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on Labour Economics |
| By: | Paul Schweinzer; Joanna K. Swaffield |
| Abstract: | We analyse the effect of the voluntary adoption of a living wage on firms operating in product markets in which consumption behaviour is at least partly determined by reputational concerns for ethical firm behaviour. We show without recourse to morality or efficiency-wage theories that the adoption of a living wage policy may increase consumer welfare as well as producer surplus through the segmentation of a previously homogenous product market. In particular, we demonstrate that it may serve a firm’s profit maximisation interest to voluntarily adopt a living wage. |
| Keywords: | Living wage, Signalling, Reputation |
| JEL: | J31 J38 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:14/21&r=lab |
| By: | Olivier Cardi; Romain Restout |
| Abstract: | This paper investigates the relative price and relative wage effects of a higher productivity in the traded sector compared with the non traded sector in a two-sector open economy model with imperfect substitutability in hours worked across sectors. The Balassa- Samuelson [1964] model predicts that a rise in the sectoral productivity ratio by 1% raises the relative price of non tradables by 1% while leaving unchanged the non traded wage-traded wage ratio. Applying cointegration methods to a panel of fourteen OECD countries over the period 1970-2007, our estimates show that the relative price rises by only 0.78% and the relative wage falls by 0.27%. While our first set of empirical findings cast doubt on the quantitative predictions of the Balassa-Samuelson model, our second set of evidence highlights the role of imperfect labor mobility: the relative price responds more to a productivity differential between tradables and non tradables while the reaction of the relative wage is more muted in countries with higher intersectoral reallocation of labor. We show that the ability of the two-sector model to account for our evidence quantitatively relies upon two ingredients: i) imperfect mobility of labor across sectors, and ii) physical capital accumulation. Finally, our numerical results reveal that the model predicts the relative price response pretty well, and to a lesser extent the relative wage response. |
| Keywords: | Relative price of non tradables; Sectoral wages; Productivity growth; Sectoral labor reallocation; Investment. |
| JEL: | E22 F11 F41 F43 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2014-16&r=lab |
| By: | Roberto Pinheiro (University of Colorado); Ludo Visschers (The University of Edinburgh, Universidad Carlos III and CESifo) |
| Abstract: | Workers in less-secure jobs are often paid less than identical-looking workers in more secure jobs. We show that this lack of compensating differentials for unemployment risk can arise in equilibrium when all workers are identical and firms differ only in job security (i.e. the probability that the worker is not sent into unemployment). In a setting where workers search for new positions both on and off the job, the worker’s marginal willingness to pay for job security is endogenous, increasing with the rent received by a worker in his job, and depending on the behavior of all firms in the labor market. We solve for the labor market equilibrium and find that wages increase with job security for at least all firms in the risky tail of the distribution of firm-level unemployment risk. Unemployment becomes persistent for low-wage and unemployed workers, a seeming pattern of ‘unemployment scarring’ created entirely by firm heterogeneity. Higher in the wage distribution, workers can take wage cuts to move to more stable employment. |
| Keywords: | Layoff Rates, Unemployment risk, Wage Differentials, Unemployment Scarring |
| JEL: | J31 J63 |
| Date: | 2014–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:250&r=lab |
| By: | Ayako Kondo (Yokohama National University); Saori Naganuma (Bank of Japan) |
| Abstract: | This paper investigates the factors preventing inter-industry labor reallocation by estimating the determinants of inter-industry worker flow and earnings change after a job change. We find that the difference in required tasks is an important reason for reduction in earnings after an inter-industry job change, and the fear of earnings losses may prevent workers from moving to industries requiring a different set of tasks. Also, more workers switch to industries with which their previous industry had larger transactions, although it affects earnings changes only marginally. On the other hand, industry performance does not affect labor inflow or wage changes significantly for inter-industry job changes. Furthermore, earnings loss associated with a move to a distant industry is not necessarily smaller for workers who are relatively more likely to move to a distant industry. |
| Keywords: | inter-industry labor mobility; task specific human capital |
| JEL: | J62 J21 |
| Date: | 2014–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:boj:bojwps:wp14e08&r=lab |
| By: | Fabrizio Mazzonna (University of Lugano and MEA); Franco Peracchi (University of Rome "Tor Vergata" and EIEF) |
| Abstract: | We investigate the causal effect of retirement on health and cognitive abilities by exploiting the panel dimension of the first two waves of the Survey of Health Ageing and Retirement in Europe (SHARE) and the variation between and within European countries in old age retirement rules. We show evidence of substantial heterogeneity in the effect of retirement across occupational groups. In particular, we find that retirement increases the age-related decline of health and cognitive abilities for most workers. On the other hand, we find evidence of a positive immediate effect of retirement for those employed in highly physically demanding jobs. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:eie:wpaper:1409&r=lab |
| By: | Edwards, T. Huw (Loughborough University); Perroni, Carlo (Department of Economics and CAGE, University of Warwick) |
| Abstract: | We investigate the theoretical relationship between wage concentration and international market integration. Access to imported varieties lowers the cost of intermediate inputs (“machines”) used to carry out production tasks, causing workers with different comparative abilities to be sorted across a narrower range of tasks and raising the concentration of earnings. The accompanying shift in input use further expands the range of traded varieties, which further lowers the cost of machines. Effects on the volume of intermediate goods trade and the number of varieties produced are mutually reinforcing, resulting in a multiplier effect of market integration on wage concentration. |
| Keywords: | Trade, Skills, and Tasks; Wage Inequality |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:203&r=lab |