nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2012‒07‒08
ten papers chosen by
Erik Jonasson
Lund University

  1. Trade Liberalisation Does Not Always Raise Wage Premia: Evidence from Ugandan Districts By Massimiliano Calì
  2. Retirement Age across Countries: The Role of Occupations By Philip Ulrich Sauré; Hosny Zoabi
  3. The Mexican Wage Curve 2000-2003: A Quantile Analysis By Hector Elias Gutierrez Rufrancos
  4. Is the Erosion Thesis Overblown? Evidence from the Orientation of Uncovered Employers By John Addison; Paulino Teixeira; Katalin Evers; Lutz Bellmann
  5. Can Rural Public Works Affect Agricultural Wages? Evidence from India By Erlend Berg; Sambit Bhattacharyya; Rajasekhar Durgam; Manjula Ramachandra
  6. Retiree Health Benefits as Deferred Compensation: Evidence from the Health and Retirement Study By James Marton; Stephen A. Woodbury
  7. Immigrants and Earnings Inequality: Evidence from Hong Kong By Ou, Dongshu; Kondo, Ayako
  8. The relative importance of adolescent skills and behaviors for adult earnings: A cross-national study By Kathryn Duckworth; Greg J. Duncan; Katja Kokko; Anna-Liisa Lyyra; Molly Metzger; Sharon Simonton
  9. The Returns to Education in China: Evidence from the 1986 Compulsory Education Law By Hai Fang; Karen N. Eggleston; John A. Rizzo; Scott Rozelle; Richard J. Zeckhauser
  10. An Analysis of Productivity Performance in Spain Before and During the Crisis: Exploring the Role of Institutions By Juan S. Mora Sanguinetti; Andrés Fuentes

  1. By: Massimiliano Calì
    Abstract: The process of economic integration over the past two decades has been accompanied by an expanding income wedge between skilled and unskilled workers in many developing countries. This was also the case for Ugandan wage employees during the 1990s, which was a period of abrupt trade opening and market reforms. This is a surprising result for an unskilled labour abundant country like Uganda in light of a standard Heckscher-Ohlin (H-O) framework. But was the trade opening responsible for the increase in wage premia? By using a novel district-level analysis, I find that in fact increased trade reduced the returns to schooling in line with the H-O predictions. On the other hand, the intensification of domestic trade across districts during the period was associated with higher returns in those districts relatively endowed with skilled employees. This effect appears to be responsible for at least some of the rising returns to schooling among wage employees in Uganda.
    Keywords: Returns to education, wage inequality, Uganda, trade, market reforms
    JEL: F10 F14 F16 O12 O15
    Date: 2012–06
  2. By: Philip Ulrich Sauré; Hosny Zoabi
    Abstract: Cross-country variation in average retirement age is usually attributed to institutional differences that affect individuals' incentives to retire. We suggest a different approach. Since workers in different occupations naturally retire at different ages, the composition of occupations within an economy matters for its average retirement age. Using U.S. data we infer the average retirement age by occupation, which we then use to predict the retirement age of 38 countries according to the occupational composition of these countries. Our findings suggest that the differences in occupational composition explain up to 39.2% of the observed cross-country variation in retirement age.
    Keywords: Retirement Age, Occupational Distribution, Cross-Country Analysis
    JEL: J14 J24 J26 J82
    Date: 2012
  3. By: Hector Elias Gutierrez Rufrancos (Department of Economics, University of Sussex)
    Abstract: This paper exploits the Mexican Encuesta Nacional de Empleo Urbano (ENEU) to determine the existence of the wage curve|an empirical phenomena rst suggested by Blanch ower and Oswald (1990)|during the period 2000{2003. We propose an innovative approach to the wage curve by estimating the elasticity across the wage dis- tribution. This is applied to the Mexican experience during the early 2000s recession. The evidence indicates that for Mexico during this period there is no wage curve, and that wages are positively aected by local levels of unemployment. This lends credi- bility to the Harris and Todaro (1970) view which suggests that there is segmentation in the labour market with residual unemployment. We argue that perhaps the power of unions may account for our fndings.
    Keywords: Wage curve, unemployment, Formal/Informal Employment, Urban labour markets, Mexico
    JEL: C21 J30 J60 O17
    Date: 2012–06
  4. By: John Addison (University of South Carolina and GEMF); Paulino Teixeira (University of Coimbra, Portugal and GEMF); Katalin Evers (Institut für Arbeitsmarkt- und Berufsforschung, Bundesagentur für Arbeit); Lutz Bellmann (Friedrich-Alexander-Universität Erlangen-Nürnberg and Institut für Arbeitsmarkt- und Berufsforschung, Bundesagentur für Arbeit)
    Abstract: It is sometimes claimed that the coverage of collective bargaining in Germany is considerably understated because of orientation, a process whereby uncovered firms profess to shadow the wages set under sectoral bargaining. Yet importantly, at a time when collective bargaining proper has been in retreat, little is known of corresponding trends in the frequency of indirect coverage, still less of the degree to which wages are aligned in practice. Using nationally representative data for 2000–2010, this paper charts the extent of orientation in the uncovered sector, and tracks average wages across bargaining regimes as well as changes in wages from switches in regime. It is reported that orientation is growing with the decline in sectoral bargaining and that orienting firms do pay higher wages than their counterparts in the collective bargaining free zone. Yet in neither case – frequency nor remuneration – is the degree of ‘compensation’ recorded other than partial.
    Keywords: Orientation, Erosion of Collective Bargaining, Uncovered Sector, Sectoral Bargaining, Wages, Regime Shifts.
    JEL: J31 J5
    Date: 2012–06
  5. By: Erlend Berg; Sambit Bhattacharyya; Rajasekhar Durgam; Manjula Ramachandra
    Abstract: It has long been hypothesised that public works programmes, in addition to the welfare effect on those directly employed, can influence equilibrium wage rates. In this paper we test the impact of the Indian government’s major public works programme, the National Rural Employment Guarantee (NREG), on agricultural wages. The rollout of NREG in three phases is used to identify difference-in-difference estimates of the programme effect. Using monthly wage data from the period 2000-2011 for a panel of 249 districts across 19 Indian states, we find that on average NREG boosts the real daily agricultural wage rates by 5.3 per cent. It takes 6 to 11 months for an NREG intensity shock to feed into higher wages. The wage effect appears to be gender neutral and biased towards unskilled labour. It is positive across different implementation stages and months. It remains significant even after controlling for rainfall; district and time fixed effects; and phase-wise linear, quadratic, and cubic time trends. The validity of our identification strategy is confirmed by placebo tests. We argue that since most of the world’s poor live in rural areas, and the poorest of the poor are agricultural wage labourers, rural public works constitute a potentially important anti-poverty policy tool.
    Keywords: Public works; Workfare; NREG; Agricultural wages
    JEL: O1
    Date: 2012
  6. By: James Marton (Georgia State University); Stephen A. Woodbury (Michigan State University and W.E. Upjohn Institute)
    Abstract: Are early retiree health benefits (RHBs) a form of deferred compensation that binds workers to an employer? Most employers who offer RHBs offer them only to workers who have 10 or more years of tenure with the firm and have reached age 55. Accordingly, workers in firms offering RHBs have an incentive to stay with a firm in the years before they attain eligibility for RHBs, and a greater incentive than otherwise to retire thereafter. We test for the existence of such a pattern of incentives by examining the age-specific relationship between workers’ eligibility for RHBs and retirement. The findings suggest that workers in RHB-offering firms are less likely to retire at ages 50 and 51 than similar workers in firms that do not offer RHBs. Also, RHB-eligible workers aged 60 and 61 are more likely to retire than similar RHB-ineligible workers. Such a pattern is consistent with RHBs acting as part of a delayed-payment contract of the kind described by Lazear (1979, 1981).
    Keywords: Tax Subsidies, Health Insurance, Retirement, Employee Benefits, Deferred Compensation, Compensation Methods
    JEL: H25 I18 J26 J32 M52
    Date: 2012–03
  7. By: Ou, Dongshu; Kondo, Ayako
    Abstract: Using data from 1991 to 2006 in Hong Kong, this paper documents how the distribution of workers’ earnings and the inequality of immigrants’ and natives’ earnings changed over time. We decompose earnings inequality to explore how the changes in immigrants’ share of the labor force have affected earnings inequality. We find that the increase in overall inequality can be explained by the increase in the within-group variance of natives. A nonnegligible part of the increase in inequality for women is due to the expansion of between-group variance caused by the large inflow of low-income immigrants from developing countries.
    Keywords: Earnings inequality; immigrants; Hong Kong
    JEL: D31 O15 J61
    Date: 2012–06–26
  8. By: Kathryn Duckworth (Institute of Education, University of London, 20 Bedford Way, London WC1H 0AL, UK.); Greg J. Duncan (University of California, Irvine, 2056 Education, Mail Code: 5500, Irvine, CA, 92697.); Katja Kokko (Department of Psychology, P.O. Box 35, FI-40014 University of Jyvaskyla.); Anna-Liisa Lyyra (Department of Psychology, P.O. Box 35, FI-40014 University of Jyvaskyla.); Molly Metzger (Northwestern University, 626 Library Place, Evanston, IL 60208.); Sharon Simonton (University of Michigan, Institute for Social Research, 426 Thompson Street, Ann Arbor, MI.)
    Abstract: Seeking convergent findings in five data sets from four countries, we assess the relative importance of adolescent skills and behaviors for completed schooling and labor market success in adulthood. We provide a framework for classifying "noncognitive" skills and use data designed by developmental psychologists to provide reliable measures of a variety of achievement and behavioral skills assessed between ages 13 and 16. Results show that adolescent achievement, particularly math achievement, is a stronger predictor of completed schooling than measures of noncognitive skills. Achievement skills also out-predict noncognitive skills with regard to adult earnings, although the differences are not as striking.
    Keywords: adolescent skills, adolescent behaviors, adult earnings
    JEL: J24 J31 J45
    Date: 2012–06–28
  9. By: Hai Fang; Karen N. Eggleston; John A. Rizzo; Scott Rozelle; Richard J. Zeckhauser
    Abstract: As China transforms from a socialist planned economy to a market-oriented economy, its returns to education are expected to rise to meet those found in middle-income established market economies. This study employs a plausible instrument for education: the China Compulsory Education Law of 1986. We use differences among provinces in the dates of effective implementation of the compulsory education law to show that the law raised overall educational attainment in China by about 0.8 years of schooling. We then use this instrumental variable to control for the endogeneity of education and estimate the returns to an additional year of schooling in 1997-2006. Results imply that the overall returns to education are approximately 20 percent per year on average in contemporary China, fairly consistent with returns found in most industrialized economies. Returns differ among subpopulations; they increase after controlling for endogeneity of education.
    JEL: J31 O15 P52
    Date: 2012–06
  10. By: Juan S. Mora Sanguinetti; Andrés Fuentes
    Abstract: The Spanish economy experienced significantly weaker labour productivity growth than other OECD economies and failed to catch up with the most advanced economies in the period 1996-2007. In recent years labour productivity growth has accelerated, but this recovery is likely to be due to cyclical and temporary factors. The aim of this paper is to identify what factors weigh on weak trend productivity growth. The relatively weak performance largely reflects the low growth of total factor productivity within a wide range of sectors, with very limited impact of composition effects, while the capital stock and educational attainment of the workforce have grown relatively strongly. The paper investigates the role of some institutions in deterring innovation, competition and the growth of successful firms. It argues that Spain needs to have a more flexible labour market and collective bargaining system to improve productivity performance. Productivity performance would also benefit from a more flexible business environment in such a way that both entry and exit of firms in the economy are less costly, including a reform of bankruptcy legislation, steps to make civil judicial procedures more efficient and a greater reduction of barriers to entry into the retail trade sector.<P>Analyse de la performance de la productivité en Espagne avant et durant la crise : Le rôle des institutions<BR>L’économie espagnole a enregistré une croissance nettement plus faible de la productivité du travail que les autres économies de l’OCDE et elle n’a pas réussi à rattraper les économies les plus avancées sur la période 1996-2007. Ces dernières années, la croissance de la productivité du travail s’est accélérée, mais ce redressement est vraisemblablement dû à des facteurs conjoncturels et temporaires. L’objet de cette étude est d’identifier les facteurs qui pèsent sur la croissance de la productivité. La faiblesse relative de la performance reflète en grande partie la médiocre progression de la productivité totale des facteurs dans un large éventail de secteurs, avec un impact très limité des effets de composition, alors que le stock de capital et le niveau de formation de la main-d’oeuvre ont assez fortement progressé. Cette étude examine dans quelle mesure certains dispositifs institutionnels ont joué contre l’innovation, la concurrence et le développement d’entreprises prospères. L’Espagne, est-il observé, doit pouvoir s’appuyer sur un marché du travail et un système de négociations collectives plus flexibles pour améliorer sa performance en termes de productivité. La performance sur le plan de la productivité bénéficierait aussi de davantage de flexibilité dans l’environnement des entreprises, de façon qu’aussi bien les entrées que les sorties d’entreprises de l’économie soient moins coûteuses, ce qui suppose une réforme de la législation sur les faillites, des mesures pour rendre les procédures judiciaires au civil plus efficientes et un abaissement plus marqué des barrières à l’entrée dans le secteur du commerce de détail.
    JEL: J24 K0 O4
    Date: 2012–06–21

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