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on Labour Economics |
| By: | David Neumark (Department of Economics, University of California-Irvine); William Wascher (Board of Governors of the Federal Reserve System) |
| Abstract: | We review the burgeoning literature on the employment effects of minimum wages—in the United States and other countries—that was spurred by the “new minimum wage research” beginning in the early 1990's. The wide range of existing estimates makes it difficult for us to draw broad generalizations about the implications of the new minimum wage research. Clearly, no consensus now exists about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that this recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. The overwhelming majority of the studies surveyed in this paper give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects. Moreover, the evidence tends to point to disemployment effects of minimum wages in the United States as well as many other countries. Two potentially more important conclusions emerge from our review. First, we see very few—if any—cases where a study provides convincing evidence of positive employment effects of minimum wages, especially from studies that focus on broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, when researchers focus on the least-skilled groups most likely to be adversely affected by minimum wages, we regard the evidence as relatively overwhelming that there are stronger disemployment effects for these groups. |
| Keywords: | Minimum wage; Employment |
| JEL: | J23 J38 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:060708&r=lab |
| By: | Holger Strulik (University of Hannover); Jean-Robert Tyran (Department of Economics, University of Copenhagen); Paolo Vanini (University of Zurich) |
| Abstract: | We develop a simple model of short- and long-term unemployment to study how labor market institutions interact with labor market conditions and personal characteristics of the unemployed. We analyze how the decision to exit unemployment and to mitigate human capital degradation by retraining depends on education, skill degradation, age, labor market tightness, taxes, unemployment insurance benefits and welfare assistance. We extend our analysis by allowing for time-inconsistent choices and demonstrate the possibility of an unemployment trap. |
| Keywords: | unemployment; skill degradation; retraining; unemployment benefits; welfare assistance; present-biased preferences |
| JEL: | J64 J31 J38 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:0618&r=lab |
| By: | Cenesiz, Alper; Pierdzioch, Christian |
| Abstract: | We used a dynamic two-country optimizing model featuring efficiency wages to analyze the implications of capital mobility for labor market volatility. Capital mobility magnifies the short-run effects of productivity shocks and monetary shocks on employment and the real wage, but dampens the medium-run effects. The overall effects of capital mobility on the volatility of employment and the real wage, their cyclical properties, and the persistence of employment fluctuations are moderate. |
| Keywords: | Capital mobility; Efficiency wages; Labor market volatility |
| JEL: | F36 E44 F41 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:504&r=lab |
| By: | Yolanda Rebollo Sanz (Department of Economics, Universidad Pablo de Olavide) |
| Abstract: | The path to a permanent contract often implies a sequence of temporary jobs, multi-firms experiences and unemployment spells. This paper investigates whether the characteristics of the path may influence the chances to get a permanent contract and the duration itself at the nonpermanent state. We estimate a simple hazard model with unobserved heterogeneity to examine the average duration at the non-permanent position needed to get a permanent one, either in the same or in other firm. The analysis considers two different groups of workers specially affected by temporary contracts. These are the young workers who just enter into the labor market, and the long term unemployed. We find evidence of the existence of the temporality trap. The probability of accessing into a permanent contract is non linearly related to the duration at the non-permanent state. It starts increasing but once it reaches a maximum it drops to pretty low levels. Besides, repeated temporary contracts and job interruptions reduce it while multi-firm experiences seem do not affect it negatively. |
| Keywords: | Temporary employment, temporality trap, Single risk models, Unobserved heterogeneity |
| JEL: | J64 J41 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:06.31&r=lab |
| By: | Paul Frijters; Uwe Dulleck; Rudolf Winter-Ebmer (School of Economics and Finance, Queensland University of Technology) |
| Abstract: | Starting a firm with expansive potential is an option for educated and high-skilled workers. If there are labor market frictions, this additional option can be seen as reducing the chances of ending up in a low-wage job and hence as increasing the incentives for education. In a matching model, we show that reducing the start-up costs for new firms results in higher take-up rates of education. It also gives rise—through a thick-market externality—to higher rates of job creation for high-skilled labor as well as average match productivity. We provide empirical evidence to support our argument. |
| Keywords: | Matching; education; start-up costs; venture capital; bureaucratic hurdles |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:qut:pfrijt:2006&r=lab |
| By: | Popli, Gurleen |
| Abstract: | In this paper we look at the distribution of wages to examine the extent and cause of the increasing wage inequality in Mexico over the last two decades (1984 to 2000). To understand the causes of the increase in inequality over time we do a counterfactual analysis. We find that over the last two decades not only did the inequality increase, there also was an erosion of real wages, and it's the middle class which was affected the most. Main reason for the decrease in real wages was the declining unionization in the country. While the main reason for the rise in inequality was the changing distribution of skills. |
| Keywords: | kernel density estimation; counterfactual distribution ; unions; trade liberalization; changing distribution of skills |
| JEL: | C14 J31 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:399&r=lab |
| By: | Block, Joern; Wagner, Marcus |
| Abstract: | Our paper uses data from the German Socio Economic Panel Study (GSOEP) to analyze how necessity and opportunity entrepreneurs differ in kind and in earnings and what the determinants of the latter are. We estimate probit and random effects panel data models in order to address these questions. We find that the two types of entrepreneurs differ as concerns age, gender and other characteristics, but not with regard to education levels. Furthermore, opportunity entrepreneurs earn significantly more in our sample and the determinants of earnings levels differ to some degree. We conclude that our findings indicate a need to distinguish between the two groups in entrepreneurship policy-making. The results also show that commonly used specifications of earnings equations in labour economics seem to work better for opportunity than for necessity entrepreneurs. |
| Keywords: | opportunity entrepreneurship; necessity entrepreneurship; earnings equation; wage equation; entrepreneurship; Germany; GSOEP |
| JEL: | J23 |
| Date: | 2006–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:610&r=lab |
| By: | Tomi Kyyrä; mika Maliranta |
| Keywords: | factor income shares, wage policy, decomposition, productivity |
| JEL: | J23 J24 D33 |
| Date: | 2006–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1049&r=lab |
| By: | Vivi Alatas; Lisa Cameron; Ananish Chaudhuri; Nisvan Erkal; Lata Gangadharan |
| Abstract: | In recent years, a substantial body of work has emerged in the social sciences exploring differences in the behavior of men and women in various contexts. This paper contributes to this literature by investigating gender differences in attitudes towards corruption. It departs from the previous literature on gender and corruption by using experimental methodology. Attitudes towards corruption play a critical role in the persistence of corruption. Based on experimental data collected in Australia (Melbourne), India (Delhi), Indonesia (Jakarta) and Singapore, we show that while women in Australia are less tolerant of corruption than men in Australia, there are no significant gender differences in attitudes towards corruption in India, Indonesia and Singapore. Hence, our findings suggest that the gender differences found in the previous studies may not be nearly as universal as stated and may be more culture-specific. We also explore behavioral differences by gender across countries and find that there are larger variations in women’s attitudes towards corruption than in men’s across the countries in our sample. |
| Keywords: | Gender, Corruption, Experiments, Punishment, Multicultural Analysis |
| JEL: | C91 J16 K42 O12 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:mlb:wpaper:974&r=lab |
| By: | Cenesiz, Alper; Pierdzioch, Christian |
| Abstract: | We used a dynamic two-country optimizing model featuring a labor-market friction in the form of efficiency wages to analyze the implications of financial market integration for macroeconomic dynamics. Efficiency wages tend to magnify the effect of financial market integration on macroeconomic dynamics. As compared to a model featuring a Walrasian labor market, efficiency wages may even reverse the direction of the change in macroeconomic dynamics caused by financial market integration. |
| Keywords: | Open economy macroeconomics; Financial market integration; Efficiency wages |
| JEL: | F36 E44 F41 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:506&r=lab |
| By: | Yaya, Mehmet-Erdem |
| Abstract: | This paper examines the effects of several macroeconomic variables such as GDP, imports, unemployment, immigration and emigration on the real wages and salaries of German laborers. Annual data for 49 years has been used to estimate twelve different regressions, trying to capture the effect of these variables on the real wages and salaries in Germany while considering the unification of West-East Germany with a dummy variable. The results are intriguing, and contradicting with most of the earlier literature. The paper concludes that wages are unresponsive to the macroeconomics changes most of the time while salaries are more sensitive to macroeconomic changes. The paper also contributes to the literature by investigating the effects of macroeconomic variables on the salary and wage changes of different gender groups. |
| Keywords: | Immigration; wages; international trade; Germany |
| JEL: | F16 F22 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:505&r=lab |
| By: | Di Tella, Rafael; Dubra, Juan |
| Abstract: | We observe that countries where belief in the "American dream" (i.e., effort pays) prevails also set harsher punishment for criminals. We know from previous work that beliefs are also correlated with several features of the economic system (taxation, social insurance, etc). Our objective is to study the joint determination of these three features (beliefs, punitiveness and economic system) in a way that replicates the observed empirical patterns. We present a model where beliefs determine the types of contracts that firms offer and whether workers exert effort. Some workers become criminals, depending on their luck in the labor market, the expected punishment, and an individual shock that we call "meanness". It is this meanness level that a penal system based on "retribution" tries to detect when deciding the severity of the punishment. We find that when initial beliefs differ, two equilibria can emerge out of identical fundamentals. In the "American" (as opposed to the "French") equilibrium, belief in the "American dream" is commonplace, workers exert effort, there are high powered contracts (and income is unequally distributed) and punishments are harsh. Economists who believe that deterrence (rather than retribution) shapes punishment can interpret the meanness parameter as pessimism about future economic opportunities and verify that two similar equilibria emerge. |
| Keywords: | beliefs; multiple equilibria; illegal behavior; fines; sentences. |
| JEL: | K42 K14 E62 P16 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:500&r=lab |
| By: | D. VANDAELE; P. GEMMEL |
| Abstract: | Despite the growing body of literature on different employee behaviors such as organizational citizenship behavior or boundary spanning behavior, few research studies have investigated the impact of both in-role and extra-role behavior on performance outcomes, especially in business services settings. In this study we investigate how in-role behavior, extra-role behavior, and their interrelation influences employee performed productivity and quality in business security services. Data from 1,174 frontline service employees is analyzed using structural equation modeling. The results indicate that performance quality is directly influenced by in-role employee behavior oriented towards customers, while performance productivity is influenced by both in-role and extra-role employee behavior oriented towards employees and customers. Opportunities for future research and managerial implications of the results are discussed. |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:06/411&r=lab |
| By: | Anindya Ghose (Stern School of Business, New York University); Bin Gu (McCombs School of Business, University of Texas at Austin) |
| Abstract: | It is well known that the Internet has significantly reduced consumers’ search costs online. But relatively little is known about how search costs affect consumer demand structure in online markets. In this paper, we identify the impact of search costs on firm competition and market structure by exploring a unique theoretical insight that search costs create a kink in aggregate demand when firms change prices. The significance of the kink reflects the magnitude of online search costs and the kinked demand function provides information on how search costs affect competition in the online market. Using a dataset collected from Amazon and Barnes & Noble, we find that search costs vary significantly across online retailers. Consumers face low search costs for price information from Amazon.com. It leads to a higher price elasticity when the firm reduces prices than when it increases prices, increasing Amazon’s incentive to engage in price competition. On the other hand, consumers face relatively higher search costs for price information from Barnes & Noble. This leads to a lower price elasticity when Barnes & Noble reduces prices than when it increases prices, reducing Barnes & Noble’s incentive to engage in price competition. We also find that search costs decrease with the passage of time as the information about price changes dissipates among consumers, leading to increased price elasticity over time. Finally, we highlight that search costs are lower for popular books compared to rare and unpopular books. These findings have implications for the impact of the Internet on the Long Tail phenomenon. |
| Keywords: | Electronic Markets, Search Costs, Kinked Demand Curve, Price Elasticity, Price Competition, Long Tail |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0619&r=lab |