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on Labour Economics |
| By: | Heyman, Fredrik (Research Institute of Industrial Economics); Gustavsson Tingvall, Patrik (Stockholm School of Economics); Sjöholm, Fredrik (Stockholm School of Economics) |
| 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: | 2006–11–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0675&r=lab |
| By: | William T. Dickens (The Brookings Institution, 1775 Massachusetts Avenue, NW Washington, D.C. 20036, USA.); Lorenz Götte (Institute for Empirical Research in Economics, University of Zurich, Blümlisalpstrasse 10, CH-8006 Zürich, Switzerland.); Erica L. Groshen (Federal Reserve Bank of New York, 33 Liberty Street, New York, NY 10045, USA.); Steinar Holden (University of Oslo, Box 1095 Blindern, 0317 Oslo, Norway.); Julián Messina (University of Salerno, Via Ponte don Melillo, 84084 Fisciano (SA), Italy.); Mark E. Schweitzer (Federal Reserve Bank of Cleveland, P.O. Box 6387 Cleveland, Ohio 44101-1387, USA.); Jarkko Turunen (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Melanie E. Ward (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | How do the complex institutions involved in wage setting affect wage changes? The International Wage Flexibility Project provides new microeconomic evidence on how wages change for continuing workers. We analyze individuals’ earnings in 31 different data sets from sixteen countries, from which we obtain a total of 360 wage change distributions. We find a remarkable amount of variation in wage changes across workers. Wage changes have a notably non-normal distribution; they are tightly clustered around the median and also have many extreme values. Furthermore, nearly all countries show asymmetry in their wage distributions below the median. Indeed, we find evidence of both downward nominal and real wage rigidities. We also find that the extent of both these rigidities varies substantially across countries. Our results suggest that variations in the extent of union presence in wage bargaining play a role in explaining differing degrees of rigidities among countries. JEL Classification: E3, J3, J5. |
| Keywords: | Wage setting, Wage change distributions, Downward nominal wage rigidity, Downward real wage rigidity. |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20060697&r=lab |
| By: | Heyman, Fredrik (Research Institute of Industrial Economics); Gustavsson Tingvall, Patrik (Stockholm School of Economics); Sjöholm, Fredrik (Stockholm School of Economics) |
| Abstract: | Numerous studies on firm-level data have reported higher average wages in foreign-owned firms than in domestically-owned firms. This, however, does not necessarily imply that the individual worker’s wage increase with foreign ownership. Using detailed matched employer-employee data on the entire Swedish private sector, we examine the effect of foreign ownership on individual wages, controlling for individual and firm heterogeneity as well as for possible selection bias in foreign acquisitions. We distinguish between foreign greenfields and takeovers and compare foreign owned firms with both domestic multinationals and local firms. Our results show a considerably smaller wage premium in foreign owned firms than what has been found in studies conducted at a more aggregate level. Moreover, foreign takeovers of Swedish firms tend to have no or even a negative effect on wages. |
| Keywords: | FDI; Foreign Ownership; Wages; Matched Employer-Employee Data; Propensity Score Matching |
| JEL: | C23 F23 J31 |
| Date: | 2006–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0674&r=lab |
| By: | Marie-Benoît MAGRINI (LEREPS-GRES) |
| Abstract: | Spatial mobility can be seen as an employment strategy to obtain job opportunities located into a different local labor market than the individual origin’s local market. That is migrants should have higher wages than non-migrants, as much more than migration effort should be compensated by job advantages following migration, according to the costs/benefits trade-off mechanism. Nevertheless some unobservable characteristics could generate higher or lower earnings as well as higher or lower migration probabilities. By considering migration’s distance of young workers, between the local labor markets at the end of their studies and three years later, we evaluate the real migration return of spatial mobility which reveal their migration costs/benefits trade-off. |
| Keywords: | distance, spatial mobility, human capital, youth’entry into the labour market, selection bias, endogenous bias |
| JEL: | J61 J24 R23 C34 C35 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:grs:wpegrs:2006-26&r=lab |
| By: | Etienne Campens (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], CEPREMAP - CEntre Pour la Recherche EconoMique et ses APplications - [Ministère de la Recherche]); Solenne Tanguy (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]) |
| Abstract: | This paper deals with the consequences of the existence of private employment agencies on the labor market. Using a matching framework, we study the conditions of existence of private employment agencies and the consequences of competition on the market for job placement. We show that the private employment agencies enter in the labour market only if they are much more efficient than the private agency. Moreover, the level of the unemployment benefits is a disincentive to manage workers for the private agency. Because of a high fallback position for the worker, it is costly for the private employment agency to manage a worker having some low probabilities to exit from unemployment. If these conditions are satisfied, the existence of private employment agencies improve the labor market through shorter unemployment spells and a lower unemployment rate. Moreover, an improvement in the matching process is an incentive for the firms to post vacancies at the private agencies. Nevertheless, the workers managed by the private agencies receive some lower wages than the other workers because of the payment by the firm for recruiting a worker. Finally, we show that private employment agencies have a natural disincentive to manage unskilled workers. But, the introduction of a subsidy to match an unskilled worker with a vacancy seems to be a sufficient incentive to make the private employment agencies managing unskilled workers. |
| Keywords: | Unemployment, matching model, public employment agencies, private employment agencies. |
| Date: | 2006–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00113476_v1&r=lab |
| By: | PERACCHI FRANCO |
| Abstract: | This chapter analyzes the international evidence on the relationship between educational wage premia and the distribution of personal labor earnings. The aim is to review what is known about the contribution of differences in relative wages across schooling levels to the degree of variability, between countries and over time, in the pecuniary returns to work. Definition and measurement problems are of paramount importance in analyses of this kind, and so a large part of the chapter is devoted to some of these issues. |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceiswp:215&r=lab |
| By: | Céline Choulet (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]) |
| Abstract: | This paper raises the question of the dynamic effects of public spending in jobs on labor market performance. We use a dynamic matching model and study how public jobs creation affects endogenous workers' decisions to move on the labor market and private-sector firms' job creation and destruction decisions. We obtain that it exerts an attracting effect and a fiscal effect on the labor market that make the unemployment rate and job flows overshoot. As an empirical illustration, we estimate a SVAR model that focuses on the consequences of public job creations on unemployment, wages and job flows dynamics. We confirm our intuition : public employment has a significant ambiguous effect on private wages. |
| Keywords: | Public sector labor market, unemployment dynamics. |
| Date: | 2006–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00113357_v1&r=lab |
| By: | SALTARI ENRICO; TILLI RICCARDO |
| Abstract: | We provide a theoretical microfoundation for the inverse relationship between firing costs and labor market tightness and evaluate the effects of this relationship on labor market performance in a matching model à la Mortensen and Pissarides (1994). Results are clear cut and generalize our previous work. First, a sufficient condition to have a firing cost function with a negative slope is when the elasticity of the separation rate with respect to firing costs is equal to one, i.e. when the median voter (which is the employed worker) takes into account in her choice of optimal level of firing costs only the unemployment duration during her lifetime but not the potential gains or losses in terms of wage. Second, the optimal behavior of the economic agents can give rise to a labor market configuration characterized by multiple equilibria: high average duration of unemployment will produce a labor market with low flows and wage and high strictness of employment protection, and vice versa. |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceiswp:240&r=lab |
| By: | Ours,Jan C. van (Tilburg University, Center for Economic Research) |
| Abstract: | This paper discusses developments in the Netherlands concerning unemployment insurance, unemployment assistance and disability insurance. The emphasis is on how incentives for individual workers and firms affect flows of benefit recipients. |
| Keywords: | unemployment benefits;unemployment assistance;disability benefits;incentives |
| JEL: | H55 J64 J65 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2006116&r=lab |
| By: | Luc Behaghel; Bruno Crépon; Béatrice Sédillot |
| Abstract: | French firms laying off workers aged 50 and above have to pay a tax to the unemployment insurance system, known as the Delalande tax. This is a rare case of experience rating in the European context. We evaluate its impact on layoffs as well as on hiring, taking advantage of several changes in the measure since its introduction in 1987. A legislative change in 1992 exempted firms from the tax for workers who were hired after age 50. Following this change, the transition rate from unemployment to employment increased significantly for workers over 50 compared to workers less than 50. The difference is sizeable: between one third and one half of the initial transition rate. Evidence on the effect on layoffs is less clear cut. The impact is sizeable only for the most stringent tax schedule, after 1998. |
| Keywords: | Experience rating; employment protection; old workers; layoff; hiring |
| JEL: | J23 J63 J65 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:lea:leawpi:0608&r=lab |
| By: | Sebastian Weber (IUHEI, The Graduate Institute of International Studies, Geneva) |
| Abstract: | This paper investigates the effects of different labor market structures on the level of unemployment. A theoretical interpretation of an open economy version of the Calmfors and Driffill framework with traded good sector and sheltered non traded good sector is presented, in which different wage-employment trade-offs faced by unions in traded and non traded goods sector as well as the degree of openness is taken into account. From a theoretical point of view the framework supports the idea of the hump-shaped relationship between the degree of centralization of the bargaining process and the level of unemployment, which is sustained even with increased openness. Countries with an intermediate level of bargaining are expected to benefit most in terms of lower unemployment from an increase in openness. In an empirical part, the model is applied to a panel of 20 OECD countries over the period 1970-2000 and the predictions of the model are tested. I find empirical support for both of the main hypothesis, particularly if the strength of the employment protection is additionally taken into account. The results render also support to the literature on the interaction of product market regulations and labor market institutions, as countries which face stronger competition in the product market from foreign producers stand to benefit more from a deregulation in the labor market via a weakening of the employment protection legislation. |
| Keywords: | Labor Market Institutions, Unemployment, Openness to Trade, Product Market Competition |
| JEL: | F16 J64 J51 |
| Date: | 2006–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heiwp22-2006&r=lab |
| By: | Aurora Galego (Department of Economics, University of Évora); João Pereira (Department of Economics, University of Évora) |
| Abstract: | In this paper we use two alternative approaches to study the extent of gender wage discrimination in Portugal. Both methods involve the estimation of wage equations for males and females and the Blinder [1973] and Oaxaca [1973] decomposition. However, to take into account possible sample selection bias, we consider both parametric and semi-parametric methods. First, we consider a parametric approach that relies on distributional assumptions about the distribution of the error terms in the model (Vella (1992, 1998) and Wooldridge (1998)). Within this approach, if the distributional assumption is not satisfied, the parameters’ estimates may be inconsistent. Secondly, we apply Li and Wooldridge [2002] semi-parametric estimator, which does not assume any known distribution on the joint distribution of the errors of the wage equation and of the sample selection equation; the distribution has an unknown form and is estimated through non-parametric kernel techniques. We employ micro data for Portugal from the European Community Household Panel (ECHP). The results from both approaches provide evidence in favour of the existence of gender wage discrimination in Portugal. However, the extent of labour market discrimination decreases when sample selection bias corrections are taken into account. |
| JEL: | J31 J71 C14 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:evo:wpecon:13_2006&r=lab |
| By: | Wolf-Heimo Grieben |
| Abstract: | We analyze the interaction between globalization and labor market frictions in a dynamic general equilibrium North-South non-scale growth model with endogenous Northern innovation and endogenous Southern imitation. The employment, growth and relative-wage effects of globalization are shown to depend qualitatively on the degree of Northern labor market frictions. We demonstrate that Northern countries with particular severe labor market frictions benefit from globalization in terms of employment and growth. We also analyze whether stricter intellectual property rights protection in the South, rising R&D subsidies in the North or an increase in Northern labor market flexibility alleviate or aggravate globalization effects. |
| Keywords: | Globalization, Quality-Ladder Model, Non-Scale Growth, Frictional Unemployment, Firing Costs |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c011_053&r=lab |
| By: | Tomi Kyyrä; Mika Maliranta |
| Abstract: | In contrast with the experiences of the UK and the US, the distribution of labour and capital income has changed sharply in favour of capital in most Continental European and Nordic countries during the past two decades. We examine forces behind the evolution of the aggregate labour share by analysing the dynamics of labour shares within and between firms/plants in the Finnish business sector. Using a decomposition method applied in labour economics and productivity analysis, we show that much of the decline in the aggregate labour share stems from the reallocation of resources between firms and plants, while labour shares at the firm/plant level have remained relatively stable. |
| Keywords: | factor income shares, wage policy, decomposition, productivity |
| Date: | 2006–11–21 |
| URL: | http://d.repec.org/n?u=RePEc:fer:dpaper:406&r=lab |
| By: | RICCI ANDREA; WALDMANN ROBERT |
| Abstract: | This paper shows that the distortion induced by hold up in the private provision of training can justify the introduction of positive amount of firing tax in economies populated by risk neutral or perfectly insured agents. More precisely we highlight two results. First, an efficient economic policy, which makes use of a combination of a small lay-off taxes and hiring subsidies, always increases employment, productivity and welfare of unemployed workers. Second, in the case of no hiring subsidies, there is not a monotonic relationship between firing penalties and welfare, depending on the returns to training. In this case, an increase in the firing taxes causes an increase in job tenure and training but may be associated with lower market tightness if training returns are not high enough, confirming a trade off between adjustment costs and productivity gains related to employment protection. Implications of wage rigidity for newly hired workers are also considered. |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceiswp:230&r=lab |
| By: | Areendam Chanda; Carl-Johan Dalgaard |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c010_016&r=lab |
| By: | Wolf Dieter Heinbach |
| Abstract: | Collective wage agreements still play an important role in the German wage bargaining system. However, there is a critical debate in Germany whether collective agreements deliver the flexibility needed by firms to adjust to the needs of international competition and technological change. In recent years, the social partners in some industries have responded to this possible lack of flexibility by introducing so called opening clauses into their collective bargaining agreements. These allow firms to deviate from their collective agreement under certain conditions. The aim of this paper is to empirically analyze the prevalence of opening clauses in the German manufacturing sector and their impact on the wage structure. To provide a basis for the empirical analyses, a survey on the existence and intensity of opening clauses in central collective agreements has been conducted. Thereby, these sectoral data about opening clauses are exactly combined with those from the German Structure of Earnings Survey 1995 and 2001, a linked employer-employee dataset from German official statistics. The results show the number of collective bargaining agreements containing opening clauses increasing remarkably since 1991. Furthermore, the implementation of opening clauses into collective contracts creates significant effects on wages. |
| Keywords: | opening clauses; collective bargaining; wage structure |
| JEL: | J31 J51 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:hoh:hohdip:276&r=lab |
| By: | Pietro F. Peretto |
| Keywords: | Product Market, Labor Market, Market Structure, Employment, Unemployment |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c011_014&r=lab |
| By: | Pierre-Andre Chiappori; Murat Iyigun; Yoram Weiss |
| Abstract: | We produce a model with pre-marital schooling investment, endogenuos marital matching and spousal specialization in homework and market production Pre-marital investments generate two kinds of returns: a labor-market return due to the education premium and a marriage-market return because education can improve the intra-marital share of the surplus one can extract from marriage. When the returns to education are gender neutral, men and women educate in equal proportions and there is pure positive assortative matching in the marriage markets. But if the returns are not gender neutral, then there is mixing in equilibrium where some educated individuals marry uneducated spouses and those who educate less because their labor-market return is lower extract a relatively larger share of the marital surplus. Conditional on the choice of schooling, couples’ career decisions affect the size of their marital surplus, but the existence of large and frictionless marriage markets can still produce efficient household specialization where the higher-wage spouse specializes in market production and the lower-wage spouse engages in homework. Even when cultural and social norms or the time requirements of homework dictate that wives devote relatively more time to homework, women can acquire more schooling than men if a gender wage gap exists but narrows with the level of education. |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c011_034&r=lab |