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on Labour Economics |
| By: | Anne Daly (University of Canberra); Akira Kawaguchi (Doshisha University); Xin Meng (Australian National University and ERMES, University of Paris II); Karen Mumford (University of York, National Institute for Labour Studies, Australia and IZA Bonn) |
| Abstract: | In a series of studies written during the 1980s Bob Gregory and his co-authors compared the gender wage gap in Australia with that found in other countries. They found it was not the difference in human capital endowments that explained different gender wage gaps but rather the rewards for these endowments. They concluded that country-specific factors, especially the institutional environment, were important in explaining the gender wage gap. This study updates Gregory’s work by comparing the gender wage gap across four countries, Australia, France, Japan and Britain. Our results concord with those of Gregory: institutions are still important in explaining the relative size of the gender wage gap. |
| Keywords: | gender earnings, wage gap, institutions, workplace effects |
| JEL: | J3 J7 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1921&r=lab |
| By: | Ana Rute Cardoso (IZA Bonn, University of Minho and CEPR) |
| Abstract: | The statement that individuals care for status and for their position within a hierarchy has been subject to sparse economic analysis. I check this assertion by analyzing wages and status within the firm, with status measured as the worker rank in the firm wage hierarchy. More precisely, I focus on worker mobility between jobs, to compare movers and stayers in terms of gains/losses in wage level versus gains/losses in rank position. The following questions are addressed: Upon switching firm, what do workers gain/loose in terms of wage and in terms of rank position? Is there a trade-off between wage and rank? If so, does it vary across groups of workers? A remarkable longitudinal linked employer-employee dataset is used. Estimation takes account of worker unobserved heterogeneity. Results indicate that movers are subject to slower rank progression than stayers. That penalty is larger the larger the new firm when compared to the old one. Moreover, faster rank progression is achieved by movers at the price of slower wage progression, suggesting the existence of a trade-off between wage and status. |
| Keywords: | linked employer-employee data, job mobility, wage structure, wage ranks |
| JEL: | J63 J31 J41 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1900&r=lab |
| By: | Ambra Poggi (SEMEQ Department - Faculty of Economics - University of Eastern Piedmont) |
| Abstract: | The aim of this paper is to analyze the wage differentials associated with non-pecuniary working conditions (distance to job, environment conditions, working times) using objective and subjective data. In fact, the individual can be compensated for unsatisfactory working conditions by higher wage (compensating wage differentials theories). Or, if productivity is positively associated with satisfaction, higher wages can be offered to more productive workers, that are workers with higher level of satisfaction (wage efficiency theories). Therefore, we estimate a wage equation with variables that capture workers’ subjective view about their current working conditions allowing for unobserved individual heterogeneity. Finally, we quantify any systematic differences in the wage differentials associated with nonpecuniary working conditions by occupation in order to infer whether any apparent productivity effects of flextime may be relatively greater than the hedonic effects for certain occupations. |
| Keywords: | wage differentials, job satisfaction, working conditions, occupations |
| JEL: | J28 J31 J81 C23 |
| URL: | http://d.repec.org/n?u=RePEc:upo:upopwp:104&r=lab |
| By: | Yannis Ioannides; Adriaan Soetevent |
| Keywords: | job search, social networks, arbitrary degree distribution, wage inequality, incidence of unemployment |
| JEL: | D83 J31 J64 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0601&r=lab |
| By: | Heyman, Fredrik (European Institute of Japanese Studies); Sjöholm, Fredrik (European Institute of Japanese Studies); Gustavsson Tingvall, Patrik (European Institute of Japanese Studies) |
| Abstract: | Multinational firms pay relatively high wages. Less is known about the wage structure within multinational and non-multinational firms. We examine the impact of acquisitions on wage dispersion in Sweden using a large matched employer-employee data set. Foreign acquisitions of Swedish firms increase wage dispersion by increasing wages for high-skilled workers. The positive impact is concentrated to CEOs and managers, whereas other groups are either negatively affected or not affected at all. The impact on high-skilled workers’ wages seems to be caused by the acquisition rather than the ownership itself, since ownership changes from foreign to Swedish result in similar increases. |
| Keywords: | FDI; Multinational Companies; Foreign ownership; Wage-Dispersion; Skill groups; Matched Employer-Employee data |
| JEL: | C23 F23 J31 |
| Date: | 2006–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:eijswp:0222&r=lab |
| By: | Sara Lemos |
| Abstract: | The available minimum wage literature, which is mostly based on US evidence, is not very useful for analyzing developing countries, where the minimum wage affects many more workers and labor institutions and law enforcement differ in important ways. The main contribution of this paper is to present new empirical evidence on minimum wage effects for a key developing country, Brazil. Using a monthly household survey panel from 1982 to 2000 we find evidence of a strong wage compression effect for both the formal and informal sectors. Furthermore, we find no evidence of adverse employment effects in either sector. |
| Keywords: | minimum wage; labor costs; employment; informal sector; Brazil |
| JEL: | J38 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:06/1&r=lab |
| By: | Mirko Draca (CEP, London School of Economics); Stephen Machin (University College London, CEP, London School of Economics and IZA Bonn); John Van Reenen (CEP, London School of Economics) |
| Abstract: | Although there is a large literature on the economic effects of minimum wages on labour market outcomes (especially employment), there is hardly any evidence on their impact on firm performance. This is surprising: minimum wages appear to have a significant impact on wages, but only a limited impact on jobs, so it is natural to imagine there must be a stronger impact on other aspects of firm behaviour. In this paper we consider the impact of minimum wages on firm profitability by exploiting the introduction of a minimum wage to the UK labour market in 1999. We use pre-policy information on the distribution of wages to construct treatment and comparison groups and implement a difference in differences approach. We show evidence that firm profitability was significantly reduced (and wages significantly raised) by the minimum wage introduction. This emerges from separate analyses of two distinct types of firm level panel data (one on firms in a very low wage sector, UK residential care homes, and a second on firms across all sectors). Interestingly, we find no evidence that the profitability reductions resulted in increases in firm exit, so our findings may be consistent with redistribution of quasi-rents towards low wage employees. |
| Keywords: | minimum wage, profitability, exit |
| JEL: | J23 L25 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1913&r=lab |
| By: | Eriksson, Åsa (Department of Economics, Lund University) |
| Abstract: | This paper examines the determinants of the wage level and the relation between the wage level and unemployment in Sweden between 1982 and 2002, using a cointegrated VAR approach. The long-run relation between wages and unemployment is found to be negative. There is also evidence of large deviations between the development in real wages and the development in productivity, in that the growth in real wages exceeds the growth in labour productivity. The results indicate that rigidities are present in the Swedish labour market and that these rigidities may cause higher unemployment. Furthermore, trade unions are found to have a large influence on the wage formation process. |
| Keywords: | Wage formation; Unemployment; Cointegration; Common Trends |
| JEL: | C32 E24 |
| Date: | 2005–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2006_001&r=lab |
| By: | Marloes de Graaf-Zijl (SEO, Universiteit van Amsterdam) |
| Abstract: | In this paper I analyse job satisfaction using fixed effect analysis and a multiple equation model. Overall job satisfaction is analysed as an aggregate of satisfaction with several job aspects. I find that overall job satisfaction is mainly determined by satisfaction with job content. All aspect satisfactions are subsequently explained from observed characteristics, with special focus on contingent employment contracts. Satisfaction with job security is the aspect satisfaction with the strongest relation to type of contract. Since this is also the aspect that receives least weight in overall job satisfaction this has little impact on workers total happiness. More influential is the low satisfaction with job content due to agency work. Overall, temporary agency work leads to the lowest job satisfaction. On-call work and fixed-term work arrangements do not differ from regular work in overall job satisfaction they provide, even though they do lead to highe! r or lower satisfaction with some aspects of the job. |
| Keywords: | temporary employment; job satisfaction |
| JEL: | J28 J40 C23 |
| Date: | 2005–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20050119&r=lab |
| By: | Cronqvist, Henrik; Heyman, Fredrik; Nilsson, Mattias; Svaleryd, Helena; Vlachos, Jonas |
| Abstract: | Based on a two-million-observation panel dataset that matches public firms with detailed data on their employees, we find that entrenched managers pay their workers more. For example, our estimates show that CEOs with more control rights (votes) than all other blockholders together, pay their workers about 6%, or $2,200 per year, higher wages. Because cash flow rights ownership by the CEO and better corporate governance are found to mitigate such behaviour, we interpret the higher pay as evidence of agency problems between shareholders and managers affecting workers' pay. The findings do not appear to be driven by endogeneity of managerial ownership and are robust to a series of robustness checks. These results are consistent with an agency model in which managers pay high wages because they come with private benefits for the manager, such as lower-effort wage bargaining and better CEO-employee relations, and suggest more broadly an important link between the external corporate governance of large public firms and labour market outcomes. |
| Keywords: | agency problems; corporate governance; matched employer-employee data; private benefits; wages |
| JEL: | G32 G34 J31 J33 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5371&r=lab |
| By: | Kenjiro Hori (School of Economics, Mathematics & Statistics, Birkbeck College) |
| Abstract: | This paper analyses the optimal wage contract when firms face demand uncertainty and workers care about employment stability. Workers choose the firm that offers the highest utility taking into account the future lay-off probabilities; firms choose the wage contract that maximises the residual share of the gains from production. For risk-neutral workers this occurs with any efficient wage contract so long as it matches the ex-ante outside option of the workers, i.e. all feasible efficient contracts are optimal. The feasibility is proved for the efficient profit-sharing case. For risk-averse workers with variable effort supply, profit-sharing contracts are further shown to provide effort incentives through both their efficiency wage and performance-related payout effects. The paper thus promotes profit-sharing contracts not only on the grounds of employment stability, but also on the basis of its efficiency and incentive effects. |
| Keywords: | feasiblity, optimal wage contract, profit-share, efficiency |
| JEL: | J33 J23 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:bbk:bbkefp:0601&r=lab |
| By: | Fabien Postel-Vinay; Hélène Turon |
| Abstract: | The existing literature on inequality between private and public sectors focuses on cross-section differences in earnings levels. A more general way of looking at inequality between sectors is to recognize that forward-looking agents will care about income and job mobility too. We show that these are substantially different between the two sectors. Using data from the BHPS, we estimate a model of income and employment dynamics over seven years. We allow for unobserved heterogeneity in the propensity to be unemployed or employed in either job sector and in terms of the income process. We then combine the results into lifetime values of jobs in either sector and carry out a cross-section comparative analysis of these values. We have four main findings. First focusing on cross-sector differences in terms of the income process only, we detect a positive average public premium both in income flows and in the present discounted sum of future income flows. Second, we argue that income inequality is lower but more persistent in the public sector, as most of the observed relative cross-sectional income compression in the public sector is due to a lower variance of the transitory component of income. Third, when taking job mobility into account, the lifetime public premium is essentially zero for workers that we categorize as ``high-employability'' individuals, suggesting that the UK labor market is sufficiently mobile to ensure a rapid allocation of workers into their ``natural'' sector. Fourth, we find some evidence of job queuing for public sector jobs among ``low-employability'' workers. |
| Keywords: | Income Dynamics, Job Mobility, Public-Private Inequality, Selection Effects |
| JEL: | J45 J31 J62 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:bri:cmpowp:05/121&r=lab |
| By: | Donna Brown (Royal Holloway College, University of London); Peter Ingram (University of Surrey); Jonathan Wadsworth (CEPR and Royal Holloway College, University of London) |
| Abstract: | Against a background of increased decentralisation in the structure of wage decision making, we analyse the effects of unions on the dispersion and persistence of pay settlements over the medium term using a longitudinal data set covering British private sector establishments over the period 1987-2001. It seems that the union effect of a reduction in wage dispersion in pay levels observed in earlier studies is repeated when we follow wage changes (settlements) over the medium term. Declining union presence seems therefore to account for some of the increase in longer-term wage dispersion over the sample period. The increase in aggregate wage settlement dispersion seems to have been accompanied by an increase in the permanent rather than transitory components of the variance and this stems mostly from the non-union sector. |
| Keywords: | Pay, Wage Change, Unions, Persistence, Inequality |
| JEL: | J3 J5 J6 |
| Date: | 2004–10 |
| URL: | http://d.repec.org/n?u=RePEc:sur:surrec:1104&r=lab |
| By: | Peter Kuhn (University of California, Santa Barbara and IZA Bonn); Fernando Lozano (Pomona College); |
| Abstract: | After declining for most of the century, the share of employed American men regularly working more than 50 hours per week began to increase around 1970. This trend has been especially pronounced among highly educated, high-wage, salaried, and older men. Using two decades of CPS data, we rule out a number of factors, including business cycles, changes in observed labor force characteristics, and changes in the level of men’s real hourly earnings as primary explanations of this trend. Instead we argue that increases in salaried men's marginal incentives to supply hours beyond 40 accounted for the recent rise. Since these increases were accompanied by a rough constancy in real earnings at 40 hours, they can be interpreted as a compensated wage increase. |
| Keywords: | labor supply, work hours |
| JEL: | J22 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1924&r=lab |
| By: | Marloes de Graaf-Zijl (Faculty of Economics and Econometrics, Universiteit van Amsterdam) |
| Abstract: | In this paper I analyse the use and compensation of fixed-term and on-call employment contracts in the Netherlands. I use an analytical framework in which wage differentials result from two types of uncertainty. Quantity uncertainty originates from imperfect foresight in future product demand. I argue that workers who take over part of the quantity uncertainty from the employer get higher payments. Quality uncertainty on the other hand originates from the fact that employers are ex-ante unable to fully observe a workers ability and results in lower wages. Using a combination of propensity score and Mahalanobis matching I analyse wage differentials and find that on-call workers receive compensation for providing quantity flexibility. Compensation of fixed-term contracts on the other hand is dominated by the negative wage effect of quality uncertainty. I investigate whether this relation still holds after the 1999 policy change that had a substantial impact on the attractiveness of on-call and fixed-term workers from the employers perspective. I find that the policy change has not only influenced the use of on-call and fixed-term contracts, but unintentionally also their compensation. |
| Keywords: | temporary employment; wage differentials; uncertainty |
| JEL: | J31 J40 C21 |
| Date: | 2005–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20050120&r=lab |
| By: | Tracy L. Regan (University of Miami); Ronald L. Oaxaca (University of Arizona and IZA Bonn) |
| Abstract: | We address the bias from using potential vs. actual experience in earnings models. Statistical tests reject the classical errors-in-variable framework. The nature of the measurement error is best viewed as a model misspecification problem. We correct for this by modeling actual experience as a stochastic regressor and predicting experience using the NLSY79 and the PSID. Predicted experience measures are applied to the IPUMS. Our results suggest that potential experience biases the effects of schooling and the rates of return to labor market experience. Using such a measure in earnings models underestimates the explained portion of the male-female wage gap. |
| Keywords: | experience, specification error, decomposition, gender |
| JEL: | C81 J24 J31 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1920&r=lab |
| By: | Robert D. Mohr (University of New Hampshire); Cindy Zoghi (U.S. Bureau of Labor Statistics) |
| Abstract: | This study uses a survey of Canadian workers with rich, matched data on job characteristics to examine whether “enriched” job design, with features like quality circles, feedback, suggestion programs, and task teams, affects job satisfaction. We identify two competing hypotheses on the relationship between enriched jobs and job satisfaction. The “motivation hypothesis,” implies that enrichment will generally increase satisfaction and the “intensification hypothesis,” implies that enrichment may decrease satisfaction by increasing the intensity and scope of work. Our results show that several forms of enrichment, specifically suggestion programs, information sharing, task teams, quality circles and training, raise satisfaction. Therefore we argue that the data support the motivation hypothesis. Partitioning the data by education level or union membership further supports this conclusion, while a direct test of the intensification hypothesis does not support the competing hypothesis. |
| Keywords: | Job Satisfaction; Job Enrichment; Human Resource Practices |
| JEL: | J28 M54 J24 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec060010&r=lab |
| By: | Jens Rubart (Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology)) |
| Abstract: | During the last two decades the so called IT revolution has led to a diverse pattern of growth and employment in OECD countries. In particular, anglo-saxon economies like the U.S. or the U.K. exhibited high rates of economic performance and low unemployment rates, whereas continental European countries showed low economic growth and high unemployment rates. Based on the findings of Lindquist (2004) that the relative demand for workers of different skills (measured by the variation of educational wage differences) varies significantly over the business cycle, we develop a dynamic general equilibrium model which accounts for skill biased technology shocks as well as for the employment record of labor which is divided into different categories of skills. Furthermore, the labor market is characterized by search and matching frictions which allows us to analyze different kinds of institutional settings which determine the negotiated wage rates as well as the demand for labor of the respective skill group. In particular, the latter assumption enables us to control for stylized facts of continental European labor markets. By confronting our theoretical results to empirical evidences it is shown that labor market frictions are necessary to reproduce empirical findings as the lagged response of output, wages and employment after unanticipated shocks to technology. |
| Keywords: | DGE Model, Heterogenous Labor, Skill Biased Technological Change, Search Unemployment |
| JEL: | E32 J21 J23 J24 J31 J41 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:tud:ddpiec:158&r=lab |
| By: | Guido Schwerdt (European University Institute, Department of Economics, Villa San Paolo, Via della Piazzuola 43, 50133 Florence, Italy); Jarkko Turunen (European Central Bank, DG-Economics, Kaiserstrasse 29, Postfach 16 03 19, 60066 Frankfurt am Main, Germany.) |
| Abstract: | Composition of the euro area workforce evolves over time and in response to changing labour market conditions. We construct an estimate of growth in euro area labour quality over the period 1983-2004 and show that labour quality has grown on average by 0.6% year-on-year over this time period. Labour quality growth was significantly higher in the early 1990s than in the 1980s. This strong increase was driven by an increase in the share of those with tertiary education and workers in prime age. Growth in labour quality moderated again towards the end of the 1990’s, possibly reflecting the impact of robust employment growth resulting in the entry of workers with lower human capital. Labour quality growth has on average accounted for nearly one third of euro area labour productivity growth. The results point to a significant decline in the contribution of total factor productivity to euro area growth. |
| Keywords: | Human capital, labour quality, total factor productivity, growth accounting. |
| JEL: | E24 J24 O47 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20060575&r=lab |
| By: | Yann Algan (Université Marne la Vallée, CEPREMAP, OEP and IZA Bonn); Pierre Cahuc (Université Paris 1, CREST-INSEE, CEPR and IZA Bonn) |
| Abstract: | We argue that the efficiency of the Danish flexicurity Model, which combines high unemployment benefits with low job protection and high participation rate, relies on strong public-spiritedness. We also argue that Continental and Mediterranean European countries are unlikely to be able to implement the Danish Model because the lack of public-spiritedness of their citizens raises moral hazard issues which hinder the implementation of efficient public unemployment insurance. |
| Keywords: | job protection, unemployment benefits, civic attitudes |
| JEL: | J23 J65 J68 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1928&r=lab |
| By: | Antonia Parera-Nicolau (Universitat de les Illes Balears); Karen Mumford (University of York and IZA Bonn) |
| Abstract: | We develop and estimate a structural model of labour supply for British two parent families, taking explicit account of the importance of childcare related variables. We find working mothers do not increase their working hours when hourly wages increase, indeed, they are more likely to reduce their hours. The major inducement for working mothers to increase their working hours, that we find, is the provision of high quality formal childcare. Implying that government policy aiming at increasing working hours amongst British mothers of pre-school children may need to focus on the quality as well as the quantity of formal child care that is available. |
| Keywords: | mothers, Britain, childcare, parents labour supply |
| JEL: | J2 J3 J80 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1908&r=lab |
| By: | Wouter Vermeulen (CPB Netherlands Bureau for Economic Policy Analysis, The Hague); Jos van Ommeren (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam) |
| Abstract: | Why are regional unemployment differentials in Europe so persistent if, as the wage curve literature demonstrates, there is no compensation in labour markets? We hypothesize that workers in high-unemployment regions are compensated in housing markets. Modelling regional unemployment differentials as a consequence of centralized wage bargaining, we show that clearing of land markets may undo the incentive for workers to migrate to low-unemployment regions in general equilibrium. The compensating differentials hypothesis is tested on city-level data for several countries. Controlling for variation in income and amenities, housing is found to be about 3 percent less expensive on average in cities where unemployment is 10 percent up. An analysis of housing demand survey data, which takes account of housing heterogeneity, yields a similar negative relationship. The magnitude of the income effect generated by this compensating differential is consistent with a -0.10 wage curve elasticity. These findings weaken the case for regional support programs. |
| Keywords: | regional unemployment; housing markets; wage curve; compensating differentials; hedonic models; regional policy |
| JEL: | R23 R13 J64 |
| Date: | 2005–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20050093&r=lab |
| By: | Herwig Immervoll (OECD and IZA Bonn); David Barber (formerly OECD) |
| Abstract: | Childcare policies play a crucial role in helping parents reconcile care and employmentrelated tasks. This paper quantifies the net cost of purchasing full-time centre-based childcare in OECD countries taking into account a wide range of influences on household budgets, including fees charged by childcare providers as well as childcare-related tax concessions and cash benefits available to parents. Building on these calculations, family resources are evaluated for different employment situations in order to assess the financial trade-offs between work and staying at home. Results are disaggregated to identify the policy features that present barriers to work for parents whose employment decisions are known to be particularly responsive to financial work incentives: lone parents and second earners with young children requiring care. The results indicate that the cost of purchasing childcare services should be analysed in conjunction with other social and fiscal policies that affect family incomes. While childcare fees can be very high, high prices may not impede employment if tax-benefit systems incorporate well-balanced provisions that help parents pay for these services. Conversely, even highly subsidised childcare markets can leave parents with little financial gain from employment if high tax burdens or benefit claw-back rates give rise to adverse work incentives. |
| Keywords: | childcare costs, work incentives, labour supply, tax-benefit systems |
| JEL: | D13 H31 J13 J18 J22 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1932&r=lab |
| By: | Lorenzo Forni (Banca d'Italia) |
| Abstract: | Is there a relation between wage bargaining institutions and unemployment? The humpshape hypothesis”, first introduced by Calmfors and Driffill (1988), states that countries with highly centralized and highly decentralized wage bargaining processes have a superior performance in terms of unemployment than countries with an intermediate degree of centralization. Calmfors and Driffill’s results were obtained on a sample including data from 1962 up to 1985. This paper shows that the claimed superiority in terms of unemployment of centralized countries over intermediate ones during the ’60s and the ’70s depended upon their high levels of government expenditure and public sector employment. The evidence shows that from the beginning of the ’80s the expansion of the public sector in centralized countries slowed down considerably and, at the same time, the correlation between the degree of centralization and unemployment weakened. This evidence helps reconcile recent findings of poor correlations between measures of economic performance and indexes of bargaining systems with Calmfors and Driffill’s original results. The paper concludes by questioning the compatibility of the reported evidence with the theoretical framework proposed by CD to explain the hump-shape hypothesis. |
| Keywords: | wage negotiations, unemployment rate, public employment |
| JEL: | E24 E62 H50 |
| Date: | 2004–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_492_04&r=lab |
| By: | Simon Commander (London Business School and IZA Bonn); Axel Heitmueller (London Business School and IZA Bonn); Laura Tyson (London Business School) |
| Abstract: | This paper proceeds from two key assumptions. The first is that European countries are likely to face increased immigration of individuals. The second is that the emigration of jobs from Europe to other regions of the world through offshoring is also likely to increase. It has been widely argued that both factors are contributing to growing insecurity among European workers. This paper has two goals: first, to put the wider discussion of job displacement and wage changes resulting from immigration and offshoring on a firmer empirical foundation; and second, to explore changes in the European social model that will allow the European economies to adjust to the challenges and respond to the opportunities resulting from increased global competition from emerging market economies. Both immigration and offshoring confront European policy makers with trade-offs between efficiency and equity. These tradeoffs can be eased by active labour market and education policies to enhance the flexibility and skills of European workers so that they enjoy the productivity advantages necessary to support high wages and compete in the global economy. Such policies must combine an appropriate balance of incentives, obligations and benefits that focus on the overall employability of workers rather than on the number of jobs in a particular company or sector. A key challenge in designing such policies is how to combine generous income support for jobseekers while at the same time strengthening their incentives to find and accept available jobs. |
| Keywords: | offshoring, migration, social model, displacement |
| JEL: | J3 J6 H2 L0 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1933&r=lab |
| By: | Enzo VALENTINI |
| Abstract: | In recent years, researchers have paid increasing attention to "factors" in job satisfaction. The relevance of this topic derives from considering that it can affect labor market behavior in relevant ways influencing productivity, effort, absenteeism, and quits. In this paper, I analyze data from the "Working in Britain, 2000" questionnaire and what I find confirms the effects of the personal condition on job satisfaction, as shown in previous studies. In advance, the analysis I have carried out gives results that are compatible with intuitions coming from studies on psychological incentives: it is important to spread information and to give voice, but it is necessary to choose means perceived as really democratic and credible; pay methods based on material incentives can hit job satisfaction, in particular if they are strictly linked to definite and explicit targets; the presence of a supervisor can be considered as a help, but it must not become a merely control activity organizing work in teams it could be an easily way to introduce informal mechanisms of control and, at the same time, to increase job satisfaction; the aim of favoring job satisfaction in a gift exchange view could be a good explanation for general training implemented by firms. |
| Keywords: | HRM practices, gift exchange, job satisfatcion, workers' partecipation |
| JEL: | D23 J28 J53 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:225&r=lab |
| By: | Jakob Roland Munch (University of Copenhagen and CEBR); Jan Rose Skaksen (Copenhagen Business School, CEBR and IZA Bonn) |
| Abstract: | This paper studies the impact of outsourcing on individual wages. In contrast to the standard approach in the literature, we focus on domestic outsourcing as well as foreign outsourcing. By using a simple theoretical model, we argue that, if outsourcing is associated with specialization gains arising from an increase in the division of labor, domestic outsourcing tends to increase wages for both unskilled and skilled labor. We use a panel data set of workers in Danish manufacturing industries to show that domestic and foreign outsourcing affect wages as predicted by the theory. |
| Keywords: | outsourcing, comparative advantage, specialization, wages |
| JEL: | F16 J31 C23 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1907&r=lab |
| By: | Alfonso Alba Ramirez; Jose Maria Arranz-Munoz; Fernando Munoz-Bullon |
| Abstract: | This paper studies transitions out of unemployment in Spain distinguishing between recall to the same employer and reemployment in a new job. We use a large sample of newly unemployed workers obtained from Social Security records for Spain. These data contain information about each individual's employer identy before and after the unemployment spell. A discrete-time duration model with competing risks of exits serves us to investigate the factors that influence the probabilities of leaving unemployment to return to the same employer or to find a new job with a different employer. We find that the route to exit unemployment is determinant to understand the influence of individual an job characteristics on the hazard rate, as well as the latter dependence on unemployment duration. The recall hazard rate exhibits positive duration dependence during the first months and negative duration dependence thereafter (it is larger for females), while the new-job hazard presents positive duration dependence (it is larger for males). |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wbrepe:wb060301&r=lab |
| By: | Christophe Nordman (DIAL, IRD-Paris); François Roubaud (DIAL, IRD-Paris) |
| Abstract: | Assessing gender inequalities has become one of the key issues of the new international poverty reduction strategies implemented in most LDCs in the past few years. It has been argued that differences in labour force attachment across gender are important to explain the extent of the gender earnings gap. However, measures of women's professional experience are particularly prone to errors given discontinuity in labour market participation. For instance, the classical Mincerian approach, where potential experience is used as a proxy for actual experience due to lack of appropriate data, has its limits in estimating the true returns to human capital. Such biases in the estimates cannot be ignored since the returns to human capital are used in the standard decomposition techniques to measure the extent of gender-based wage discrimination. By matching two original surveys conducted in Madagascar in 1998 - a labour force survey and a biographical survey - we built a unique dataset that enabled us to combine the original information gathered from each of them, particularly the earnings from current employment and the entire professional trajectories. Our results lead to an upward reappraisal of returns to experience, as potential experience always exceeds actual experience, for both males and females. In addition, controlling for further qualitative aspects of labour force attachment, we obtain a significant increase in the portion of the gender gap explained by observable characteristics, while the differences in average actual experience across sexes lead to markedly different estimates of the fraction of the gender earnings gap explained by experience. |
| Keywords: | gender wage gap, returns to human capital, labour force participation, biographical data, Madagascar. |
| JEL: | J24 J31 O12 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2005-16&r=lab |
| By: | Titas Kumar Bandopadhyay (Bagnan College) |
| Abstract: | We consider a small open Harris-Todaro (1970) economy complementing global exposure, informal labour training and the urban unemployment. Workers acquire skills through apprenticeship training in the urban informal sector. The informal employers are motivated to train the apprentices by the apprenticeship fees paid to them. The main purpose of the paper is to examine the effects of trade liberalisatioon on the wage gap between skilled and unskilled workers, on the skilled ability and on the level of urban unemployment.My analysis shows that a tariff reduction gives different results depending upon the nature of production structure , which is related to the nature of capital mobility among the different sectors.The major findings of the paper may explain the observed behaviour of the informal sector in the post reform period. |
| Keywords: | economic reform, labour training, informal sector |
| JEL: | C J |
| Date: | 2005–12–29 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpge:0512008&r=lab |
| By: | Thomas C. Buchmueller; Sabina Ohri |
| Abstract: | This study examines the effect of price on the demand for health insurance by early retirees between the ages of 55 and 64. The analysis is based on administrative data from a medium sized employer and takes advantage of a natural experiment created by the firm's health insurance contribution policy. The amount the firm contributes toward retiree health insurance coverage depends on when a person retired and her years of service at that date. As a result of this policy, there is considerable variation in out-of-pocket premiums faced by individuals in the data, but this variation is independent of the non-price attributes of the health insurance plans offered, and plausibly exogenous to individual characteristics that are likely to affect the demand for insurance. We find that price has a statistically significant but small effect on the decision to take up coverage. The implied elasticities are very similar to results found in previous studies using very different data. |
| JEL: | D12 H51 I11 J26 J32 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11951&r=lab |
| By: | Aniela Wirz (Swiss Institute for Business Cycle Research (KOF), Swiss Federal Institute of Technology Zurich (ETH)) |
| Abstract: | Married male workers are found to have a lower incidence of overeducation. A theoretical explanation for this phenomenon is lacking. We test in our study whether the traditional specialisation of spouses’ time between home and market production tends to improve a husband’s jobeducation- match (JEM). We test this hypothesis first by drawing on the method used in the marriage wage premia literature based mainly on the model of Becker (1985). In addition, we perform a new test following the theory of François (1998), which requires less restrictive assumptions. Overall, our results show that within-household specialisation (WHS) explains a substantial part of the superior JEM of husbands, regardless of whether a wife’s labour market participation (experience) or both spouses housework hours are used to measure specialisation. The results and in particular the independent and significant impact of women’s housework hours on their husbands’ JEM, however, speak clearly in favour of François’ theory and against the explanation of Becker. Testing for an endogeneity bias due to a possible sorting process of more able husbands with “traditional” spouses or a measurement error of the JEM does not alter these conclusions. |
| Keywords: | Overeducation; Household models, Human capital, Labour productivity |
| JEL: | I21 J16 J24 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:04-93&r=lab |
| By: | Robert W. Fairlie (University of California, Santa Cruz, National Poverty Center and IZA Bonn) |
| Abstract: | The Blinder-Oaxaca decomposition technique is widely used to identify and quantify the separate contributions of group differences in measurable characteristics, such as education, experience, marital status, and geographical differences to racial and gender gaps in outcomes. The technique cannot be used directly, however, if the outcome is binary and the coefficients are from a logit or probit model. I describe a relatively simple method of performing a decomposition that uses estimates from a logit or probit model. Expanding on the original application of the technique in Fairlie (1999), I provide a more thorough discussion of how to apply the technique, an analysis of the sensitivity of the decomposition estimates to different parameters, and the calculation of standard errors. I also compare the estimates to Blinder-Oaxaca decomposition estimates and discuss an example of when the Blinder-Oaxaca technique may be problematic. |
| Keywords: | decomposition, logit, probit, Blinder-Oaxaca decomposition, race, gender |
| JEL: | C6 J15 J16 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1917&r=lab |
| By: | CASTRO, Rui; COEN-PIRANI, Daniele |
| Abstract: | This paper documents and discusses a dramatic change in the cyclical behavior of aggregate hours worked by individuals with a college degree (skilled workers) since the mid-1980’s. Using the CPS outgoing rotation data set for the period 1979:1-2003:4, we find that the volatility of aggregate skilled hours relative to the volatility of GDP has nearly tripled since 1984. In contrast, the cyclical properties of unskilled hours have remained essentially unchanged. We evaluate the extent to which a simple supply/demand model for skilled and unskilled labor with capital-skill complementarity in production can help explain this stylized fact. Within this framework, we identify three effects which would lead to an increase in the relative volatility of skilled hours: (i) a reduction in the degree of capital-skill complementarity, (ii) a reduction in the absolute volatility of GDP (and unskilled hours), and (iii) an increase in the level of capital equipment relative to skilled labor. We provide empirical evidence in support of each of these effects. Our conclusion is that these three mechanisms can jointly explain about sixty percent of the observed increase in the relative volatility of skilled labor. The reduction in the degree of capital-skill complementarity contributes the most to this result. |
| Keywords: | Macroeconomics, Business Cycles, Volatility, Skilled Hours, Skill Premium, Catal- Skill Comementarity |
| JEL: | E24 E32 J24 J31 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:mtl:montde:2005-19&r=lab |
| By: | Massimiliano BRATTI; Stefano STAFFOLANI (Universita' Politecnica delle Marche, Dipartimento di Economia) |
| Abstract: | The authors evaluate the economic effects of the hypothesis of effort-based career opportunities, described as a situation in which a firm creates incentives for employees to work longer hours than bargained (or desired), by making career prospects depend on relative working hours. Firms' personnel management policies may tend to increase working time (or workers' effort) in order to maximize profits. Effort-based career opportunities raise working time, production and output per worker, and reduce workers' utility. The authors make a first attempt to empirically estimate the relationship between hours worked and the expected opportunities of promotion using the British Household Panel Survey data set. Their analysis shows that the perceived probability of promotion increases with working time, and that this result is robust to various econometric specifications. |
| Keywords: | bargaining, career, personnel management, promotion, welfare, working time |
| JEL: | J22 J23 J50 M12 |
| Date: | 2004–02 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:203&r=lab |
| By: | Tracy L. Regan (University of Miami); Galen Burghardt (Calyon Financial); Ronald L. Oaxaca (University of Arizona and IZA Bonn) |
| Abstract: | This paper develops a theoretical model of optimal schooling levels where ability and family background are the central explanatory variables. We derive schooling demand and supply functions based on individual wealth maximization. Using NLSY79 data we stratify our sample into one-year "FTE" work experience cohorts for 1985-1989. Mincer's (1974) "overtaking" cohort (the years of work experience at which individuals' observed earnings approximately equal what they would have been based on schooling and ability alone) corresponds to 13 FTE years of work experience yielding on average a rate of return of 9.6 percent and an average (optimal) 11.4 years of schooling. |
| Keywords: | human capital, ability, family background, schooling, earnings |
| JEL: | J24 J31 J22 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1927&r=lab |