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on Labour Economics |
| By: | Erzo F.P. Luttmer |
| Abstract: | This paper investigates whether the minimum wage leads to inefficient job rationing. By not allowing wages to clear the labor market, the minimum wage could cause workers with low reservation wages to be rationed out while equally skilled workers with higher reservation wages are employed. This paper exploits the overlapping nature of the CPS panels to more precisely identify those most affected by the minimum wage, a group I refer to as the "unskilled." I test for inefficient rationing by examining whether the reservation wages of employed unskilled workers in states where the 1990-1991 federal minimum wage increase had the largest impact rose relative to reservation wages of unskilled workers in other states. I find that reservation wages of unskilled workers in high-impact states did not rise relative to reservation wages in other states, indicating that the increase in the minimum wage did not cause jobs to be allocated less efficiently. |
| JEL: | D61 J21 J30 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13012&r=lab |
| By: | ASANO Hirokatsu; KAWAGUCHI Daiji |
| Abstract: | In an attempt to explain the male-female wage differential, we estimated the relative marginal productivity and relative wage of female workers compared to those of male workers, using panel data from Japanese firms. The estimation results indicate that firms hiring 10 percentage points more women produce 0.8 percent more given the total wage bill and other inputs. Crosssectional estimates that neglect firm fixed effects indicate that female workers' marginal productivity is 45 percent of male workers', while female wage is 30 percent of male wage. These estimates indicate that part of the wage differential cannot be explained by the productivity differential. The estimation that allows for the correlated productivity/demand shocks suggests the robustness of the results. The IV estimator that allows for firm-level fixed effects seems to suffer from the bias due to the positive correlation between productivity/demand shocks and female employee proportion. Evidence found in this study is consistent with the existence of employer sex discrimination. |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:07020&r=lab |
| By: | L Yuetyee Wong |
| Abstract: | This paper explores links between women's economic progress and widening inter-industry wage differentials. Each phenomenon arises because of technological change that has favored young women's human capital, in what is called sex-biased technological change. Such technological change helps lower the costs of women of bringing their abilities to the market, enabling more of them to gravitate to the high-tech sector, shifting the relative skill supply. Our theory can simultaneously rationalize the facts on increasing female wages and their participation in the high-tech sector, wage premium favoring the high-tech sector, and female to male wage ratios. Our theory also predicts an amplification of the selection effect on gender difference in productivity in the high-tech sector. We use workers' skill indexes given by the Dictionary of Occupational Titles to determine technology sectors. Results based on state-level data indicate the elasticity of substitution between high and low-skill workers is around 2. We provide evidence in favor of sector participation and wage patterns predicted by our model. The allocative impact of sex-biased technological change is 8 to 10 times larger than the wage effect. The results are robust for all measures of patent innovation. |
| Keywords: | sector choice, directed technological change, gender wage gap |
| JEL: | J11 O11 |
| Date: | 2006–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed006:477&r=lab |
| By: | Ludsteck, Johannes; Haupt, Harald |
| Abstract: | A firm that faces insufficient supply of labor can either increase the wage offer to attract more applicants, or reduce the hiring standard to enlarge the pool of potential employees, or do both. This simultaneous adjustment of wages and hiring standards in response to changes in market conditions has been emphasized in a classical contribution by Reder and leads to the effect that wage reactions to employment changes can be expected to be more pronounced for low wage workers than for high wage workers. This is the `Reder Hypothesis'. The present contribution sets out to test this hypothesis using German employment register data and a censored panel quantile regression approach. Our findings support the Reder Hypothesis, suggesting that market clearing in labor markets is achieved by a combination of wage adjustments and changes in hiring standards. |
| Keywords: | standards; overqualification; wage structure; panel quantile regression; censoring |
| JEL: | J31 J41 C24 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:1397&r=lab |
| By: | Beblo, Miriam; Bender, Stefan; Wolf, Elke |
| Abstract: | We analyze the wage effects of employment breaks of women entering motherhood using a novel within-firm matching approach where mothers’ wages upon return to the job are compared with those of their female colleagues within the same firm. Using an administrative German data set we investigate three different matching procedures based on information two years before birth: (1) exact matching on individual characteristics, (2) propensity score matching and (3) a combined procedure of exact and propensity score matching. Our results yield new insights into the nature of the wage penalty associated with motherhood, since we find first births to reduce women’s wages by 16 to 19 percent, regardless of the matching procedure applied. Neglecting the firm identifier and matching across all firms, however, yields a wage cut of 30 percent. Furthermore, we can show that the wage loss increases with the duration of the employment break. |
| Keywords: | wages, parental leave, matching |
| JEL: | C14 J13 J31 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5447&r=lab |
| By: | Alex Bryson |
| Abstract: | We investigate the effect of employer behaviour on job satisfaction. Using linked employer-employee data from the 1998 British Workplace Employee Relations Survey, we consider how eorkplace practices affect individual' satisfaction with four aspects of their jobs, including pay. The paper covers a range of employer practices, including HRM and internal labour markets practices, methods for informing and consulting employees, and job sercurity guarantees. We present an empirical framework for analysing these various facets of job satisfaction simultaaneously and find that the existence of internal labour markets is the most effective workplace practice in fostering employees' satisfaction |
| URL: | http://d.repec.org/n?u=RePEc:psi:resdis:22&r=lab |
| By: | John S. Earle; Álmos Telegdy |
| Abstract: | Studies of public-private and foreign-domestic wage differentials face difficulties distinguishing ownership effects from correlated characteristics of workers and firms. This paper estimates these ownership differentials using linked employer-employee data (LEED) from Hungary containing 1.35mln worker-year observations for 21,238 firms from 1986 to 2003. We find that ownership type is highly correlated with characteristics of both workers (education, experience, gender, and occupation) and firms (size, industry, and productivity), suggesting ownership type is systematically selected along these dimensions. The large unconditional wage gaps (0.24 for public-private and 0.40 for foreign-domestic) in the data are little affected by conditioning on worker characteristics, but controlling for industry reduces the public and foreign premia (to 0.16 and 0.34, respectively), and controlling for employment size further reduces them (to 0.07 and 0.28). We also exploit the presence of 3,700 switches of ownership type in the data to estimate firm fixed-effects and random trend models, accounting for unobserved firm characteristics affecting the average level and trend growth of wages. These controls have little effect on the conditional public-private gap, but they reduce the estimated foreign premium (to 0.07). The results imply that the substantial unconditional wage differentials are mostly, but not entirely, a function of differences in worker and firm characteristics, and that linked panel data are necessary to take these correlated factors into account. |
| JEL: | F23 J23 J31 J45 P23 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12997&r=lab |
| By: | Asma Hyder (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | This paper examines the magnitude of public/private wage differentials in Pakistan using data drawn from the 2001-02 Labour Force Survey. Pakistan Labour Force Survey is a nationwide survey containing micro data from all over the country containing demographic and employment information. As in many other countries, public sector workers in Pakistan tend to have higher average pay and educational levels as compared to their private sector counterparts. First, this paper presents the inter-sectoral earning equations for the three main sectors of the economy, i.e., public, private, and state-owned enterprises. These results are further decomposed into “treatment” and “endowment effect”. To examine the role of human capital in wage gap, the rate of return to different levels of schooling is calculated. These rates of return to education may be important for policy formulation. The relative earning share is also worked out to look into the distribution of wages across the occupational categories. The earning equations are estimated with and without correction for selectivity, which is also the main objective of the study, i.e., to find out if any non-random selection is taking place within these three sectors of employment |
| Keywords: | Wage Differentials, Rate of Return to Education, Public Sector Labour Markets |
| JEL: | J32 J45 J24 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:17&r=lab |
| By: | Spermann, Alexander |
| Abstract: | This paper advocates the cautious and constitutional evolution of existing basic income schemes (“unemployment benefit II”) and Targeted Negative Income Tax (TNIT = "Einstiegsgeld") into a means-tested combi-wage model for the future long-term unemployed (gradualism strategy). The paper argues that, with regard to existing unemployment benefit II claimants, stronger financial incentives should be offered on a time restricted basis by largely disregarding (up to the relative poverty line) earnings from "mini", "midi" and part-time jobs – with the aim of providing current unemployment II claimants with a powerful incentive to work at least 15 hours a week and thus to relinquish their unemployed status. Bearing in mind the uncertain employment impact and the related fiscal risks, the paper advises against additional financial incentives by reducing support levels from one day to the next (cold turkey strategy). |
| Keywords: | Labor Market Reform, Employee Subsidy, Workfare, longterm unemployment |
| JEL: | I38 J22 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5458&r=lab |
| By: | John S Heywood; Colin Green |
| Abstract: | This paper investigates the influence of performance related pay on several dimensions of job satisfaction. In cross-sectional estimates, performance related pay is associated with increased overall satisfaction, satisfaction with pay, satisfaction with job security and satisfaction with hours. It appears to be negatively associated with satisfaction with the work itself. Yet, after accounting for worker fixed-effects, the positive associations remain and the negative association vanishes. These results appear robust to a variety of alternative specifications and support the notion that performance pay allows increased opportunities for worker optimization and do not generally demotivate workers or crowd out intrinsic motivation. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:004731&r=lab |
| By: | Helen Simpson (Institute for Fiscal Studies) |
| Abstract: | <p>I use within-firm, plant-level data combined with geographic information on firms' overseas operations to examine how investment in low-wage economies affects firms' home-country operations. To remain close to theory I focus on changes in firms' organisational and industrial structure driven by plant closures. As predicted by models of vertical multinationals I find that investment in relatively low-wage economies is associated with plant closures in relatively low-skill, labour-intensive industries in the UK. The findings are of interest in the context of the relaxation of barriers to inward investment in low-wage economies.</p> |
| Keywords: | Multinational enterprises; skills; wages; globalisation |
| JEL: | F2 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:07/07&r=lab |
| By: | Nikolaj Malchow-Møller; James R. Markusen; Bertel Schjerning |
| Abstract: | Foreign-owned firms are often hypothesized to generate productivity "spillovers" to the host country, but both theoretical micro-foundations and empirical evidence for this are limited. We develop a heterogeneous-firm model in which ex-ante identical workers learn from their employers in proportion to the firm?s productivity. Foreign-owned firms have, on average, higher productivity in equilibrium due to entry costs, which means that low-productivity foreign firms cannot enter. Foreign firms have higher wage growth and, with some exceptions, pay higher average wages, but not when compared to similarly large domestic firms. The empirical implications of the model are tested on matched employer-employee data from Denmark. Consistent with the theory, we find considerable evidence of higher wages and wage growth in large and/or foreign-owned firms. These effects survive controlling for individual characteristics, but, as expected, are reduced significantly when controlling for unobservable firm heterogeneity. Furthermore, acquired skills in foreign-owned and large firms appear to be transferable to both subsequent wage work and self-employment. |
| JEL: | F16 F2 F23 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13001&r=lab |
| By: | Rosario Crinò (Università degli Studi di Milano - DEAS, Italy and CESPRI - Bocconi University, Milan, Italy.) |
| Abstract: | This paper reviews the existing empirical literature on the effects of offshoring and foreign activities of Multinational Enterprises (MNEs) on the labor markets of developed countries. Avail-able results provide robust evidence in support of the fear that material offshoring worsens wage inequality between skilled and unskilled workers; on the contrary, results are still too ambiguous to support concerns that material offshoring raises the elasticity of unskilled labor demand and produces adverse short-run employment dynamics. Service offshoring does not reduce total labor demand significantly and does not pose serious threats to human capital accumulation. Finally, MNEs tend to substitute domestic labor with foreign labor, but the relationship is weak; moreover, substitutability is mainly driven by horizontal, market-seeking, Foreign Direct Investments. |
| Keywords: | Offshoring, Multinational Enterprises, Labor Market. |
| JEL: | F16 F23 J31 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:cri:cespri:wp196&r=lab |
| By: | Parantap Basu (Department of Economics and Finance University of Durham UK) |
| Abstract: | Labour market friction is viewed as the Tobin’s Q of an employed worker as opposed to the position of the Beveridge curve. This Tobin’s Q is inversely proportional to the average quality of the match between employers and workers. Based on this measure, I find that the labour market friction has a procyclical trend in the US, which is indicative of the fact that firms compromise on the quality of the skill match during an expansion. |
| Keywords: | Intangible Capital, Skill matching, Human capital |
| JEL: | G12 D92 |
| Date: | 2007–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:mmf:mmfc06:35&r=lab |
| By: | Arntz, Melanie |
| Abstract: | By examining the destination choice patterns of heterogenous labor, this paper tries to explain the skill composition of internal job matching flows in Germany. Estimates from a nested logit model of destination choice suggest that spatial job matching patterns by high-skilled individuals are mainly driven by interregional income differentials, while interregional job matches by less-skilled individuals are much more affected by regional differentials in job opportunities. Regional differentials in non-pecuniary assets slightly contribute to spatial sorting processes in Germany. Such differences in destination choices by skill level are partly modified by different spatial patterns of job-to-job matches and job matches after unemployment. Simulating job matching patterns in a scenario of economic convergence between eastern and western Germany demonstrates that wage convergence is the most effective means of attracting human capital to eastern Germany. |
| Keywords: | interregional job matches, destination choice, human capital |
| JEL: | C35 J61 R23 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5456&r=lab |
| By: | Rob Euwals; Jaco Dagevos; Mérove Gijsberts; Hans Roodenburg |
| Abstract: | On the basis of two datasets, the German Socio-Economic Panel 2002 and the Dutch Social Position and Use of Provision Survey 2002, we investigate the importance of characteristics related to immigration for the labour market position of Turkish immigrants. We use regression techniques to correct for composition effects in employment rates, tenured job rates and job prestige scores (ISEI). First, we find that educational attainment and language proficiency have a higher return in the Netherlands than in Germany. Second, we find that second generation immigrants have improved their labour market position relative to the first generation of labour migrants and their partners. The improvement is largely due to an improvement in educational attainment and language proficiency. Third, for the Netherlands we find a positive relation between naturalisation and labour market position, while for Germany we find a negative relation with tenured employment. The contrasting results on tenured employment may be explained partly by differences in immigration rules. In Germany, economic self-reliance is more important than in the Netherlands, and this may lead to a stronger incentive to naturalise for workers with a temporary contract. |
| Keywords: | Immigration; Labour Market; Naturalisation; Language Proficiency |
| JEL: | C25 F22 J15 J61 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:79&r=lab |
| By: | Tiongson, Erwin R.; Fares, Jean |
| Abstract: | Relatively little is known about youth unemployment and its lasting consequences in transition economies, despite the difficult labor market adjustment experienced by these countries over the past decade. The authors examine early unemployment spells and their longer-term effects among the youth in Bosnia and Herzegovina (BiH), where the labor market transition is made more difficult by the challenges of a post-conflict environment. They use panel data covering up to 4,800 working-age individuals over the 2001 to 2004 period. There are three main findings from their analysis. First, youth unemployment is high-about twice the national average-consistent with recent findings from the BiH labor market study. Younger workers are more likely to go into inactivity or unemployment and are also less likely to transition out of inactivity, holding other things constant. Second, initial spells of unemployment or joblessness appear to have lasting adverse effects on earnings and employment ( " scarring " ). But there is no evidence that the youth are at a greater risk of scarring, or suffer disproportionately worse outcomes from initial joblessness, compared with other age groups. Third, higher educational attainment is generally associated with more favorable labor market outcomes. Skilled workers are less likely to be jobless and are less likely to transition from employment into joblessness. But there is evidence that the penalty from jobless spells may also be higher for more educated workers. The authors speculate that this may be due in part to signaling or stigma, consistent with previous findings in the literature. |
| Keywords: | Labor Markets,Youth and Governance,Population Policies,Adolescent Health,Social Protections & Assistance |
| Date: | 2007–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4183&r=lab |
| By: | Richard Holt (Edinburgh University) |
| Abstract: | New Keynesian models attempt to account for economic fluctuations under nominal rigidities without modelling unemployment. They struggle to generate observed output and inflation persistence. To address these issues, recent research embeds labour search with matching frictions in a New Keynesian framework. Models with labour market search, matching and endogenous job destruction, feature unemployment, but generate an upward sloping Beveridge curve and overly volatile gross job flows. By introducing a second margin, hours, in the adjustment of labour input I obtain a negative unemployment-vacancy correlation and plausible gross job flow volatilities without affecting the desirable persistence properties of the model. I show that these results are affected by real wage rigidity, endogenous job destruction and capital adjustment costs |
| Keywords: | Beveridge Curve, Hours, Gross Job Flows, Inflation |
| JEL: | E24 E31 J64 |
| Date: | 2007–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:mmf:mmfc06:138&r=lab |
| By: | Alexander Kemnitz (Institut für Volkswirtschaft und Statistik (IVS)) |
| Abstract: | This paper investigates the effect of labor immigration on public pensions when wage setting by a centralized trade union leads to unemployment. It is shown that immigration improves the financial soundness of pay-as-you-go pensions if and only if it diminishes total employment. This occurs if the absolute value of the elasticity of labor demand exceeds the unemployment rate. |
| JEL: | F22 H55 J51 |
| URL: | http://d.repec.org/n?u=RePEc:mea:ivswpa:616&r=lab |
| By: | Paul Beaudry; David A. Green; Benjamin Sand |
| Abstract: | Does attracting or losing jobs in high paying sectors have important spill-over effects on wages in other sectors? The answer to this question is central to a proper assessment of many trade and industrial policies. In this paper, we explore this question by examining how predictable changes in industrial composition in favor of high paying sectors affect wage determination at the industry-city level. In particular, we use US Census data over the years 1970 to 2000 to quantify the relationship between changes in industry-specific city-level wages and changes in industrial composition. Our finding is that the spill-over (i.e., general equilibrium) effects associated with changes in the fraction of jobs in high paying sectors are very substantial and persistent. Our point estimates indicate that the total effect on average wages of a change in industrial composition that favors high paying sectors is about 3.5 times greater than that obtained from a commonly used composition-adjustment approach which neglects general equilibrium effects. We interpret our results as being most likely driven by a variant of the mechanism recently emphasized in the heterogenous firm literature whereby changes in competitive pressure cause a reallocation of employment toward the most efficient firms. |
| JEL: | J31 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13006&r=lab |
| By: | Qingfang Wang |
| Abstract: | In the context of continuing influxes of large numbers of immigrants to the United States, urban labor market segmentation along the lines of race/ethnicity, gender, and class has drawn considerable growing attention. Using a confidential dataset extracted from the United States Decennial Long Form Data 2000 and a multilevel regression modeling strategy, this paper presents a case study of Chinese immigrants in the San Francisco metropolitan area. Correspondent with the highly segregated nature of the labor market as between Chinese immigrant men and women, different socioeconomic characteristics at the census tract level are significantly related to their occupational segregation. This suggests the social process of labor market segmentation is contingent on the immigrant geography of residence and workplace. With different direction and magnitude of the spatial contingency between men and women in the labor market, residency in Chinese immigrant concentrated areas is perpetuating the gender occupational segregation by skill level. Whereas abundant ethnic resources may exist in ethnic neighborhoods and enclaves for certain types of employment opportunities, these resources do not necessarily help Chinese immigrant workers, especially women, to move upward along the labor market hierarchy. |
| Keywords: | Chinese immigrants, ethnic niches, gender, residence, workplace, San Francisco |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:07-09&r=lab |
| By: | David Rosnick; Mark Weisbrot |
| Abstract: | European employees work fewer hours per year -- and use less energy per person -- than their American counterparts. This report compares the European and U.S. models of labor productivity and energy consumption. It finds that if all countries worked as many hours per week as U.S. workers do, the world would consume 15 to 30 percent more energy by 2050 than it would by following Europe's model. |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2006-32&r=lab |
| By: | Mathias Sinning; Silja Göhlmann; Thomas Bauer |
| Abstract: | This paper investigates gender differences in smoking behavior using data from the German Socio-economic Panel (SOEP). We develop a Blinder- Oaxaca decomposition method for count data models which allows to isolate the part of the gender differential in the number of cigarettes daily smoked that can be explained by differences in observable characteristics from the part attributable to differences in coefficients. Our results reveal that the major part of the gender smoking differential is attributable to differences in coefficients indicating substantial differences in the smoking behavior between men and women rather than differences in characteristics. |
| Keywords: | Blinder-Oaxaca decomposition, count data models, SOEP, smoking, gender differences |
| JEL: | C25 I12 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:dpaper:0044&r=lab |
| By: | Dean Baker |
| Abstract: | Much has been written in this business cycle regarding the rapid increases in productivity and the stagnant growth in wages. From the peak of the last business cycle in the first quarter of 2001 to the second quarter of 2006, productivity increased by 17.9 percent, an average growth rate of 3.2 percent per year. But real wages have barely moved, with the average hourly wage for production and nonsupervisory workers increasing by just 1.2 percent, an average annual growth rate of just over 0.2 percent. This report explores the forces behind this difference. It looks at cyclical trends in labor and capital income, and the difference between gross and net productivity. |
| JEL: | E32 E24 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2007-05&r=lab |
| By: | Alex Bryson |
| Abstract: | The paper estimates the union wage premium in Britain’s private sector in 1998, after nearly two decades of union decline. It examines the performance of the linear estimator alongside a semi-parametric technique (propensity score matching (PSM)) – hitherto unused in the wage premium literature - which shares the same identifying assumption, namely that selection into membership is captured with observable data. Results using the two techniques are compared, and reasons for differences in results are identified and discussed. By altering the information set entering estimation the paper shows the sensitivity of OLS and PSM results to data quality. |
| URL: | http://d.repec.org/n?u=RePEc:psi:resdis:9&r=lab |
| By: | Elisabetta Trevisan (Department of Economics, University Of Venice Cà Foscari) |
| Abstract: | This paper investigates the impact of the introduction of new restrictive permanent contracts on the perceived job security of the workers in Spain. The perceived job security is strongly influenced by the characteristics of individuals and their distribution within groups. Comparing heterogeneous groups could make the traditional DID estimator biased. To address this issue I combine the propensity score matching DID with a fixed effect estimator. The analysis is conducted using data from the ECHP Survey for Spain from 1995 to 2000. The result is that this reform has a positive impact only for one targeted group, i.e. the young workers and no effect for the others. Several robustness checks are performed. |
| Keywords: | Job security, Firing Costs, Evaluation Policy, Fixed effect estimator. |
| JEL: | C14 C33 J28 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:02_07&r=lab |
| By: | Özlem Onaran (Department of Economics, Vienna University of Economics & B.A.) |
| Abstract: | This paper estimates a labor demand equation based on the panel data of manufacturing industry in the Central and Eastern European Countries (the Czech Republic, Hungary, Poland, Slovakia, Slovenia, Lithuania, Bulgaria, and Romania) in order to test the effect of domestic factors (wages and output) and international factors (exports, imports, and FDI) on employment during the era of post -transition recovery. The findings indicate that employment does not respond to wages in more than half of the cases. The output elasticity of labor demand is mostly positive, but low, with a number of cases where employment is completely de-linked from output. An impressive speed of integration to the European economic sphere through FDI and international trade has not prevented job losses in the manufacturing industry. While there are very few cases of positive effects, insignificant effects of trade and FDI dominate the findings with some evidence of negative effects as well |
| JEL: | F16 F21 J23 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp103&r=lab |
| By: | David R. Howell; Dean Baker; Andrew Glyn; John Schmitt |
| Abstract: | This report debunks the myth that labor market protections, such as unions and unemployment benefits, are responsible for high European unemployment rates. |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2006-14&r=lab |
| By: | Fitzenberger, Bernd; Kohn, Karsten; Wang, Qingwei |
| Abstract: | Union density in Germany has declined remarkably during the last two decades. We estimate socio-economic and workplace-related determinants of union membership in East and West Germany using data from the German Socio-Economic Panel by means of Chamberlain-Mundlack correlated random effects probit models. Drawing on the estimates, we project net union densities (NUD) and analyze the differences between East and West Germany as well as the corresponding changes in NUD over time. Blinder-Oaxaca decompositions show that changes in the composition of the work force have only played a minor role for the deunionization trends in East and West Germany. In East-West comparison, differences in the characteristics of the work force reflect a lower quality of membership matches in East Germany right after German unification. |
| Keywords: | Union membership, union density, correlated random effects probit model, decomposition analysis, East Germany, West Germany |
| JEL: | J51 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5460&r=lab |
| By: | Kuan Xu; Zhengxi Lin (Department of Economics, Dalhousie University; Policy Research and Coordination, Human Resources and Skills Development Canada) |
| Keywords: | Training; Canada; adult; education |
| Date: | 2007–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:dal:wparch:paperb1_7_ic_workingpaper&r=lab |
| By: | JUAN CARLOS PASTOR (Instituto de Empresa); MARGARITA MAYO (Instituto de Empresa) |
| Abstract: | Social support has been cited as one of the most effective resources to alleviate job-related stress. The purpose of this study was to investigate the moderating effect of leader social support on the stress-strain relationship. A total of 768 workers from 45 different organizations participated in the study. The results of the moderated regression analyses showed that the effect of leader social support on the stressor-strain relationship depended on source congruence. Whereas we found a reverse buffering effect for leader support on the role conflict-strain relationship we found favorable buffering effects for leader support on the physical stressors-strain relationship. |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:emp:wpaper:wp07-07&r=lab |
| By: | Alexander Kemnitz (Institut für Volkswirtschaft und Statistik (IVS)) |
| Abstract: | This paper shows that the immigration of some low skilled workers can be of advantage for the low skilled natives when the host economy suffers from unemployment due to trade unions and an unemployment insurance scheme. This benefit arises if trade unions have appropriate bargaining power and preferences for members' income, labor market discrimination against immigrants is strong enough and the unemployment tax rate is low. |
| JEL: | F22 J5 J61 J7 |
| URL: | http://d.repec.org/n?u=RePEc:mea:ivswpa:615&r=lab |
| By: | Kenn Ariga (Institute of Economic Research, Kyoto University); Giorgio Brunello (Department of Economics, University of Padova) |
| Abstract: | There is substantial cross - country variation in secondary school design, with some countries tracking students into different ability schools very early, and other countries with little or no tracking at all. Does tracking length affects school performance, as measured by standardized test scores? We use the international data from the International Adult Literacy Survey to estimate the relationship between the experienced tracking length and the performance in standardized cognitive test scores of young adults, aged between 16 and the mid - twenties. Our IV estimates suggest that the contribution of tracking to performance is positive and statistically significant: conditional on total years of schooling, one additional year spent in a track raises average performance by 3.3 to 3.4 percentage points, depending on the estimates. |
| Keywords: | tracking, secondary schools, efficiency |
| JEL: | I21 I28 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:630&r=lab |
| By: | Berliant, Marcus; Kung, Fan-chin |
| Abstract: | The modern literature on city formation and development, for example the New Economic Geography literature, has studied the agglomeration of agents in size or mass. We investigate agglomeration in sorting or by type of worker, that implies agglomeration in size when worker populations differ by type. This kind of agglomeration can be driven by asymmetric information in the labor market, specifically when firms do not know if a particular worker is of high or low skill. In a model with two types and two regions, workers of different skill levels are offered separating contracts in equilibrium. When mobile low skill worker population rises or there is technological change that favors high skilled workers, integration of both types of workers in the same region at equilibrium becomes unstable, whereas sorting of worker types into different regions in equilibrium remains stable. The instability of integrated equilibria results from firms, in the region to which workers are perturbed, offering attractive contracts to low skill workers when there is a mixture of workers in the region of origin. |
| Keywords: | Adverse selection; Agglomeration |
| JEL: | D82 R13 R12 |
| Date: | 2006–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1278&r=lab |
| By: | Sonja Fagernäs |
| Abstract: | This paper investigates the effects of corporate governance factors and family ties on the pay of managing directors in a sample of Indian stock listed companies. It uses a unique seven-year firm level panel dataset and controls for firm performance and both CEO and firm specific fixed effects. The hypothesis is that corporate governance, ownership structures and market pressure shape the power relations between the board and managers, and affect the level and structure of CEO pay. The evidence for India supports these hypotheses. Managing directors, who are related to the founding family, or controlling group, or any of the members on the board of directors, are paid more. This holds for total pay and both for the less variable component and the performance-related component of pay. In contrast, the presence of outside representatives on the board - non-executive directors or nominees of creditors or institutional investors - is found to have a disciplinary effect. The presence of nominees lowers the level of pay and that of non-executives ties pay more to firm performance. A further timely finding is that the staged introduction of a recent mandatory corporate governance code, aiming to improve governance and pay disclosure in listed companies, has raised the tendency of firms to tie pay explicitly to firm performance. Overall, the practice of tying pay explicitly to performance has become more common over time. |
| Keywords: | Executive pay, Corporate Governance, Family firms, Corporate Law, India |
| JEL: | G30 J33 K22 M52 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp335&r=lab |
| By: | John Schmitt; Ben Zipperer |
| Abstract: | This report finds a steep rise in illegal firings of pro-union workers in the 2000s relative to the last half of the 1990s. It uses published data from the National Labor Relations Board (NLRB) to update an index of the probability that a pro-union worker will be fired in the course of a union election campaign. By 2005, pro-union workers involved in union election campaigns faced about a 1.8 percent chance of being illegally fired during the course of the campaign. If we assume that employers target union organizers and activists, and that union organizers and activists make up about 10 percent of pro-union workers, our estimates suggest that almost one-in-five union organizers or activists can expect to be fired as a result of their activities in a union election campaign. |
| JEL: | J41 J52 J53 J58 J83 K42 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2007-01&r=lab |
| By: | Baltagi, Badi H.; Blien, Uwe (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Wolf, Katja (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "This paper reconsiders the West German wage curve using the employment statistics of the Federal Employment Services of Germany (Bundesanstalt für Arbeit) over the period 1980-2004. This updates the earlier study by Baltagi and Blien (1998) by 15 years for a more disaggregated 326 regions of West Germany. It is based on a random sample of 417,426 individuals drawn from the population of employees whose establishments are required to report to the social insurance system. We find that the wage equation is highly autoregressive but far from unit root. This means that this wage equation is not a pure Phillips curve, nor a static wage curve, and one should account for wage dynamics. This in turn leads to a smaller but significant unemployment elasticity of -0.02 up to -0.03 rather than the -0.07 reported in the static wage curve results reported by Baltagi and Blien (1998)." (author's abstract, IAB-Doku) ((en)) |
| Keywords: | Arbeitslosenquote, Lohnhöhe, regionaler Arbeitsmarkt, Lohnkurve, IAB-Beschäftigtenstichprobe, Phillipskurve, Westdeutschland, Bundesrepublik Deutschland |
| JEL: | C23 J30 J60 |
| Date: | 2007–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:200714&r=lab |
| By: | Arslan Razmi (University of Massachusetts Amherst) |
| Abstract: | Recent post-liberalization decades have seen increasing gaps between wages and profit in- come, rising skill premia, and disappointing formal sector employment growth in many develop- ing countries. This paper presents an attempt to reconcile some of these developments with the help of modified versions of simple standard trade theory factor endowment models. Measures undertaken to enhance public sector efficiency and attract investment in the export sector can create a conflict of interest between the owners of capital and labor, and increase the rental- wage and skill-unskilled wage gaps, contra the predictions of the Heckscher-Ohlin-Samuelson model. Moreover, increasing inequality can exist side-by-side with increasing informalization of the economy. The greater unskilled labor intensity of the informal sector, factor market rigidities in the formal sector, and the sector specificity of some factors crucially influence the outcomes of policy experiments. Even within a simple framework that assumes full employment of resources, large segments of labor may have good reason to fear the consequences of reform. JEL Categories: F16, O17, F11 |
| Keywords: | Specific factors model, Ricardo-Viner model, Heckscher-Ohlin model, informaliza- tion, international production networks, elasticity of factor substitution, nominal wage rigidity, income inequality, skill premium. |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2007-06&r=lab |
| By: | John Schmitt; Dean Baker |
| Abstract: | This report shows that Europe's welfare states have nearly closed the employment gap with respect to the United States for workers aged 25 to 54 years old. |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2006-23&r=lab |
| By: | Hans-Martin von Gaudecker; Carsten Weber (Mannheim Research Institute for the Economics of Aging (MEA)) |
| Abstract: | We analyse the effect of abolishing gender-based categorisation of risks on the pricing of annuity contracts. Under the absence of screening activities, we find clear evidence of insurers expecting strong adverse selection effects. In particular, most of the unisex contracts’ payouts closely resemble those from women’s policies before the reform. Hence the policy target is not met and there are large efficiency losses for men. We conclude that there seems to be little hope for unisex policies to meet their equity ob jectives if consumers can react on the extensive margin, unless subsidies are extremely large. |
| Date: | 2006–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:mea:meawpa:06108&r=lab |
| By: | Barbara Berkel (Mannheim Research Institute for the Economics of Aging (MEA)) |
| Abstract: | The present paper investigates individual determinants of retirement entry age using administrative data on individuals’ retirement entries in 2003 published by the German Pension Insurance (SUF Versichertenrentenzugang 2003 ). As preretirement is an important issue in Germany, special interest is attached to the identification of individuals that preretire: 40 percent of all men and women in the sample preretire. On average they stay 2.4 years in preretirement before taking one of the o |
| Date: | 2006–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:mea:meawpa:06107&r=lab |
| By: | Hujer, Reinhard; Thomsen, Stephan L.; Zeiss, Christopher |
| Abstract: | Short-term training measures are the most important intervention of German active labor market policy in terms of persons promoted. However, evidence on the impacts of programs is missing. This study analyzes the effects of these programs on the individual unemployment duration in West Germany. By applying a multivariate mixed proportional hazards model, we are able to consider information of the timing of treatment in the unemployment spell as well as observable and unobservable factors to control for selectivity. Moreover, we allow treatment effects to vary over time and take account of heterogeneity in the effects due to individual differences. |
| Keywords: | Training Measures, Active Labor Market Policy, West Germany, Multivariate Mixed Proportional Hazards, Time-Varying Treatment Effects |
| JEL: | C14 C41 I28 J24 J64 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5459&r=lab |
| By: | Lei Fang; Richard Rogerson |
| Abstract: | The large differences in hours of work across industrialized countries reflect large differences in both employment to population ratios and hours per worker. We imbed the canonical model of labor supply into a standard matching model to produce a model in which both the intensive and extensive margins are operative. We then assess the implications of several policies for changes along the two margins. Firing taxes and entry barriers both lead to changes in hours and employment in opposite directions, while tax and transfer policies lead to decreases in both employment and hours per worker. |
| JEL: | E2 J2 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13007&r=lab |
| By: | Susan Helper; Morris M. Kleiner |
| Abstract: | The study examines US-European productivity and worker attitude differences, focusing on changes in incentive structures. We analyze productivity and worker attitudes in five plants in the UK and US belonging to the same multinational producer of automotive sensors and actuators. We examine the firm's efforts to make complementary changes in product strategy and human-resource policies. In particular, we look at the impact of a Value-Added Gainsharing plan (VAG) that was introduced at different times among the four plants. Our analysis draws on multiple plant visits, surveys of almost all of the workforce, and confidential financial data. Our study offers a rare look inside a low-wage, non-union firm. We find that the VAG had an impact on productivity and profitability. We find that the UK plant's productivity and worker satisfaction was well below that of the US plants. However, neither our analysis nor interviews with managers suggest that differences in national institutions play a key role in explaining these results. |
| JEL: | D21 D24 J31 J33 J53 J81 L11 L2 L23 L25 L6 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13015&r=lab |
| By: | Alvarez-Parra, Fernando A.; Sanchez, Juan M. |
| Abstract: | This paper considers the problem of optimal unemployment insurance in a moral hazard framework. Unlike existing literature, unemployed workers can secretly participate in a hidden labor market; as a consequence, an endogenous lower bound for promised utility preventing "immiserization" arises. Moreover, the presence of a hidden labor market makes possible an extra deviation and therefore hardens the provision of incentives. Under linear cost of effort, we show that the optimal contract prescribes no participation in the hidden labor market and a decreasing sequence of unemployment payments until the lower bound for promised utility is reached. At that moment, participation jumps and unemployment payments drop down to zero. For the case of non-linear effort cost we calibrate the model to Spain. As in the linear cost of effort, this exercise reproduces no participation and decreasing payments during the initial phase of unemployment. After around three years of unemployment, the contract prescribes a jump in participation and an abrupt decline in unemployment payments. To the best of our knowledge, this is the first paper justifying an abrupt drop in unemployment payments. In addition, the quantitative analysis suggests that in an environment in which agents differ in separation rate, the hidden labor market reinforces the benefits from a type-dependent unemployment system. |
| Keywords: | Unemployment Insurance; Hidden Labor Markets; Moral Hazard; Recursive Contracts |
| JEL: | J68 D82 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2531&r=lab |
| By: | Kiminori Matsuyama |
| Abstract: | This paper presents a model of emergent class structure, in which a society inhabited by inherently identical households may be endogenously split into the rich bourgeoisie and the poor proletariat. For some parameter values, the model has no steady state where all households remain equally wealthy. In this case, the model predicts emergent class structure or the rise of class societies. Even if every household starts with the same amount of wealth, the society will experience “symmetry-breaking” and will be polarized into two classes in steady state, where the rich maintain a high level of wealth partly due to the presence of the poor, who have no choice but to work for the rich at a wage rate strictly lower than the “fair” value of labor. The non-existence of the equal steady state means that a one-shot redistribution of wealth would not be effective, as wealth inequality and the class structure would always reemerge. Thus, the class structure is an inevitable feature of capitalism. For other parameter values, on the other hand, the model has the unique steady state, which is characterized by perfect equality. In this case, the model predicts dissipating class structure or the fall of class societies. Even if the society starts with significant wealth inequality, labor demand by the rich employers pushes up the wage rate so much that workers will escape from the poverty and eventually catch up with the rich, eliminating wealth inequality and the class structure in the long run. In an extension, we introduce self-employment, which not only provides the poor with an alternative to working for the rich, but also provides the rich with an alternative to investment that create jobs. Due to this dual nature of selfemployment, the effects of self-employment turn out to be quite subtle. Yet, within the present framework, it is possible to offer a complete characterization of the steady states even in the presence of self-employment. |
| Keywords: | Imperfect Credit Markets, Distribution of Household Wealth, Vertical Division of Labor, Endogenous Inequality, Unattainability of Classless Society, Symmetry-Breaking |
| URL: | http://d.repec.org/n?u=RePEc:nwu:cmsems:1407&r=lab |
| By: | William Kerr; Adriana Kugler; David Autor |
| Abstract: | Theory predicts that mandated employment protections may reduce productivity by distorting production choices. Firms facing (non-Coasean) worker dismissal costs will curtail hiring below efficient levels and retain unproductive workers, both of which should affect productivity. These theoretical predictions have rarely been tested. We use the adoption of wrongful discharge protections by U.S. state courts over the last three decades to evaluate the link between dismissal costs and productivity. Drawing on establishment-level data from the Annual Survey of Manufacturers and the Longitudinal Business Database, our estimates suggest that wrongful discharge protections reduce employment flows and firm entry rates. Moreover, analysis of plant-level data provides evidence of capital deepening and a decline in total factor productivity following the introduction of wrongful discharge protections. This last result is potentially quite important, suggesting that mandated employment protections reduce productive efficiency as theory would suggest. However, our analysis also presents some puzzles including, most significantly, evidence of strong employment growth following adoption of dismissal protections. In light of these puzzles, we read our findings as suggestive but tentative. |
| Keywords: | Dismissal Costs, Employment Fluctuations, Entry and Exit, Labor Productivity, TFP, Entrepreneurship |
| JEL: | J11 J21 J31 J61 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:07-04&r=lab |
| By: | Lauren Xiaoyuan Lu; Jan A. Van Mieghem; R. Canan Savaskan |
| Abstract: | We study how rework routing together with wage and piece rate compensation can strengthen incentives for quality. Traditionally, rework is assigned back to the agent who generates the defect (in a self routing scheme) or to another agent dedicated to rework (in a dedicated routing scheme). In contrast, a novel cross routing scheme allocates rework to a parallel agent performing both new jobs and rework. The agent who passes quality inspection or completes rework receives the piece rate paid per job. We compare the incentives of these rework allocation schemes in a principal-agent model with embedded quality control and routing in a multi-class queueing network. We show that conventional self routing of rework can never induce first-best effort. Dedicated routing and cross routing, however, strengthen incentives for quality by imposing an implicit punishment for quality failure. In addition, cross routing leads to workload allocation externalities and a prisoner’s dilemma, thereby creating highest incentives for quality. Firm profitability depends on capacity levels, revenues, and quality costs. With ample capacity, dedicated routing and cross routing both achieve first-best profit rate, while self routing does not. With limited capacity, cross routing generates the highest profit rate when appraisal, internal failure, or external failure costs are high, while self routing performs best when gross margins are high. When the number of agents increases, the incentive power of cross routing reduces monotonically and approaches that of dedicated routing. |
| Keywords: | queueing networks; routing; Nash equilibrium; quality control; piece rate; epsilon equilibrium. |
| URL: | http://d.repec.org/n?u=RePEc:nwu:cmsems:1436&r=lab |