which is distinctive compared with Western countries. The relationship between intergenerational co-residence and the maternal labor supply is also examined using the instrumental variable approach based on the cross-sectional Labor Force Survey, which has data covering over 30 years. Our results show that co-residence increases the female labor supply by 21% and also extends women’s working hours by 10 hours.
Parenthood Penalty and Gender Wage Gap: Recent Evidence from Thailand
This study first examines the evolution of gender wage gap in Thailand, using cross-sectional data from the Labor Force Survey (LFS) for 1985–2017. We find that education, occupation, and industry significantly contribute to gender wage gap convergence in Thailand. Furthermore, for females, the wage gap between mothers and non-mothers has increased over time, while for males, the changes are relatively small. Thereafter, we examine the gender wage gap associated with marriage and parental status, using panel data from the Socio-Economic Survey (SES) for 2005– 2012, and find wage penalty for both motherhood and fatherhood in Thailand.
On Worker and Firm Heterogeneity in Wages and Employment Mobility: Evidence from Danish Register Data
In this paper, we develop a model of wage dynamics and employment mobility with unrestricted interactions between worker and firm unobserved characteristics in both wages and employment mobility. We adopt the finite mixture approach of Bonhomme et al. (2017). The model is estimated on Danish matched employer-employee data for the period 1985-2013. The estimation includes gender, education, age, tenure and time controls. We find significant sorting on wages and it is stable over the period. Sorting is established early in careers, increasing during the first decade after which it declines steadily. Job-to-job mobility displays a “mean-reverting” pattern that maintains correlations between worker and firm types to a stationary level. Counterfactuals demonstrate that sorting is primarily driven by two channels: First, a “preference” channel whereby higher wage workers are more likely to accept jobs in higher wage firms. Second, a job finding channel where the job destination distribution out of non-employment is stochastically increasing in the wage type of the worker.
Labour Supply of Married Women in Thailand: 1985-2016
This study investigates the labour supply behaviour of married Thai women with reference to their own and their spouse’s wages. By utilising data of the national Labour Force Survey in Thailand from 1985 to 2016, the wage imputation technique and the instrumental variables approach are applied to correct sample selection and to alleviate endogeneity, common issues that cause bias in estimating female labour supply. By controlling for spousal education and number of children, the main findings indicate an inverse relationship between married women’s labour supply and wages, contrary to the results found in most developed countries. The estimated own wage elasticity ranges from -1.70 to -2.40 and cross elasticity ranges from -0.16 to -0.17, indicating that the impact of own wage on labour supplied is much larger than spouse’s wage. The results from disaggregation classified according to different socioeconomic backgrounds also show the negative elasticities between own and spouses’ wage across all subgroups, except for those with university degrees and higher income.
Minimum Wage and Lives of the Poor: Evidence from Thailand
Studying how the poor respond to the minimum wage policy in Thailand, I find that a notable increase in the minimum wage has no significant impact on employment among the poor even though wage plays a vital but heterogeneous role in determining employment. Also, this policy can significantly boost expenditure among the poor residing in provinces where the minimum wage is adjusted dramatically. Surprisingly, food does not account for the largest share of consumption as the income of the poor rises. The results are still robust to additional controls and redefinition of the poverty.