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on Labour Economics |
| By: | Cunningham, Wendy; Kristensen, Nicolai |
| Abstract: | Despite the existence of minimum wage legislation in most Latin American countries, there is little empirical evidence demonstrating its impact on the distribution of wages. In this study the authors analyze cross-country data for 19 Latin American and Caribbean (LAC) countries to gain an understanding of if and how minimum wages affect wage distributions in LAC countries. Although there is no single minimum wage institution in the LAC region, the authors find regional trends. Minimum wages affect the wage distribution in both the formal and, especially, the informal sector, both at the minimum wage and at multiples of the minimum. The minimum does not uniformly benefit low-wage workers: in countries where the minimum wage is relatively low compared to mean wages, the minimum wage affects the more disadvantaged segments of the labor force, namely informal sector workers, women, young and older workers, and the low skilled, but in countries where the minimum wage is relatively high compared to the wage distribution, it primarily affects wages of the high skilled. This indicates that the minimum does not generally lift the wages of all, but instead, it offers a wage into which employers can " lock in " wages that are already near that level. Thus, minimum wage legislation is more far-reaching than originally thought, affecting both the uncovered informal sector and those earning above the minimum. In addition, the relative level of the minimum wage i s important for determining whose wages are affected. |
| Keywords: | Labor Markets,Income,Wages, Compensation & Benefits,Corporate Social Responsibility,Child Labor |
| Date: | 2006–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3870&r=lab |
| By: | John K. Dagsvik; Marilena Locatelli; Steinar Strøm |
| Abstract: | A female labor supplied model including sectoral choice, estimated on data from Norway, 1994 has been used in simulation to yield labor supply elasticities. We find that these elasticities are declining with the wage level of the women. The overall elasticities are rather small, but these small elasticities shadow for much stronger sectoral responses. A wage increase gives the women an incentive to shift labor supply from the public to the private sector. This occurs despite the fact that education and experiences have a slightly higher return in the public than in the private sector. The reasons for our result are that in the private sector wages are more dispersed and hours are less regulated. Marginal tax rates were cut considerably in the 1992 tax reform. We find that the impact on overall labor supply is rather modest, but again these modest changes shadow for stronger sectoral changes. The tax reform stimulated the women to shift their labor from the public to the private sector and to work longer hours. A calculation of the expected value of changes in household welfare shows that the richest households benefited far more from the 1992 tax reform than the poorest household. |
| Keywords: | Labor supply, married females, structural model, sectoral choice, wage ealsticities, evaluation of tax reforms |
| JEL: | J22 C51 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:wpc:wplist:wp01_06&r=lab |
| By: | Manoj Atolia (Department of Economics, Florida State University) |
| Abstract: | The paper puts forward the hypothesis that transitory effects of trade liberalization on wage inequality can differ from the long-run outcome based on the HOS theory. In cases where HOS theory predicts a decline in wage inequality in the long run, a temporary rise can occur due to (i) asymmetries in the speed of contraction in the import sector and expansion in other sectors, and (ii) capital-skill complementarity in production. Asymmetric contraction and expansion causes transitory capital accumulation that boosts the relative and the real wage of the skilled labor due to capital-skill complementarity. Although long-run HOS fundamentals are, therefore, dominated in short run by the transient effects arising due to capital-skill complementarity, the observed rise in wage inequality is, nevertheless, consistent with the HOS theory appropriately extended to a dynamic setting. |
| Keywords: | Wage Inequality, Trade Reform, HOS, Capital-Skill Complementarity, Dynamic Analysis |
| JEL: | F11 F13 F17 J31 |
| Date: | 2002–03 |
| URL: | http://d.repec.org/n?u=RePEc:fsu:wpaper:wp2002_03_01&r=lab |
| By: | Alessandro Cigno |
| Abstract: | A Beveridgean pension scheme invariably introduces a wedge between the wage rate and the marginal take-home pay. A Bis- marckian one can do so only if it is not actuarially fair, or in the presence of credit rationing. Interestingly, if the two possible sources of distortion are present at the same time, they will tend to o¤set each other. The distortion may even change sign (the wedge may become a premium). In any case, the same pension contribution will discourage labour less if the scheme is Bismar- ckian, than if it is Beveridgean. |
| Keywords: | tax wedge, Bismarck, Beveridge, public pensions, implicit pension tax, labour |
| JEL: | H31 H55 J38 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:wpc:wplist:wp04_06&r=lab |
| By: | J. David Brown; John S. Earle; Álmos Telegdy (Institute of Economics, Hungarian Academy of Sciences) |
| Abstract: | We analyze the effects of privatization on firm-level wages and employment in four transition economies. Contrary to workers' fears, our fixed effect and random trend estimates imply little effect of domestic privatization, except for a slight negative effect in Russia, and they provide some evidence of positive foreign effects on both wages and employment in all four countries. The negligible employment impact of domestic privatization results from effects on efficiency and scale that are large, positive, but offsetting in Hungary and Romania, and from small effects of both types in Russia and Ukraine. The positive employment and wage bill consequences of foreign ownership result from a substantial scale-expansion effect that dominates the efficiency effect. |
| Keywords: | privatization, employment, wages, foreign ownership, Hungary, Romania, Russia, Ukraine |
| JEL: | D21 G34 J23 J31 L33 P31 |
| Date: | 2006–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:has:bworkp:0510&r=lab |
| By: | János Gács (Institute of Economics, Hungarian Academy of Sciences) |
| Abstract: | With its impulses and coordination initiatives the EU makes efforts to influence the employment and labour policies in its Member States. Here the principal instruments are the European Employment Strategy and its main constituent, the Employment Guidelines. The latter, while based on modern professional ideas about the institutional determinants of the labour market, have been incomplete up to 2005: due to departmentalism reflected in the tensions between the EU institutions responsible for employment and macro-policies crucial fields were kept out of the employment guidelines such as wage-setting policies, the wage bargaining system as well as the budgetary implications of active labour market policies. The macroeconomic support of the EU-inspired employment policies is theoretically not sound. An example of this is the objective of the Lisbon Process of simultaneous ambitions improvement of both macro-level productivity and employment. This target ignores the trade-off between these two factors prevailing even in the long term. The division and inconsistency between the philosophy and operation of various EU institutions is reflected in the moderate, but disturbing inconsistencies between the mid-term macroeconomic and employment strategies of the Hungarian government (the Convergence Programme and the National Action Plan for Employment). There are, however, possibilities for the member countries, including Hungary, to prepare and carry out employment policies in the EU framework that are supported by sound macro-policies: they have to be less slavish abiding by specific EU recommendations, have to take into account the domestic conditions realistically, and get rid of detrimental institutional divisions, at least in their indigenous administration. |
| Keywords: | European integration, employment strategy, coordination of policies |
| JEL: | F15 E61 J20 O11 |
| Date: | 2006–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:0520&r=lab |
| By: | Colin Rowat and Paul Seabright |
| Abstract: | This paper models aid agencies as financial intermediaries that do not make a financial return to depositors, whose concern is to transfer resources to investor-beneficiaries. This leads to a problem of verifying that the agency is using donations as intended. One solution to this problem is for an agency to employ altruistic workers at below-market wages: altruistic workers, who can monitor the agency's activities, would not work at below-market rates unless it were genuinely transferring resources to beneficiaries. We consider conditions for this solution to be incentive compatible. In a model with pure moral hazard, observability of wages makes incorporation as a not-for-profit firm redundant as a commitment device. In a model with both moral hazard and adverse selection, incorporation as a not-for-profit firm can serve as a costly commitment mechanism reassuring donors against misuse of their funds. Hiring a worker of low ability can also be a valuable commitment device against fraud. |
| Keywords: | signalling, non-profit, wage differential, donations, altruism, two-sided market |
| JEL: | D21 D64 J31 L31 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:05-16&r=lab |
| By: | Christian Haefke; Michael Reiter |
| Abstract: | Existing models of equilibrium unemployment with endogenous labor market participation are complex, generate procyclical unemployment rates and cannot match unemployment variability relative to GDP. We embed endogenous participation in a simple, tractable job market matching model, show analytically how variations in the participation rate are driven by the cross-sectional density of home productivity near the participation threshold, and how this density translates into an extensive-margin labor supply elasticity. A calibration of the model to macro data not only matches employment and participation variabilities but also generates strongly countercyclical unemployment rates. With some wage rigidity the model also matches unemployment variations well. Furthermore, the labor supply elasticity implied by our calibration is consistent with microeconometric evidence for the US. |
| Keywords: | Matching Models, Labor Market Participation, Labor Supply Elasticity, Time Aggregation |
| JEL: | E24 E32 J21 J64 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:950&r=lab |
| By: | Lundin, Per (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | The paper describes and analyses a Scandinavian research project on trade union based development of, and training in, computer technology and work organization, especially text and image processing in the graphic industries, that was named UTOPIA and carried out between 1981 and 1986. UTOPIA gave rise to the so called Scandinavian School of System Development (Den skandinaviska skolan) where the users participation in system development have become a key element. The role of labour movement in technological change is highlighted and it is underlined that there are different incentives for technological change. Corporations developing technology usually pursued increased efficiency in production, while the labour movement and UTOPIA aimed at other goals such as translating social values regarding job skills, quality of work, and quality of products into new computer hardware and software for the graphic industries. It is argued that the UTOPIA-project may be seen as an attempt to establish an innovation system in computer system development where these kind of different values were pursued. The innovation system consisted of industry, research institutes, trade unions, and universities, and was characterized by strong labour interests. |
| Keywords: | History; history of computers; history of technology; industrial democracy; innovation systems; management; technological change; trade unions |
| JEL: | J50 N00 N73 O14 O30 |
| Date: | 2006–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0052&r=lab |
| By: | Mary A. Burke (Research Department, Federal Reserve Bank of Boston); Tim R. Sass (Department of Economics, Florida State University) |
| Abstract: | In this paper we analyze a unique micro-level panel data set encompassing all publicschool students in grades 3-10 in the state of Florida for each of the years 1999/2000-2003/2004.We are able to directly link each student and teacher to a specific classroom and can thus identifyeach member of a student’s classroom peer group. The ability to track individual studentsthrough multiple classrooms over time and multiple classes for each teacher enables us to controlfor many sources of spurious peer effects such as fixed individual student characteristics andfixed teacher inputs, as well as to compare the strength of peer effects across different groupingsof peers, across grade levels, and to compare the effects of fixed versus time-varying peercharacteristics. We find mixed results on the importance of peers in the linear-in-means model,and resolve some of these apparent conflicts by considering non-linear specifications of peereffects. The results suggest that some grouping by ability may create Pareto improvements overuniformly mixed classrooms. In general we find that contemporaneous behavior wields strongerinfluence than peers’ fixed characteristics. |
| Keywords: | Peer Effects, Student Achievement |
| JEL: | I2 Z13 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:fsu:wpaper:wp2006_02_02&r=lab |
| By: | Kozo Kiyota; Toshiyuki Matsuura |
| Abstract: | This paper asks two questions. 1) Do multinational enterprises (MNEs) present different patterns of employment from domestic firms? 2) Do workers in MNEs face a higher risk of losing jobs? We distinguish two types of MNEs (i.e., Japanese MNEs and foreign-owned firms) and utilize firm-level data in Japan between 1995 and 2000. It was true that the net job destruction of Japanese MNEs was larger than those of foreign-owned firms and domestic firms. However, this negative employment growth is attributable not to rapid job destruction but to slow job creation. Second, workers in Japanese MNEs and foreign-owned firms did not face a higher risk of losing jobs than did those in domestic firms. This finding contradicts the findings of Barba Navaretti, Turrini, and Checchi (2003) but is consistent with the firm-specific skill hypothesis of Fukao and Otaki (1993). Japanese MNEs and foreign-owned firms might invest heavily in job training, which results in their lower employment volatility. |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:06014&r=lab |
| By: | Schady, Norbert |
| Abstract: | There is considerable evidence that young children in many developing countries suffer from profound deficits in nutrition, health, fine and gross motor skills, cognitive development, and socio-emotional development. Early childhood development (ECD) outcomes are important markers of the welfare of children. In addition, the deleterious effects of poor outcomes in early childhood can be long-lasting, affecting school attainment, employment, wages, criminality, and measures of social integration of adults. This paper considers the theoretical case to be made for investments in early childhood, selectively reviews the literature on the impact of ECD programs in the United States, discusses the evidence from Latin America and the Caribbean, and makes suggestions for future research. The focus is on the relation between outcomes in early childhood and measures of household s ocioeconomic status, child health, and parenting practices, as well as on the impact of specific policies and programs. The knowledge base on early childhood outcomes is still thin in Latin America and the Caribbean. There are therefore very high returns to comparative descriptive analysis in the region, as well as to careful evaluations of the impact of various programs. |
| Keywords: | Educational Sciences,Primary Education,Early Childhood Development,Street Children,Youth and Governance |
| Date: | 2006–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3869&r=lab |
| By: | Johnson, Andreas (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | The paper investigates the flows of FDI and trade in eight high performing East Asian economies with a focus on the relationship between FDI and host country exports. The development and importance of FDI and trade for the region is described. The empirical part of the paper examines the relationship between FDI and host country exports, using data for the period 1980 to 2003. Time series regressions for individual economies as well as panel data estimation indicate that FDI inflows have a significant and positive effect on host country exports, suggesting that export-platform FDI may be important for the East Asian economies. No clear link between outflows of FDI and exports was found, allowing FDI outflows to function as both a complement and a substitute for source country exports. Granger causality tests find indications of FDI inflows causing exports, providing further evidence that the export-platform FDI strategy applies for the East Asian economies. |
| Keywords: | foreign direct investment; East Asia; international trade; exports |
| JEL: | F14 F21 F23 |
| Date: | 2006–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0057&r=lab |
| By: | J. Vernon Henderson; Ari Kuncoro |
| Abstract: | Indonesia has a tradition of corruption among local officials who harass and collect bribes from firms. Corruption flourished in the Suharto, pre-democracy era. This paper asks whether local democratization that occurred after Suharto reduced corruption and whether specific local politics, over and above the effects of local culture, affect corruption. We have a firm level data set for 2001 that benchmarks bribing activity and harassment at the time when Indonesia decentralized key responsibilities to local democratically elected governments. We have a second data set for 2004 on corruption at the end of the first democratic election cycle. We find that, overall, corruption declines between these time periods. But specific politics matter. Islamic parties in Indonesia are perceived as being anti-corruption. Our data show voting patterns reflect this belief and voters' perceptions have some degree of accuracy. In the first democratic election, localities that voted in legislatures dominated by secular parties, including Megawati's party, experienced significant relative increases in corruption, while the reverse was the case for those voting in Islamic parties. But in the second election in 2004, in those localities where corruption had increased under secular party rule, voters "threw the bums out of office" and voted in Islamic parties. |
| JEL: | H7 O1 P16 R5 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12110&r=lab |
| By: | Ali Choudhary (University of Surrey); Paul Levine (University of Surrey) |
| Abstract: | We examine a model where households develop external habits by following norms and therefore have multiple habits in both consumption and labour supply. In doing so, they contribute to habit formation and hence pose an externality effect on others. Our findings are: first, that consumption and work habit (‘work ethic’) drive us towards a 24/7 society; both forms of habit increase the labour supply of households. Second, the two externalities involved in external habit work in opposite directions. For consumption, external habit is a negative externality as it reduces the utility of others in the economy. By contrast work ethic reduces the disutility and is therefore a positive externality. Third, as a result of our second finding, multiple habits can involve both a consumption tax and subsidy to correct for these externalities. Fourth, with plausible parameter values, the welfare consequences of multiple habits are far greater where there are long-run inefficiencies compared with only transitional inefficiency. |
| Keywords: | Catching-up with the Joneses, Work Ethic, Savings, Output Inefficiency and Taxation |
| JEL: | D12 E52 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:sur:surrec:0506&r=lab |
| By: | Christian Grund (RWTH Aachen University, Templergraben 59, 52056 Aachen, Germany, tel: +49 241 8096381. christian.grund@wiwi.rwth-aachen.de); Dirk Sliwka (University of Cologne, Herbert-Lewin-Str. 2, 50931 Köln, Germany, tel: +49 221 470-5888, fax: +49 221 470-5078. dirk.sliwka@uni-koeln.de) |
| Abstract: | A main prediction of agency theory is the well known risk-incentive trade-off. Incentive contracts should be found in environments with little uncertainty and for agents with low degrees of risk aversion. There is an ongoing debate in the literature about the first trade-off. Due to lack of data, there has so far been hardly any empirical evidence about the second. Making use of a unique representative data set, we find clear evidence that risk aversion has a highly significant and substantial negative impact on the probability that an employee's pay is performance contingent. |
| Keywords: | Agency theory, GSOEP, Incentives, Pay for performance, Performance appraisal, Risk, Risk aversion |
| JEL: | J33 M52 D80 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:101&r=lab |
| By: | Julio J. Rotemberg |
| Abstract: | This paper presents a complete general equilibrium model with flexible wages, where the degree to which wages and productivity change when cyclical employment changes is roughly consistent with postwar U.S. data. Firms with market power are assumed to bargain simultaneously with many employees, each of whom finds himself matched with a firm only after a process of search. When employment increases as a result of reductions in market power, the marginal product of labor falls. This fall tempers the bargaining power of workers and thus dampens the increase in their real wages. The procyclical movement of wages is dampened further if the posting of vacancies is subject to increasing returns. |
| Keywords: | Wages |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:06-5&r=lab |
| By: | Olivier Guedj (Capital Fund Management); Jean-Philippe Bouchaud (Science & Finance, Capital Fund Management; CEA Saclay;) |
| Abstract: | We study the statistics of earning forecasts of US, EU, UK and JP stocks during the period 1987-2004. We confirm, on this large data set, that financial analysts are on average over-optimistic and show a pronounced herding behavior. These effects are time dependent, and were particularly strong in the early nineties and during the Internet bubble. We furthermore find that their forecast ability is, in relative terms, quite poor and comparable in quality, a year ahead, to the simplest `no change' forecast. As a result of herding, analysts agree with each other five to ten times more than with the actual result. We have shown that significant differences exist between US stocks and EU stocks, that may partly be explained as a company size effect. Interestingly, herding effects appear to be stronger in the US than in the Eurozone. Finally, we study the correlation of errors across stocks and show that significant sectorization occurs, some sectors being easier to predict than others. These results add to the list of arguments suggesting that the tenets of Efficient Market Theory are untenable. |
| JEL: | G10 |
| Date: | 2004–10 |
| URL: | http://d.repec.org/n?u=RePEc:sfi:sfiwpa:500062&r=lab |
| By: | Marc Potters (Science & Finance, Capital Fund Management); Jean-Philippe Bouchaud (Science & Finance, Capital Fund Management; CEA Saclay;) |
| Abstract: | We solve exactly a simple model of trend following strategy, and obtain the analytical shape of the profit per trade distribution. This distribution is non trivial and has an option like, asymmetric structure. The degree of asymmetry depends continuously on the parameters of the strategy and on the volatility of the traded asset. While the average gain per trade is always exactly zero, the fraction f of winning trades decreases from f = 1/2 for small volatility to f = 0 for high volatility, showing that this winning probability does not give any information on the reliability of the strategy but is indicative of the trading style. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:sfi:sfiwpa:500065&r=lab |
| By: | Luis Eduardo Arango; Carlos Esteban Posada |
| Abstract: | A pseudo-panel was built to estimate the determinants of the labor participation decision of married women between 1984 and 2000. Past participation decisions, education level, labor income taxes, children between 1 and 2 years of age, and the presence of other people unemployed at home are the main explanatory variables of married women’s labor participation in Colombia . The interest rate variable does not offer any insight into that decision. |
| Keywords: | married women, labor participation, state-dependence, fertility. |
| JEL: | C21 C23 C25 J22 J13 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:357&r=lab |