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on Labour Economics |
| By: | Lundborg, Per (Trade Union Institute for Economic Research) |
| Abstract: | Swedish wage setting has undergone drastic changes during the last 10-15 years. While Sweden was known for its narrow wage distribution, wage differentiation and wage bargaining at the individual level has become leading principles among white-collar workers’ unions. The purpose of the present paper is to analyse the consequences of this wage policy shift. Wage differences have increased drastically among white-collar workers while remained constant or even decreased among blue collar workers. We show that wage differentiation has had a strong effect on white collar workers’ average wage, and caused a major increase in the wage gap between the aggregates of whitecollar and blue-collar workers. We also show that increases in the coefficient of variation of wages raise productivity in firms with many workers in that worker category. Last and foremost, we show that the transition to individual wage setting raises the scope for firms to set efficiency wages and we find support for the fair wage version of efficiency wage setting. The effects of higher wage/fair wage rates were stronger in the late 1990s, when wage differentiation increased more, than in the early 2000s. |
| Keywords: | Efficiency wages; productivity; wage differentials |
| JEL: | J31 J41 J51 |
| Date: | 2005–09–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:fiefwp:0205&r=lab |
| By: | Ina Ganguli (Harvard University); Katherine Terrell (University of Michigan, Ann Arbor and IZA Bonn) |
| Abstract: | Ukraine, the second largest country in the former Soviet bloc, is facing the challenge of rallying popular support for major structural reforms. As in most developing economies, the "Orange Revolution" government’s success will depend on its ability to keep income distribution within an acceptable range. This paper is the first to make use of recent methodological developments in Lemieux’s (2002) decomposition method to advance our understanding of the determinants of wage inequality in developing and transition economies. With an eye toward future policy, we apply this approach to the first large longitudinal micro data set for Ukraine - the Ukrainian Longitudinal Monitoring Survey (ULMS) - to determine the extent to which the introduction of markets and new institutions affected men’s and women’s wage inequality between 1986 and 2003. We find that wage inequality rises substantially for both men and women. Applying the Lemieux method, we show that market forces drive the increase in inequality through changes in wage premiums, but the changes in the composition of the labor force (selection) generally contribute to a reduction in wage inequality; the exception is that changes in women’s labor composition contribute to an increase in inequality in the top half of their wage distribution. Finally, changes in unobservable characteristics work toward increasing inequality for both men and women. The institution of the minimum wage plays an important role in lowering the growth in inequality, more for women than for men. Going forward, if the government wants to ameliorate the effects of market forces on wage inequality, it should recognize the importance of maintaining the value of, and compliance with, the minimum wage. |
| Keywords: | gender, inequality, semi-parametric estimation, transition, wages, Ukraine |
| JEL: | C14 I2 J16 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1724&r=lab |
| By: | Tomer Blumkin (Ben Gurion University); Yossi Hadar (Ben Gurion University); Eran Yashiv (LSE (visiting), Tel Aviv University, CEPR and IZA Bonn) |
| Abstract: | This paper studies optimal UI policy from the perspective of worker assignment to heterogenous jobs in an environment of random matching. Workers react to UI policy through job acceptance decisions; firms react to UI policy through wage posting. There is endogenous assortative matching as a result of the fact that UI policy induces a time profile for reservation wages, shifting the labor force towards the more productive firms. The relation between productivity dispersion and UI policy is mediated by the wage posting policies of firms that take both productivity and policy into account. Optimal UI policy is shown to crucially depend on the properties of the firm productivity distribution, such as its variance and skewness. |
| Keywords: | productivity, heterogeneity, UI policy, endogenous assortative matching, search |
| JEL: | E24 J64 J65 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1733&r=lab |
| By: | Stéphane Auray (Université Charles-de-Gaulle Lille 3, GREMARS and CIRPÉE); Samuel Danthine (Université du Québec à Montréal, CIRPÉE and IZA Bonn) |
| Abstract: | A matching model with labor/leisure choice and bargaining frictions is used to explain (i) differences in GDP per hour and GDP per capita, (ii) differences in employment, (iii) differences in the proportion of part-time work across countries. The model predicts that the higher the level of rigidity in wages and hours the lower are GDP per capita, employment, part-time work and hours worked, but the higher is GDP per hours worked. In addition, it predicts that a country with a high level of rigidity in wages and hours and a high level of income taxation has higher GDP per hour and lower GDP per capita than a country with less rigidity and a lower level of taxation. This is due mostly to a lower level of employment. In contrast, a country with low levels of rigidity in hour and in wage setting but with a higher level of income taxation has a lower GDP per capita and a higher GDP per hour than the economy with low rigidity and low taxation, because while the level of employment is similar in both economies, the share of part-time work is larger. |
| Keywords: | models of search and matching, bargaining frictions, economic performance, labor market institutions, part-time jobs, labor market rigidities |
| JEL: | E24 J22 J30 J41 J50 J64 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1722&r=lab |
| By: | Robert Drago (Pennsylvania State University); David Black (Melbourne Institute of Applied Economic and Social Research, University of Melbourne); Mark Wooden (Melbourne Institute of Applied Economic and Social Research, University of Melbourne and IZA Bonn) |
| Abstract: | Previous research hypothesizes that long working hours are related to consumerism, the ideal worker norm, high levels of human capital, and a high cost-of-job-loss. The authors test these hypotheses using panel data on working hours for an Australian sample of full-time employed workers. Analyses include a static cross-sectional model and a persistence model for long hours over time. The results suggest that long hours (50 or more hours in a usual week) are often persistent, and provide strongest support for the consumerism hypothesis, with some support for the ideal worker norm and human capital hypotheses, and no support for the cost-of-job-loss hypothesis. Other results are consistent with a backward-bending supply of long hours, and with multiple job holders and the self-employed working long hours. |
| Keywords: | HILDA Survey, overwork, working hours |
| JEL: | J22 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1720&r=lab |
| By: | Panu Poutvaara (University of Helsinki, CEBR, CESifo, HECER and IZA Bonn) |
| Abstract: | Migration between countries with earnings-related and flat-rate pay-as-you-go social security systems may change human capital investments in both countries. The possibility of emigration boosts investments in human capital in the country with flat-rate benefits. Correspondingly, those expecting to migrate from the country with earnings-related benefits to a country with flat-rate benefits may reduce their investment in education. With suitably planned transfers between the two countries, allowing for migration may generate a Paretoimprovement for all current and future generations. Without transfers, either country may be unable to pay for promised benefits when labor becomes mobile. |
| Keywords: | social security, education, migration, earnings-related and flat-rate pensions |
| JEL: | H55 I2 F22 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1729&r=lab |
| By: | Herbert Buscher (Institute for Economic Research Halle (IWH)); Christian Dreger (Institute for Economic Research Halle (IWH) and IZA Bonn); Raul Ramos (AQR, University of Barcelona); Jordi Surinach (AQR, University of Barcelona) |
| Abstract: | This paper investigates the role of institutions for labour market performance across European countries. As participation rates have been rather stable over the past, the unemployment problem is mainly caused by shortages in labour demand. Labour demand is expressed by its structural parameters, such as the elasticities of employment to output and factor prices. Institutional variables include employment protection legislation, the structure of wage bargaining, measures describing the tax and transfer system and active labour market policies. As cointegration between employment, output and factor prices is detected, labour demand equations are fitted in levels by efficient estimation techniques. To account for possible structural change, time varying parameter models and aysmmetries due to the business cycle situation are considered. Then, labour demand elasticities are explained by institutions using panel fixed effects regressions. The results suggest that higher flexibility and incentives of households to work appear to be appropriate strategies to improve the employment record. The employment response to economic conditions is stronger in a more deregulated environment, and the absorption of shocks can be relieved. However, the institutional database should be improved in order to arrive at more definite policy conclusions. |
| Keywords: | EU employment, labour market institutions |
| JEL: | E24 J23 J51 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1732&r=lab |
| By: | Kolm, Ann-Sofie (Dept. of Economics, Stockholm University); Nielsen, Søren Bo (Department of Economics, Copenhagen Business School) |
| Abstract: | To examine the effects on labor market performance of government tax and enforcement policies, this paper develops an equilibrium model featuring tax evasion, matching frictions, and worker-firm wage bargains. In the wage bargains, workers and firms can agree on the amount of remuneration that should not be reported to the tax authorities. We find that increased taxation actually reduces unemployment, whereas more zealous enforcement has the opposite effect. |
| Keywords: | Unemployment; matching; wage bargaining; tax evasion |
| JEL: | H26 J41 J64 |
| Date: | 2005–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sunrpe:2005_0005&r=lab |
| By: | Judith Hellerstein; David Neumark |
| Abstract: | We study workplace segregation in the United States using a unique matched employer-employee data set that we have created. We present measures of workplace segregation by education and language–as skilled workers may be more complementary with other skilled workers than with unskilled workers–and by race and ethnicity, using simulation methods to measure segregation beyond what would occur randomly as workers are distributed across establishments. We also assess the role of education- and language-related skill differentials in generating workplace segregation by race and ethnicity, as skill is often correlated with race and ethnicity. Finally, we attempt to distinguish between segregation by skill based on general crowding of unskilled poor English speakers into a narrow set of jobs, and segregation based on common language for reasons such as complementarity among workers speaking the same language. Our results indicate that there is considerable segregation by education and language in the workplace. Racial segregation in the workplace is of the same order of magnitude as education segregation, and segregation between Hispanics and whites is larger yet. Only a tiny portion of racial segregation in the workplace is driven by education differences between blacks and whites, but a substantial fraction of ethnic segregation in the workplace can be attributed to differences in language proficiency. |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11599&r=lab |
| By: | Uwe Blien (Institute for Employment Research (IAB) and IZA Bonn); Jens Suedekum (University of Konstanz and IZA Bonn); Katja Wolf (Institute for Employment Research (IAB)) |
| Abstract: | In this paper we study the dynamics of local employment growth in West Germany from 1980 to 2001. Using dynamic panel techniques, we analyse the timing of the impact of diversity and specialisation, as well as of the human capital structure of local industries. Diversity has a positive effect on employment growth in the short run, which is stronger in manufacturing than in services. Concerning specialization we find evidence for mean reversion, which is inconsistent with the idea that growth emphasizes itself. But there is considerable inertia in this process. A positive effect of education is only found in manufacturing. Additionally, we look at the impact of firm size and regional wages on local employment growth. |
| Keywords: | regional labour markets, externalities, local employment growth, dynamic panel estimation, urbanization and localisation effects |
| JEL: | R11 O40 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1723&r=lab |
| By: | David N. Figlio; Cecilia Elena Rouse |
| Abstract: | In this paper we study the effects of the threat of school vouchers and school stigma in Florida on the performance of "low-performing" schools using student-level data from a subset of districts. Estimates of the change in school-level high-stakes test scores from the first year of the reform are consistent with the early results used by the state of Florida to claim large-scale improvements associated with the threat of voucher assignment. However, we also find that much of this estimated effect may be due to other factors. While we estimate a small relative improvement in reading scores on the high-stakes test for voucher-threatened/stigmatized schools, we estimate a much smaller relative improvement on a lower-stakes, nationally norm-referenced, test. Further, the relative gains in reading scores are explained largely by changing student characteristics. We find more evidence for a positive differential effect on math test scores on both the low- and highstakes tests, however, the results from the lower-stakes test appear primarily limited to students in the high-stakes grade. Finally, we find some evidence that the relative improvements following the introduction of the A Plan by low-performing schools were more due to the stigma of receiving the low grade rather than the threat of vouchers. |
| JEL: | I20 I21 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11597&r=lab |
| By: | Esfandiar Maasoumi (Southern Methodist University); Almas Heshmati (TEPP, Seoul National University and IZA Bonn) |
| Abstract: | We examine the dynamic evolution of incomes, both disposable and gross, for several groups in the PSID panel data at several points from 1968 to 1997. We employ the extended Kolmogorov-Smirnov tests of First and Second Order Stochastic Dominance (SD) as implemented by Maasoumi and Heshmati (2000). They do not impose the Least Favorable Case (LFC) of the composite null hypotheses of SD orders. This is in contrast to simulation and bootstrap-based techniques that do so, resulting in tests that are not asymptotically similar or unbiased. Our approach is also different from the subsampling technique of Linton et al (2005) who obtain critical values for these tests under very general sampling schemes. We offer partial control for many individual/family specific attributes, such as age, gender, education, number of children, work and marital status, by comparing group cells. This avoids having to specify and estimate models of dependence of incomes on these attributes, but lacks the multiple controls that is the promise of such techniques. We find a surprising number of strong rankings, both between groups and over time, in gross income and, to a lesser extent, in ‘disposable’ incomes. |
| Keywords: | Stochastic Dominance, bootstrap, income distribution, testing, PSID, gender, education, age, marital status |
| JEL: | C14 D33 D63 H24 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1727&r=lab |