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on Labour Economics |
| By: | Karsten Kohn (Goethe University of Frankfurt and IZA Bonn) |
| Abstract: | Using register data from the IAB employment sample, this paper studies the wage structure in the German labor market throughout the years 1992-2001. Wage dispersion has generally been rising. The increase was more pronounced in East Germany and occurred predominantly in the lower part of the wage distribution for women and in the upper part for men. Censored quantile wage regressions reveal diverse age and skill patterns. Applying Machado/Mata (2005)-type decompositions I conclude that differences in the composition of the work force only had a small impact on the observed wage differentials between East and West Germany, but changes in the characteristics captured better parts of the observed wage changes over time. |
| Keywords: | wage inequality, censored quantile regression, Machado/Mata decomposition, IABS, East Germany, West Germany |
| JEL: | J31 C24 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2098&r=lab |
| By: | Bhandari, Amit (University of Kalyani); Heshmati, Almas (Ratio) |
| Abstract: | Since the early 1990s, the employment structure of organised manufacturing industries in India has undergone substantial changes with the steep rise in the use of contract workers in place of permanent workers. This process has led to increased wage inequality, discrimination as well as the concern of job insecurity in the labour market. We focus on the wage inequality between permanent and contract workers, since contract workers earn substantially lower wages than their counterpart. The study uses data at the individual level from a recent labour survey of organised manufacturing industries in India. The lower wage earned by contract worker is largely due to cost cutting, rather than differences in labour productivity. The issue of job insecurity has been modeled in form of a binary logistic model. The factors affecting job security are divided as productivity related attributes like level of education, skill etc. and institutional attributes such as labour market rules and regulations, union membership etc. Contrary to the general expectation the study finds that permanent workers are more concern of job insecurity than contract workers. |
| Keywords: | Job Security; Discrimination; Wages; Decomposition; Permanent and Contract Workers; Manufacturing |
| JEL: | J31 J60 J70 |
| Date: | 2006–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0088&r=lab |
| By: | Lukyanova Anna |
| Abstract: | The paper documents the changes in the size of the wage distribution in Russia over the period 1994–2003. Developments in wage inequality varied a lot by sub-periods: overall wage inequality stayed stable in 1994–1996, then it jumped following the 1998 crisis and remained at higher levels for three years. In 2002 the trend reversed again and in the course of a single year wage inequality fell back to the level of the mid-1990s. We find that evolution wage inequality was largely driven by changes in the upper end of the wage distribution. Decomposition of wage inequality by population sub-groups shows that inequality has been higher for men, younger and low-educated workers, and rural inhabitants. The structure of inequality did not change much over the period from 1994 to 2003. Demographic variables (mainly gender and region) explain the largest proportion of wage dispersion (over 40% of the explained variation and 15% of total variation). Nearly equivalent is the contribution of firm characteristics with industry affiliation of employer playing the leading role. Our results show that returns to education continued to rise at all percentiles of the wage distribution converging at the level of about 8–9% of wage increase for an additional year of schooling. |
| Keywords: | Russia, wage inequality, decomposition, quantile regression |
| JEL: | E24 J31 |
| Date: | 2006–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:eer:wpalle:06-03e&r=lab |
| By: | Gadi Barlevy; H. N. Nagaraja |
| Abstract: | This paper extends previous work on the identification of search models in which observed worker productivity is imperfectly observed. In particular, it establishes that these models remain identified even when employment histories are left-censored (i.e. we do not get to follow workers from their initial job out of unemployment), as well as when workers set different reservation wages from one another. We further show that allowing for heterogeneity in reservation can affect the empirical estimates we obtain, specifically estimates of the rate at which workers receive job offers. |
| Keywords: | Labor mobility ; Wages |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-06-03&r=lab |
| By: | Rutkowski, Jan |
| Abstract: | The paper reviews labor market developments in the transition economies of Europe and Central Asia. It argues that the scarcity of productive job opportunities and the growing labor market segmentation are the two main labor market problems facing the transition economies. In the European transition economies the lack of jobs has led to persistent open unemployment. In the Commonwealth of Independent States (CIS) it has led to hidden unemployment (underemployment and low productivity employment). Unemployment in the European transition economies is supported by the developed social safety net. In contrast, in the CIS for most workers unemployment is not an affordable option. They either stick to their old, unproductive jobs in unrestructured enterprises, or work in the informal sector, or resort to subsistence agriculture. Thus, underemployment in the CIS is a mirror image of unemployment in the European transition economies. Accordingly, the high employment-to-population ratios in many CIS countries do not necessarily signify favorable labor market performance. Instead they often indicate delayed enterprise restructuring, the maintenance of unsustainable jobs in uncompetitive firms, and the existence of a large informal sector as an employer of last resort. Labor market segmentation has been caused by a sharp increase in earnings differentials and the attendant increase in the incidence of low-paid jobs, by the polarization of regional labor market conditions, and finally by the growth of the informal sector offering casual, low-productivity jobs. Labor market segmentation and accompanying inequalities are more pronounced in the CIS than in the European transition economies. |
| Keywords: | Labor Markets,Labor Standards,Labor Management and Relations,Educational Policy and Planning,Work & Working Conditions |
| Date: | 2006–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3894&r=lab |
| By: | Carolyn Pitchik |
| Abstract: | When human capital skills differ in their ability to attract offers from alternative employers, a potential inefficiency in human capital investment arises. If a worker's ability and investments are observed by the labour market only when the worker invests in self-promoting activities, then high-ability workers overinvest in self-promotion. No bond is posted in the contract that both attains efficient investment and minimizes the bond subject to individual rationality constraints and the zero profit condition. The contract is one in which the firm (i) offers to match outside offers strategically and (ii) guarantees a minimum wage. The model predicts that, under both the spot market contract and the efficient contract, wage declines with seniority even when conditioning on high ability. This prediction is consistent with the stylized fact regarding the decline of wages with seniority in academia. The model can also explain how the seniority wage premium may vary across disciplines, time, and schools. |
| Keywords: | microeconomic theory, negative seniority wage premium, spot market contract, efficient contract, general human capital, multi-tasking |
| JEL: | J3 J24 J41 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-229&r=lab |
| By: | Pilar González (CETE, Faculdade de Economia, Universidade do Porto); Maria Clementina Santos (CETE, Faculdade de Economia, Universidade do Porto); Luís Delfim Santos (CEMPRE, Faculdade de Economia, Universidade do Porto) |
| Abstract: | Using data from the Personnel Records (Quadros de Pessoal) for the period 1985-2000, we analyse the gender wage gap in Portugal. We estimate wage discrimination and endowment differentials using four decomposition methods. Our main concern is to analyse the key factors that lie behind the persistent gender pay gap despite the deep changes that characterise the recent evolution of the Portuguese labour market and the high female participation rate that exists in the country. Moreover, using the Neumark methodology, we discuss the relative contribution of different factors in explaining the gender pay gap. The results suggest that, in accordance with previous international research, the measured discrimination differential dominates the estimated endowment differential. Over time, a relevant discrimination gap persisted and it didn’t show any tendency to decrease. Results are also consistent in showing that the most important difference in attributes to explain the gender pay gap is the way how males and females are distributed by sector of industry. As to human capital variables, their relative importance to the explanation of the gender pay gap has reduced sharply, particularly along the 90’s. |
| Keywords: | Labour market; discrimination; wage differential; gender |
| JEL: | J71 C50 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:por:cetedp:0505&r=lab |
| By: | Griffith, Rachel Susan; Harrison, Rupert; Macartney, Gareth |
| Abstract: | We analyze the impact of product market competition on unemployment and wages, and how this depends on labour market institutions. We use differential changes in regulations across OECD countries over the 1980s and 1990s to identify the effects of competition. We find that increased product market competition reduces unemployment, and that it does so more in countries with labour market institutions that increase worker bargaining power. The theoretical intuition is that both firms with market power and unions with bargaining power are constrained in their behaviour by the elasticity of demand in the product market. We also find that the effect of increased competition on real wages is beneficial to workers, but less so when they have high bargaining power. Intuitively, real wages increase through a drop in the general price level, but workers with bargaining power lose out somewhat from a reduction in the rents that they had previously captured. |
| Keywords: | competition; product market regulation; unemployment; wage bargaining |
| JEL: | E24 J50 L50 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5599&r=lab |
| By: | Sara Vertommen (Catholic University Leuven); Albert Martens (Catholic University Leuven) |
| Abstract: | Several previous researches have confirmed the hypothesis of ethnostratification, which holds that the labour market is divided into different ethnic layers. While people of a European origin are over-represented in the top layers (the primary market), people with non-European roots and/or nationalities are more concentrated in bottom layers (the secondary market). Relative to the primary market, this secondary market is characterized by a higher chance of unemployment, lower wages, poorer working conditions and greater job insecurity. This paper deals with a very important condition of work: the wage. Does origin have an impact on the level of wage? We make a distinction between nine origin groups: Belgians, North en West Europeans, South Europeans (from Greece, Spain, Portugal), Italians, East Europeans, Moroccans, Turks, Sub Sahara Africans and Asians. The first part of this article briefly describes the database used for the analyses and presents a few general figures for the total Belgian population. In the second part we examine the impact of origin on wage levels. For each origin group we will give an overview of the average daily wages and the partition over the wage classes. For the “weaker” populations, gender and age are taken into account. Finally, by means of a regression analysis, we will examine the influence of origin while controlling a few other variables that may influence the wage level. |
| Keywords: | Origin, Wage Levels and Distributions, Ethnostratification, Valuable Database |
| JEL: | J31 J21 J71 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.61&r=lab |
| By: | L. Nunziata |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:433&r=lab |
| By: | P. Manasse; L. Stanca; A. Turrini |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:423&r=lab |
| By: | Gianmarco I.P. Ottaviano (University of Bologna); Giovanni Peri (University of California, Davis and NBER) |
| Abstract: | The standard empirical analysis of immigration, based on a simple labor demand and labor supply framework, has emphasized the negative impact of foreign born workers on the average wage of U.S.-born workers (particularly of those without a high school degree). A precise assessment of the average and relative effects of immigrants on U.S. wages, however, needs to consider labor as a differentiated input in production. Workers of different educational and experience levels are employed in different occupations and are therefore imperfectly substitutable. When taking this approach, one realizes that foreign-born workers are “complements” of U.S.-born workers in two ways. First, foreign-born residents are relatively abundant in the educational groups in which natives are scarce. Second, their choice of occupations for given education and experience attainments is quite different from that of natives. This implies that U.S.- and foreign-born workers with similar education and experience levels are imperfectly substitutable. Accounting carefully for these complementarities and for the adjustment of physical capital induced by immigration, the conventional finding of immigration’s impact on native wages is turned on its head: overall immigration over the 1980- 2000 period significantly increased the average wages of U.S.-born workers (by around 2%). Considering its distribution across workers, such an effect was positive for the wage of all native workers with at least a high school degree (88% of the labor force in year 2000), while it was null to moderately negative for the wages of natives without a high school degree. |
| Keywords: | Foreign-Born, Skill Complementarities, Wages, Gains from Migration |
| JEL: | F22 J61 J31 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.52&r=lab |
| By: | Earle, John S.; Brown, J. David |
| Abstract: | The challenge for labor market poli cy in the transition economies has been to redress the sharp drops in employment and rises in unemployment in a way that fosters the creation of productive jobs. The authors first document the magnitude and productivity of job and worker reallocation. Then they investigate the effects of privatization, product and labor market liberalization, and obstacles to growth in the new private sector on reallocation and its productivity in Hungary, Romania, Russia, and Ukraine. The authors find that market reform has resulted in a large increase in the pace of job reallocation, particularly that occurring between sectors and through firm turnover. Unlike under central planning, the job reallocation during the transition has contributed significantly to aggregate productivity growth. Privatization has not only stimulated intrasectoral job reallocation, but the reallocation is more productive than that among remaining state firms. The effect of privatization on firm productivity varies considerably across countries and is not always positive. The productivity gains from privatization have generally not come at the expense of workers but are rather associated with increased wages and employment. |
| Keywords: | Labor Markets,Small Scale Enterprise,Microfinance,Economic Theory & Research,Privatization |
| Date: | 2006–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3886&r=lab |
| By: | Damiaan Persyn |
| Abstract: | This paper looks at how increasing economic integration affects wage bargaining between unions and firms if firms are internationally mobile. Using a simple NEG model we find that if firms are perfectly mobile, countries are sufficiently symmetric and wages are bargained over at the firm level they are set on the competitive level. For a more centralised bargaining scheme wage demands are made even if firms can perfectly threat to relocate. If countries are asymmetric full agglomeration becomes possible and rent-sharing between unions and firms then occurs as unions are able to appropriate part of the agglomeration rents in form of higher wages. As agglomeration rents are a hump-shaped function of trade freeness in the larger country this implies the same non-monotonic relationship between wages and the level of trade freeness. We then investigate the case where wage bargaining takes place sequentially in each country. The comparative statics of the international Nash-equilibrium in wages show increased international economic integration only leads to tighter international wage competition if countries are sufficiently symmetric. For the asymmetric case the comparative advantage and relative size of the country determine whether and how economic integration leads to lower wages. |
| JEL: | J50 J31 F16 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:17306&r=lab |
| By: | Huber, Peter |
| Abstract: | The author analyzes regional labor market disparities in transition by presenting some data and summarizing existing literature. He finds that large and persistent regional labor market disparities developed in virtually all transition countries and that there is some evidence of polarization. Differences in starting conditions and market access seem to be the major reasons for regional divergence in transition. Furthermore, regional wages are only slightly more flexible than in many European Union labor markets, interregional migration is low, and capital seems to move toward high wage and low unemployment urban centers rather than to the most backward regions. Policy should thus take a long-run perspective on the existing regional disparities, focus on removing barriers to mobility, review existing institutions for implementing regional policy, and aim at a close coordination of regional and labor market policy instruments. |
| Keywords: | Labor Markets,Economic Theory & Research,Markets and Market Access,Youth and Governance,Country Strategy & Performance |
| Date: | 2006–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3896&r=lab |
| By: | Carlos Henrique Corseuil; Hidehiko Ichimura |
| Abstract: | An alternative measure for gross job flows, incorporating within plant job reallocation, is proposed. Based on data with detailed information about workers occupation, we report the following results: 1. Most of the stylized facts about job reallocation do not change when we take into account within plant job reallocation. 2. Job creation and job destruction figures are decomposed into job created (destructed) by new (dying) firms, job created (destructed) by existing firms by expanding (contracting) workers in existing jobs, and the jobs created (destructed) due to the birth (death) of job categories in incumbent (surviving) establishments. We call the third component as the job mix component. It turned out that the job mix component corresponds to 30% (40%) per cent of job creation (destruction). 3. Also, we describe patterns of job reallocation, and each of the components, by job characteristics as opposed to workers characteristics. The job mix component of both job creation and destruction are concentrated among non-production activities and managerial positions. 4. We interpret these results as evidence that organizational change should be considered as one of the most relevant underlying causes of the employment movements reflected by job creation and job destruction measures. 5. Finally we evaluate the relevance of specific dimensions of organizational change, such as intra-firm reallocation of job categories, outsourcing, changes in the product mix, and labor division. The results points to labor division as the most relevant dimension of organizational change among the ones considered. |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:06023&r=lab |
| By: | Matteo PICCHIO (Universita' Politecnica delle Marche, Dipartimento di Economia) |
| Abstract: | The focus of this paper is to estimate the wage differentials between temporary and permanent workers using the 2002 wave of the Survey of Italian Households' Income and Wealth (SHIW) carried out by the Bank of Italy. A standard Mincer equation extended to a dummy variable for fied term contracts, interaction terms, and further explanatory variables will be estimated. Two hypothetical sources of misspecification may arise. Firstly, the potential endogeneity of the dummy variable for the contract type. Indeed, it seems plausible that those who end up in temporary jobs are not a random draw from the population and that this selection generates biased estimates. We will propose two methods to overcome the self-selectivity bias: the first one is an instrumental variables approach, the second one consists in the Heckman's (1978) dummy endogenous variable model estimator. The second possible source of misspecification is the "classical" Heckman's (1979) sample selection bias. We will present a procedure in order to test the presence of such a sample selection bias taking into account the endogeneity of the dummy variable for the contract type. |
| Keywords: | dummy endogenous variable, sample selection bias, single equation GMM, temporary employment, wage differentials |
| JEL: | C20 C30 J31 M51 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:257&r=lab |
| By: | Peter Haan (DIW, Berlin) |
| Abstract: | In this paper I develop an intertemporal discrete choice model of female labor supply that allows to analyze state dependence and labor supply along the extensive and the intensive margin. Drawing on microsimulation the nonlinearities in the household budget set are captured and thus work incentives of both spouses can be accurately described. Unobserved heterogeneity is modeled nonparametrically and the initial conditions problem is explicitly accounted for. The estimation results show that state dependence is significantly positive at the extensive margin, yet modest on the intensive margin. Using the Markov chain property, I analyze the dynamics of labor supply behavior. I find that labor supply elasticities on both margins differ significantly between the short and long run. |
| Keywords: | Genuine state dependence, labor supply of married women, panel data, unobserved heterogeneity, microsimulation |
| JEL: | C25 C33 J22 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:jep:wpaper:06002&r=lab |
| By: | Christian Dreger; Hans-Eggert Reimers |
| Abstract: | We investigate hysteresis and persistence behaviour in the course of unemployment in EU countries and US states by means of first and second generation panel unit root tests. While the former tests assume independent cross sections, the latter control for dependencies. The first generation tests indicate, that unemployment is persistent, but nevertheless stationary. Second generation tests reveal mixed results, but the evidence for stationarity is much stronger for the US. Hysteresis in EU unemployment is attributed to the idiosyncratic, but not to the common component. In contrast, idiosyncratic components are stationary in the US. If hysteresis behaviour is also relevant here, it is more likely to arise in the common component. These findings might reflect a lower degree of migration of the unemployed in the EU from starving into prosperous regions, possibly because of language barriers or national labour market regulations |
| Keywords: | Unemployment persistence, hysteresis, panel unit roots |
| JEL: | C22 C23 E24 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp572&r=lab |
| By: | Lazareva Olga |
| Abstract: | In a restructuring economy on-the-job training plays important role not only in raising the general level of human capital but in retooling workers for the new sectors of economy. The amount of on-the-job training in Russia has however been unsatisfactorily low compared to other countries. Main objective of this paper is to study the incentives of firms and workers to invest into employee training in Russia. Utilizing the data from Russian Longitudinal Monitoring survey for years 1999–2003, we investigate the determinants of training financing with the particular emphasis on the role of labor market characteristics. We exploit heterogeneity in the structure of regional labor markets in Russia to investigate its effect on training outcomes. In line with existing theory, it is shown that imperfections of the labor market, such as higher regional labor market concentration, lower share of small businesses and higher unemployment create incentives for the firms to provide training to employees. Hence, increase in the efficiency of the labor market is likely to bring about further decrease in the amount of employee training in a private sector. |
| Keywords: | Russia, on-the-job training, labor market structure, returns to training. |
| JEL: | J24 J31 |
| Date: | 2006–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:eer:wpalle:06-05e&r=lab |