nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒10‒05
seven papers chosen by
Maximo Rossi
University of the Republic

  1. Wage Posting or Wage Bargaining? Evidence from the Employers' Side By Brenzel, Hanna; Gartner, Hermann; Schnabel, Claus
  2. Born to Win? The Role of Circumstances and Luck in Early Childhood Health Inequalities By David Madden
  3. The Structure of the Permanent Job Wage Premium: Evidence from Europe By Kahn, Lawrence M.
  4. Structural Changes and Interregional Income Inequality in the Philippines, 1975-2009 By Takahiro Akita; Mark Saliganan Pagulayan
  5. Mental Illness and Unhappiness By Layard, Richard; Chisholm, Dan; Patel, Vikram; Saxena, Shekhar
  6. Catastrophic Job Destruction By Anabela Carneiro; Pedro Portugal; Jose Varejão
  7. Country Differences in Ultimatum Wage Bargaining with a Real Task: Evidence from Greece, Spain and the UK By Aurora García-Gallego; Nikolaos Georgantzís; Ainhoa Jaramillo-Gutiérrez

  1. By: Brenzel, Hanna (Institute for Employment Research (IAB), Nuremberg); Gartner, Hermann (Institute for Employment Research (IAB), Nuremberg); Schnabel, Claus (University of Erlangen-Nuremberg)
    Abstract: Using a representative establishment dataset, this paper is the first to analyze the incidence of wage posting and wage bargaining in the matching process from the employer's side. We show that both modes of wage determination coexist in the German labor market, with about two-thirds of hirings being characterized by wage posting. Wage posting dominates in the public sector, in larger firms, in firms covered by collective agreements, and in part-time and fixed-term contracts. Job-seekers who are unemployed, out of the labor force or just finished their apprenticeship are also less likely to get a chance of negotiating. Wage bargaining is more likely for more-educated applicants and in jobs with special requirements as well as in tight regional labor markets.
    Keywords: wage posting, wage bargaining, hiring, matching, Germany
    JEL: E24 J30 J63 M51
    Date: 2013–09
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7624&r=ltv
  2. By: David Madden (University College Dublin)
    Abstract: This paper measures the degree of inequality of opportunity in birthweight and birthlength for a sample of Irish infants. The sample is partitioned into eight types by mothers’ education and mothers’ smoking status. Stochastic dominance tests reveal the presence of inequality of opportunity but its fraction of total inequality is comparatively small at 1-2%, with the remainder of inequality assigned to random, unobserved factors. These results are robust to finer partitioning of the population and to re-definition of types’ opportunity sets which gives greater weight to inequality at the lower end of the distribution. Analysis of the incidence of low birthweight and short birthlength using measures from the poverty and segregation literature also reveal that incidence is not uniform across type and is consistent with the presence of inequality of opportunity.
    Keywords: Inequality of opportunity, decomposition, poverty, child health
    JEL: I14 I24 J13
    Date: 2013–09–27
    URL: http://d.repec.org/n?u=RePEc:ucn:wpaper:201313&r=ltv
  3. By: Kahn, Lawrence M. (Cornell University)
    Abstract: Using longitudinal data on individuals from the European Community Household Panel (ECHP) for thirteen countries during 1995-2001, I investigate the wage premium for permanent jobs relative to temporary jobs. The countries are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain, and the United Kingdom. I find that among men the wage premium for a permanent vs. temporary job is lower for older workers and native born workers; for women, the permanent job wage premium is lower for older workers and those with longer job tenure. Moreover, there is some evidence that among immigrant men, the permanent job premium is especially high for those who migrated from outside the European Union. These findings all suggest that the gain to promotion into permanent jobs is indeed higher for those with less experience in the domestic labor market. In contrast to the effects for the young and immigrants, the permanent job pay premium is slightly smaller on average for women than for men, even though on average women have less experience in the labor market than men do. It is possible that women even in permanent jobs are in segregated labor markets. But as noted, among women, the permanent job wage premium is higher for the young and those with less current tenure, suggesting that even in the female labor market, employers pay attention to experience differences.
    Keywords: wage structure, segmented labor markets, temporary jobs
    JEL: J31 J42
    Date: 2013–09
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7623&r=ltv
  4. By: Takahiro Akita (International University of University); Mark Saliganan Pagulayan (The National Economic and Development Authority (NEDA), Philippines)
    Abstract: The Philippines has undergone gradual but substantial changes in industrial structure over the past few decades, and these have been associated with the change in the geographical distribution of economic activity. This study analyzes changes in the determinants of regional income inequality in the Philippines associated with these structural changes from 1975 to 2009. This is accomplished by using the bi-dimensional decomposition method. The reduction of the disparity between the National Capital Region (NCR) and the rest of Luzon is essential to decreasing Luzonfs high within-region inequality and overall interregional inequality. But this is not easy to accomplish, since services sectors have enjoyed agglomeration economies that NCR has nurtured under economic liberalization and globalization. Decentralization has been one way to ameliorate the disparity, but its effects are ambiguous. Another option would be to relocate some manufacturing activities to areas outside NCR where they could enjoy localization economies.
    Keywords: structural change, regional income inequality, the Philippines, bi-dimensional decomposition, weighted coefficient of variation
    JEL: O18 R11 R12
    Date: 2013–09
    URL: http://d.repec.org/n?u=RePEc:iuj:wpaper:ems_2013_14&r=ltv
  5. By: Layard, Richard (London School of Economics); Chisholm, Dan (World Health Organization); Patel, Vikram (London School of Hygiene and Tropical Medicine); Saxena, Shekhar (World Health Organization)
    Abstract: This paper is a contribution to the second World Happiness Report. It makes five main points. 1. Mental health is the biggest single predictor of life-satisfaction. This is so in the UK, Germany and Australia even if mental health is included with a six-year lag. It explains more of the variance of life-satisfaction in the population of a country than physical health does, and much more than unemployment and income do. Income explains 1% of the variance of life-satisfaction or less. 2. Much the most common forms of mental illness are depression and anxiety disorders. Rigorously defined, these affect about 10% of all the world’s population – and prevalence is similar in rich and poor countries. 3. Depression and anxiety are more common during working age than in later life. They account for a high proportion of disability and impose major economic costs and financial losses to governments worldwide. 4. Yet even in rich countries, under a third of people with diagnosable mental illness are in treatment. 5. Cost-effective treatments exist, with recovery rates of 50% or more. In rich countries treatment is likely to have no net cost to the Exchequer due to savings on welfare benefits and lost taxes. But even in poor countries a reasonable level of coverage could be obtained at a cost of under $2 per head of population per year.
    Keywords: mental illness, welfare benefits, healthcare costs, life-satisfaction
    JEL: I10 I14 I18
    Date: 2013–09
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7620&r=ltv
  6. By: Anabela Carneiro; Pedro Portugal; Jose Varejão
    Abstract: In this article we study the resilience of the Portuguese labor market, in terms of job flows, employment and wage developments, in the context of the current recession. We single out the huge contribution of job destruction, especially due to the closing of existing firms, to the dramatic decline of total employment and increase of the unemployment rate. We also document the very large increase in the incidence of minimum wage earners and nominal wage freezes. We explored three different channels that may have amplified the employment response to the great recession: the credit channel, the wage rigidity channel, and the labor market segmentation channel. We uncovered what we believe is convincing evidence that the severity of credit constraints played a significant role in the current job destruction process. Wage rigidity is seen to be associated with lower net job creation and higher failure rates of firms. Finally, labor market segmentation seemed to have favored a stronger job destruction that was facilitated by an increasing number of temporary workers Dans cet article, nous analysons la résilience du marché du travail portugais, en termes de mouvements de main d’oeuvre, d'emplois et d'évolution des salaires, dans le contexte de la récession actuelle. Nous mettons en évidence la contribution significative des destructions d'emplois, notamment en raison des fermetures d’entreprises, à la baisse importante de l'emploi total et à l'augmentation du taux de chômage. Nous examinons également le très fort accroissement du nombre de travailleurs rémunérés au salaire minimum et le gel des salaires nominaux. Nous explorons trois différentes causes pouvant avoir amplifié la réaction de l'emploi à la grande recession : l’accès au crédit, la rigidité des salaires, et la segmentation du marché du travail. Nous mettons en lumière une preuve, que nous jugeons convaincante, que la rigueur des contraintes de crédit pesant sur les entreprises a joué un rôle important dans le processus actuel de destruction d’emplois. La rigidité des salaires est considérée comme allant de pair avec une création nette d'emplois plus faible et des taux plus élevés de faillite d'entreprises. Enfin, la segmentation du marché du travail semble avoir favorisé des destructions d'emplois plus fortes rendues possibles par un nombre croissant de travailleurs temporaires.
    Keywords: wage rigidities, job destruction, segmentation, credit constraints
    JEL: E24 J23 J63
    Date: 2013–09–23
    URL: http://d.repec.org/n?u=RePEc:oec:elsaab:152-en&r=ltv
  7. By: Aurora García-Gallego (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Nikolaos Georgantzís (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Ainhoa Jaramillo-Gutiérrez (LEE-Department of Economics, Universitat Jaume I-Castellón, ERICES-University of Valencia, Spain)
    Abstract: We study ultimatum bargaining over the wage that should be paid in order to have a subject perform a given real task. Our results are obtained from experiments run in Greece, Spain and the UK. We find significantly higher wage offers and lower acceptance probabilities in the UK than in the other two countries. Interestingly, the combination of these two effects leads to higher wages in the British pool, without reducing market efficiency as compared to Spain and Greece. Country differences in both employer and employee behavior have a clear gender component.
    Keywords: ultimatum bargaining, real task, country differences
    JEL: C91 D03 J16 J31
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:jau:wpaper:2013/13&r=ltv

This nep-ltv issue is ©2013 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at http://nep.repec.org. For comments please write to the director of NEP, Marco Novarese at <director@nep.repec.org>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.