Mario Centeno - Academia.edu (original) (raw)

Papers by Mario Centeno

This paper assesses the gains from unemployment insurance (UI) by measuring its im- pact on post-... more This paper assesses the gains from unemployment insurance (UI) by measuring its im- pact on post-unemployment wages. It takes advantage of a quasi-natural experimental setting generated by a reform of the Portuguese UI system that increased the entitlement period for some age-groups, while leaving it unchanged for other age-groups. This re- form strongly increased the observed duration of subsidized unemployment.

IZA Journal of European Labor Studies, 2014

Wage inequality in Portugal increased over the last quarter of century. The period from 1982 to 1... more Wage inequality in Portugal increased over the last quarter of century. The period from 1982 to 1995 witnessed strong increases in both upper-and lower-tail inequality. A shortage of skills combined with skill-biased technological changes are at the core of this evolution. Since 1995, lower-tail inequality decreased, while upper-tail inequality increased at a slower rate. The supply of high-skilled workers more than doubled during this period, contributing significantly to the slowdown. Polarization of employment demand is the more credible explanation for the more recent evolution. As in other developed economies, for instance Germany and the United States, we show that institutions played a minor role in shaping changes in inequality.

This paper analyses the evolution of public wages and the public-private wage gaps in the period ... more This paper analyses the evolution of public wages and the public-private wage gaps in the period prior to the adoption of the euro in the countries then engaged on the fulfi llment of the Maastricht criteria. The results suggest a relative moderation in the growth of public sector wages in several European countries in the 1990s and the existence of a positive wage differential benefi ting public employees that appears to have increased along the period. Therefore, the fact that European countries were undertaking efforts to comply with the requirements for adopting the single currency does not seem to have contributed to the reduction of the wage premium that the literature has typically associated with public sector employment. It is noteworthy that the countries where the wage differential is higher are Portugal, Ireland, Greece and Spain. This differential is, to a large extent, an actual wage premium associated with the public sector, but self-selection effects determining that the best workers prefer the public sector cannot be neglected. Nevertheless, the wage premia tend to be smaller in the case of individuals with higher earnings, making it diffi cult for the public sector to attract the more qualifi ed workers. This diffi culty may be worsened by across-theboard measures to reduce wages and employees. * The authors are thankful to Cláudia Braz, Jorge Cunha, José Ferreira Machado, Ricardo Martinho, Álvaro Novo and Manuel Pereira for helpful comments and suggestions. The opinions expressed in the article are those of the authors and do not necessarily coincide with those of the Banco de Portugal or the Eurosystem. Any errors and omissions are the sole responsibility of the authors.

This paper analyses the evolution of public wages and the publicprivate wage gaps in the period p... more This paper analyses the evolution of public wages and the publicprivate wage gaps in the period prior to the adoption of the euro in the countries then engaged on the fulfillment of the Maastricht criteria. The wage gaps are estimated controlling for employees' observed and unobservable individual attributes, using a novel methodology of fixed effects quantile regressions. The results suggest, on the one hand, a relative moderation in the growth of public sector wages in several European countries in the 1990s. On the other hand, estimates obtained for the public-private wage differential imply an increase in the same period in the majority of countries in the sample, with public employees generally becoming more beneficiated vis-à-vis private sector employees with the same observed and unobservable characteristics. Therefore, the fact that European countries were undertaking efforts to comply with the requirements for adopting the single currency does not seem to have contributed to the reduction of the wage premium that the literature has typically associated with public sector employment. It is noteworthy that the countries where the wage differential is higher are Portugal, Ireland, Greece and Spain. This differential is, to a large extent, an actual wage premium associated with the public sector, but self-selection effects determining that the best workers * The authors are thankful to for helpful comments and suggestions. The views expressed are those of the authors and do not necessarily represent those of the Banco de Portugal or the Eurosystem.Any errors and omissions are the sole responsibility of the authors. 1 prefer the public sector can not be neglected. Nevertheless, the wage premia tend to be smaller in the case of individuals with higher earnings, making it difficult to attract the more qualified workers to the public sector. This difficulty may be worsened by accross-the-board measures to reduce wages and employees.

The worker does not know in detail the nature of the job which he is obtaining nor does he know h... more The worker does not know in detail the nature of the job which he is obtaining nor does he know his own capacities. Nevertheless [the "try and try again" process of advancing to a better position] is the principal method by which workers at the present time improve their condition on their own initiative." Slichter, 1919, p. 218 "Do old fallacies ever die?" Milton Friedman, 1992

Revista Brasileira de Economia, 2009

Our objective is to study, in a labor market characterized by search frictions, the effects of te... more Our objective is to study, in a labor market characterized by search frictions, the effects of technological progress on the average quality of the job matches. We will see as results that the effects of technological progress on the labor market depend upon the initial conditions of the economy. If the economy is totally characterized by the presence of low-quality job matches, an increase in the technological progress is accompanied by an increase in the average quality of jobs. In turn, if the economy is totally characterized by the presence of high-quality job matches, an increase in the technological progress rate implies the reverse effect. Finally, if the economy is totally characterized by the presence of very high-quality jobs, an increase in the technological progress rate implies an increase in the average quality of the job matches.

This paper estimates the impact of increases in the minimum wage on employment stability, wages a... more This paper estimates the impact of increases in the minimum wage on employment stability, wages and inequality in Portugal. We use data from 2002 to 2010; from 2002 to 2006 the real minimum wage was stable, but it increased quite substantially afterwards. Lower-tail wage inequality widen up to 2006 and declined strongly afterwards. The results point towards a negative employment elasticity for workers whose initial wage is between the old and the new minimum wages. This elasticity is similar to the one obtained in the US, a country with a low minimum wage when compared to the average wage, and smaller than the one obtained for France, a country with a high minimum wage. The wage elasticity to the minimum wage is naturally higher for workers earning exactly the old minimum wage. The wages of all other workers remain unaffected. These results point to a detrimental effect of minimum wage increases for employment stability of low-wage workers, with only minor gains in terms of wages.

Economics Letters, 2010

We show that greater technological progress is associated with a lower (higher) probability of wo... more We show that greater technological progress is associated with a lower (higher) probability of worker investment in firm-specific human capital if the technology is of creative destruction (renovation) type. The impact of human capital investments on labor market outcomes depends on the type of investment.

This paper exploits an area-based pilot experiment to identify average treatment effects on unemp... more This paper exploits an area-based pilot experiment to identify average treatment effects on unemployment duration of treated individuals of two active labor market programs implemented in Portugal. We focus on the short-term heterogeneous impact on two subpopulations of unemployed individuals: young (targeted by the Inserjovem program) and old (targeted by the Reage program).

Pensions: An International Journal, 2008

Our objective is to investigate the effects of unexpected changes in the worker's obligations on ... more Our objective is to investigate the effects of unexpected changes in the worker's obligations on the decision to retire. We considered, throughout this paper, that the firm does not know the level of the worker's obligations, and is unable to determine the right moment for the worker to retire. We found that the wage rate decreases when the worker obtains the right to retire and that it is necessary that the retirement benefits be greater than the unemployment insurance in order to have flows of workers from unemployment to retirement, while it is not necessary that this be greater than the wage rate to realize flows of workers from employment to retirement. We also verified that the more difficult it is to obtain the right to retire, the higher will be the job creation flow.

We assess the impact on unemployment duration of a large scale employment program implemented in ... more We assess the impact on unemployment duration of a large scale employment program implemented in Portugal during the late 1990's and early 2000's. Based on a dataset covering over 1.5 million individuals, we construct over time nine sets of treatment and control groups to infer the effect of the program. We test the program effectiveness on the unemployment duration outcome. The results across the nine comparison sets based on the three econometric methods that we use -matching on propensity scores, duration models and difference-in-differences methods -point towards an average effect of the treatment on the treated raging from 1 to 4 months. Even though this reduction is statistically significant, it is rather small in the context of quite long unemployment spells, as the ones observed in Portugal.

The agenda for unemployment insurance (UI) system reform points, without exception, towards a sig... more The agenda for unemployment insurance (UI) system reform points, without exception, towards a significant reduction of its generosity in order to limit moral hazard problems, which ultimately lead to longer unemployment spells. However, in this paper, we show that the impact of the system is very heterogeneous. We show this for the two most important labor market outcomes related with

1. , and present evidence, respectively, for Canada and the United States, that a financially mor... more 1) , and present evidence, respectively, for Canada and the United States, that a financially more generous unemployment benefits result in better jobs, measured in terms of wage gains and job stability.

This paper studies the careers of top executives using a large panel of firms. The main objective... more This paper studies the careers of top executives using a large panel of firms. The main objective is to empirically evaluate the role of learning and human capital acquisition in promotion dynamics along with variables capturing the degree of firm openness to the external labour market. We find that promotion is positively correlated with tenure, but that there is non-linear negative duration dependence with elapsed time since the last promotion event. More opened firms, those who hire a larger fraction of managers from the external labour market, are less prone to promote insiders. The career of a given worker inside a firm can be seen as a sequence of promotion decisions. This points to a nested structure of the promotion decisions over the workers career that we model using a nested logit model. Results show that the workers' progression nest into four types: loser, early starter, late beginner, and champion. The firm openness effect is found to be more pronounced for the losers and the early starters.

Portuguese Economic Journal, 2009

This paper puts together the non-distortionary liquidity effect of unemployment insurance and job... more This paper puts together the non-distortionary liquidity effect of unemployment insurance and job match quality. We identify a big impact on subsidized unemployment duration and a small impact on wages on the job that follows the unemployment spell. Wage gains are heterogeneous and concentrated on individuals at the bottom of the pre-unemployment income distribution. The non-distortionary nature of the liquidity effect reduces the pressure on low-income workers to accept lower productivity jobs.

Empirical Economics, 2006

This paper investigates the impact of unemployment insurance (UI) generosity on the distribution ... more This paper investigates the impact of unemployment insurance (UI) generosity on the distribution of the match starting wage and tenure. We show evidence of a positive shift in the location (mean) and scale (variance) of both variables: more generous UI increases expected starting wage and tenure, and this impact is greater at the highest quantiles. In this sense, more generous

Journal of Labor Research, 2009

Using cross-country data, we investigate the determinants of reservation wages and their course o... more Using cross-country data, we investigate the determinants of reservation wages and their course over the jobless spell. Higher unemployment benefits lead to higher reservation wages. Further, again consistent with the basic search model, repeated observations on the same individual provide scant evidence of declining reservation wages.

The fundamental impulse that keeps the capitalist engine in motion comes from the new consumers' ... more The fundamental impulse that keeps the capitalist engine in motion comes from the new consumers' goods, the new methods of production or transportation, the new markets… [The process] incessantly revolutionizes from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.

This paper assesses the gains from unemployment insurance (UI) by measuring its im- pact on post-... more This paper assesses the gains from unemployment insurance (UI) by measuring its im- pact on post-unemployment wages. It takes advantage of a quasi-natural experimental setting generated by a reform of the Portuguese UI system that increased the entitlement period for some age-groups, while leaving it unchanged for other age-groups. This re- form strongly increased the observed duration of subsidized unemployment.

IZA Journal of European Labor Studies, 2014

Wage inequality in Portugal increased over the last quarter of century. The period from 1982 to 1... more Wage inequality in Portugal increased over the last quarter of century. The period from 1982 to 1995 witnessed strong increases in both upper-and lower-tail inequality. A shortage of skills combined with skill-biased technological changes are at the core of this evolution. Since 1995, lower-tail inequality decreased, while upper-tail inequality increased at a slower rate. The supply of high-skilled workers more than doubled during this period, contributing significantly to the slowdown. Polarization of employment demand is the more credible explanation for the more recent evolution. As in other developed economies, for instance Germany and the United States, we show that institutions played a minor role in shaping changes in inequality.

This paper analyses the evolution of public wages and the public-private wage gaps in the period ... more This paper analyses the evolution of public wages and the public-private wage gaps in the period prior to the adoption of the euro in the countries then engaged on the fulfi llment of the Maastricht criteria. The results suggest a relative moderation in the growth of public sector wages in several European countries in the 1990s and the existence of a positive wage differential benefi ting public employees that appears to have increased along the period. Therefore, the fact that European countries were undertaking efforts to comply with the requirements for adopting the single currency does not seem to have contributed to the reduction of the wage premium that the literature has typically associated with public sector employment. It is noteworthy that the countries where the wage differential is higher are Portugal, Ireland, Greece and Spain. This differential is, to a large extent, an actual wage premium associated with the public sector, but self-selection effects determining that the best workers prefer the public sector cannot be neglected. Nevertheless, the wage premia tend to be smaller in the case of individuals with higher earnings, making it diffi cult for the public sector to attract the more qualifi ed workers. This diffi culty may be worsened by across-theboard measures to reduce wages and employees. * The authors are thankful to Cláudia Braz, Jorge Cunha, José Ferreira Machado, Ricardo Martinho, Álvaro Novo and Manuel Pereira for helpful comments and suggestions. The opinions expressed in the article are those of the authors and do not necessarily coincide with those of the Banco de Portugal or the Eurosystem. Any errors and omissions are the sole responsibility of the authors.

This paper analyses the evolution of public wages and the publicprivate wage gaps in the period p... more This paper analyses the evolution of public wages and the publicprivate wage gaps in the period prior to the adoption of the euro in the countries then engaged on the fulfillment of the Maastricht criteria. The wage gaps are estimated controlling for employees' observed and unobservable individual attributes, using a novel methodology of fixed effects quantile regressions. The results suggest, on the one hand, a relative moderation in the growth of public sector wages in several European countries in the 1990s. On the other hand, estimates obtained for the public-private wage differential imply an increase in the same period in the majority of countries in the sample, with public employees generally becoming more beneficiated vis-à-vis private sector employees with the same observed and unobservable characteristics. Therefore, the fact that European countries were undertaking efforts to comply with the requirements for adopting the single currency does not seem to have contributed to the reduction of the wage premium that the literature has typically associated with public sector employment. It is noteworthy that the countries where the wage differential is higher are Portugal, Ireland, Greece and Spain. This differential is, to a large extent, an actual wage premium associated with the public sector, but self-selection effects determining that the best workers * The authors are thankful to for helpful comments and suggestions. The views expressed are those of the authors and do not necessarily represent those of the Banco de Portugal or the Eurosystem.Any errors and omissions are the sole responsibility of the authors. 1 prefer the public sector can not be neglected. Nevertheless, the wage premia tend to be smaller in the case of individuals with higher earnings, making it difficult to attract the more qualified workers to the public sector. This difficulty may be worsened by accross-the-board measures to reduce wages and employees.

The worker does not know in detail the nature of the job which he is obtaining nor does he know h... more The worker does not know in detail the nature of the job which he is obtaining nor does he know his own capacities. Nevertheless [the "try and try again" process of advancing to a better position] is the principal method by which workers at the present time improve their condition on their own initiative." Slichter, 1919, p. 218 "Do old fallacies ever die?" Milton Friedman, 1992

Revista Brasileira de Economia, 2009

Our objective is to study, in a labor market characterized by search frictions, the effects of te... more Our objective is to study, in a labor market characterized by search frictions, the effects of technological progress on the average quality of the job matches. We will see as results that the effects of technological progress on the labor market depend upon the initial conditions of the economy. If the economy is totally characterized by the presence of low-quality job matches, an increase in the technological progress is accompanied by an increase in the average quality of jobs. In turn, if the economy is totally characterized by the presence of high-quality job matches, an increase in the technological progress rate implies the reverse effect. Finally, if the economy is totally characterized by the presence of very high-quality jobs, an increase in the technological progress rate implies an increase in the average quality of the job matches.

This paper estimates the impact of increases in the minimum wage on employment stability, wages a... more This paper estimates the impact of increases in the minimum wage on employment stability, wages and inequality in Portugal. We use data from 2002 to 2010; from 2002 to 2006 the real minimum wage was stable, but it increased quite substantially afterwards. Lower-tail wage inequality widen up to 2006 and declined strongly afterwards. The results point towards a negative employment elasticity for workers whose initial wage is between the old and the new minimum wages. This elasticity is similar to the one obtained in the US, a country with a low minimum wage when compared to the average wage, and smaller than the one obtained for France, a country with a high minimum wage. The wage elasticity to the minimum wage is naturally higher for workers earning exactly the old minimum wage. The wages of all other workers remain unaffected. These results point to a detrimental effect of minimum wage increases for employment stability of low-wage workers, with only minor gains in terms of wages.

Economics Letters, 2010

We show that greater technological progress is associated with a lower (higher) probability of wo... more We show that greater technological progress is associated with a lower (higher) probability of worker investment in firm-specific human capital if the technology is of creative destruction (renovation) type. The impact of human capital investments on labor market outcomes depends on the type of investment.

This paper exploits an area-based pilot experiment to identify average treatment effects on unemp... more This paper exploits an area-based pilot experiment to identify average treatment effects on unemployment duration of treated individuals of two active labor market programs implemented in Portugal. We focus on the short-term heterogeneous impact on two subpopulations of unemployed individuals: young (targeted by the Inserjovem program) and old (targeted by the Reage program).

Pensions: An International Journal, 2008

Our objective is to investigate the effects of unexpected changes in the worker's obligations on ... more Our objective is to investigate the effects of unexpected changes in the worker's obligations on the decision to retire. We considered, throughout this paper, that the firm does not know the level of the worker's obligations, and is unable to determine the right moment for the worker to retire. We found that the wage rate decreases when the worker obtains the right to retire and that it is necessary that the retirement benefits be greater than the unemployment insurance in order to have flows of workers from unemployment to retirement, while it is not necessary that this be greater than the wage rate to realize flows of workers from employment to retirement. We also verified that the more difficult it is to obtain the right to retire, the higher will be the job creation flow.

We assess the impact on unemployment duration of a large scale employment program implemented in ... more We assess the impact on unemployment duration of a large scale employment program implemented in Portugal during the late 1990's and early 2000's. Based on a dataset covering over 1.5 million individuals, we construct over time nine sets of treatment and control groups to infer the effect of the program. We test the program effectiveness on the unemployment duration outcome. The results across the nine comparison sets based on the three econometric methods that we use -matching on propensity scores, duration models and difference-in-differences methods -point towards an average effect of the treatment on the treated raging from 1 to 4 months. Even though this reduction is statistically significant, it is rather small in the context of quite long unemployment spells, as the ones observed in Portugal.

The agenda for unemployment insurance (UI) system reform points, without exception, towards a sig... more The agenda for unemployment insurance (UI) system reform points, without exception, towards a significant reduction of its generosity in order to limit moral hazard problems, which ultimately lead to longer unemployment spells. However, in this paper, we show that the impact of the system is very heterogeneous. We show this for the two most important labor market outcomes related with

1. , and present evidence, respectively, for Canada and the United States, that a financially mor... more 1) , and present evidence, respectively, for Canada and the United States, that a financially more generous unemployment benefits result in better jobs, measured in terms of wage gains and job stability.

This paper studies the careers of top executives using a large panel of firms. The main objective... more This paper studies the careers of top executives using a large panel of firms. The main objective is to empirically evaluate the role of learning and human capital acquisition in promotion dynamics along with variables capturing the degree of firm openness to the external labour market. We find that promotion is positively correlated with tenure, but that there is non-linear negative duration dependence with elapsed time since the last promotion event. More opened firms, those who hire a larger fraction of managers from the external labour market, are less prone to promote insiders. The career of a given worker inside a firm can be seen as a sequence of promotion decisions. This points to a nested structure of the promotion decisions over the workers career that we model using a nested logit model. Results show that the workers' progression nest into four types: loser, early starter, late beginner, and champion. The firm openness effect is found to be more pronounced for the losers and the early starters.

Portuguese Economic Journal, 2009

This paper puts together the non-distortionary liquidity effect of unemployment insurance and job... more This paper puts together the non-distortionary liquidity effect of unemployment insurance and job match quality. We identify a big impact on subsidized unemployment duration and a small impact on wages on the job that follows the unemployment spell. Wage gains are heterogeneous and concentrated on individuals at the bottom of the pre-unemployment income distribution. The non-distortionary nature of the liquidity effect reduces the pressure on low-income workers to accept lower productivity jobs.

Empirical Economics, 2006

This paper investigates the impact of unemployment insurance (UI) generosity on the distribution ... more This paper investigates the impact of unemployment insurance (UI) generosity on the distribution of the match starting wage and tenure. We show evidence of a positive shift in the location (mean) and scale (variance) of both variables: more generous UI increases expected starting wage and tenure, and this impact is greater at the highest quantiles. In this sense, more generous

Journal of Labor Research, 2009

Using cross-country data, we investigate the determinants of reservation wages and their course o... more Using cross-country data, we investigate the determinants of reservation wages and their course over the jobless spell. Higher unemployment benefits lead to higher reservation wages. Further, again consistent with the basic search model, repeated observations on the same individual provide scant evidence of declining reservation wages.

The fundamental impulse that keeps the capitalist engine in motion comes from the new consumers' ... more The fundamental impulse that keeps the capitalist engine in motion comes from the new consumers' goods, the new methods of production or transportation, the new markets… [The process] incessantly revolutionizes from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.