3 out of 15 awarded grants go to the Department of Economics – University of Copenhagen

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23 June 2016

3 out of 15 awarded grants go to the Department of Economics

The Danish Council for Independent Research, Social Sciences awards DFF-Research Project Grants to associate professor Daniel le Maire, professor Jakob Roland Munch, and professor Søren Leth-Petersen to carry our projects on labor market matching, on the value of education in the global economy, and on the impact of savings and benefit policies on both wealth accumulation and late in life labor supply.

The purpose of Jakob's project is to advance our understanding of how the value of education is affected in the global economy. Jakob explains: "We propose to build the first dataset on cross-border transactions between firms by linking matched worker-firm data from two countries. The dataset enables us to observe buyer-seller relationships, and information about the workers of both buying and selling firms. Using this dataset we can explore novel connections between globalization, human capital and education. E.g., can skilled workers in different countries be complements, not substitutes, because they demand each other’s services through the trading relationships? Do skilled workers get rewarded in globalization because they facilitate communication and minimize production mistakes in firm-to-firm transactions? If so, what specific occupations and college majors are involved? These questions have not been addressed by any other study because the data required have not existed, until now."

Daniel draw up the headlines of the project he will coordinate: "Our project aims to make the next big push in the understanding of labor market matching by exploiting the Danish administrative data and a novel data source on job vacancies. First, we will create a unique data set containing detailed information on all workers, all firms’ online vacancies, and all hires in the Danish labor market. Second, we will use this new data set to examine congestion effects in the job search across different types of workers and firms. Such heterogeneities in congestion effects have important implications for labor market efficiency and the role of policy. Finally, we will use the new data set to undertake a study of labor market mismatch that explicitly accounts for the fact that mismatch may cause some workers to end up in jobs that are a poor match for their skills. Previous work on mismatch ignores this fact and focusses exclusively on unemployment and may therefore have severely understated the importance of mismatch and the policies to combat it.

From education to labor market matching we turn to the study of savings for late life. Søren explains: "Making people work longer and save more for retirement is a key policy objective. We want to understand how savings and benefit policies impact wealth accumulation and late in life labor supply. Current models of labor supply and savings do not take into account the interaction between labor supply and savings. We will develop and estimate a model that does. At the core of the model is how people trade off consumption today with consumption and leisure in the future. We will conduct a survey where we engineer and ask questions to illuminate these trade-offs. We will merge the survey data with administrative records with information about labor supply and wealth since 1980. Our unified approach, where model development and data collection are tightly integrated, is new. The project will result in a coherent quantitative model of individual savings and labor supply decisions, which will facilitate a more realistic assessment of labor supply and savings policies."