Minimum wage violation in central and eastern Europe

This article analyses minimum wage violations over the period 2003–12 in ten central and eastern European countries which all have national statutory minimum wages. Using European Union Statistics on Income and Living Conditions (EU‐SILC) data and the methodology proposed by Bhorat, Kanbur and Mayet (2013), the authors measure the incidence and depth of violation. In addition, they conduct regression analyses on individual, workplace and macro‐level determinants of non‐compliance. While the incidence of violation remains relatively low, the workers that minimum wage policies seek to protect appear to be the most likely to be affected by non‐compliance. Over time, higher minimum to average wage ratios are related to a higher incidence of violation.     

Visualising Gender Wage Differences in the European Union

The purpose of this article is to illustrate differences in the gender wage gap in 13 EU member states, using figures taken from the Household Panel for 2000. The methodology is based primarily on the kernel density functions of men's and women's wages. A range of situations can be observed from the Mediterranean countries (with a smaller gender pay gap) to the very specific cases of Austria and the UK and to northern European countries where the gender pay gap is chiefly the result of a larger proportion of men at higher‐paid levels. We also offer conclusions on the relevance of public employment, part‐time employment and short‐term hiring to explain the gender wage gap in each of the countries studied.     

Wage Inequality and Performance in Nonprofit and For‐Profit Organizations

This article examines the effects of several forms of wage inequality on service quality and employee effort. We suggest that two popular theories, tournament and fair wage/equity, are not necessarily competing. Each theory accurately describes aspects of employee behavior, but because of sectoral differences in organizational objectives and employee attitudes, tournament theory's predictions are relatively stronger in the for‐profit sector, while fair wage/equity theory's predictions are relatively stronger in the nonprofit sector. Using an employer–employee matched data set of nursing homes linked to a federal regulatory database and a resident survey, we found that ownership moderates the relationship between wage inequality and service quality. Although wage inequality positively affects service quality in the for‐profit sector, the reverse is true among nonprofit organizations. We also found that overall wage inequality in the workplace has a more pronounced influence on employee discretionary effort than does the employee's place in the distribution of wages.     

THE EFFECT OF MINIMUM WAGES IN THE PRESENCE OF FRINGE BENEFITS: AN EXPANDED MODEL

Firms may react to a minimum wage hike by reducing their expenditures on fringe benefits. This possibility is incorporated into an expanded model of minimum wages. A set of predictions that differentiate this expanded model from current minimum wage models is derived and tested. The expanded model is shown to better predict the effect of minimum wages on labor force participation, quit rates, and prices than previous models. An interesting result of the expanded model is that a covered worker may be worse off due to a minimum wage hike even if he retains his job.     

Can a minimum wage increase have an adverse impact on inequality? Evidence from two Latin American economies

This paper uses a semiparametric model to analyze the impact of an increase in the real minimum wage on inequality in Colombia between 1995 and 1999 and in Paraguay between 1993 and 2000–2001. Simulations suggest that if the employment effects of the minimum wage increase are ignored, the underlying policies would contribute to reduce earnings inequality in Colombia and would be inequality neutral in Paraguay. By considering the drop in wages of those who lost their jobs, simulations suggest that in both countries the policy in question would increase earnings inequality under some assumptions about the employment elasticity of the minimum wage and the new level of earnings unemployed workers rely upon. While these findings do not mean that minimum wage increases in LDCs (Less Developed Countries) necessarily have adverse distributional affects, they suggest that minimum wage policy should be implemented with care depending on how sensitive employment is to wage increases. An erratum to this article can be found at     

State minimum wage laws: Youth coverage and impact

Federal minimum wage statutes cover only 70 percent of the work force and 30 percent of all employers. State laws are designed to close some of these coverage gaps and in some cases to set higher wage floors. Hence, differences in state wage floors and coverage should affect employment rates and wage distributions, particularly among low-skilled workers. Evidence from the National Longitudinal Ssurveys of Youth is mixed, however: State wage floors appear to have no impact on youth employment or entry wages, but coverage exemptions appear to increase both employment and wages. These observations underscore the need to include state provisions in models of minimum wage impacts, particularly for later periods (e.g., 1988–1991) when state wage floors were relatively higher.     

Inter‐country wage differences in the European Union

This article investigates the determinants of wage gaps between European Union countries along the wage distribution, applying the methodology proposed by Firpo, Fortin and Lemieux (2009) and Fortin, Lemieux and Firpo (2011). The authors conclude that both wage structure and composition effects contribute to explaining wage differentials, but that the wage structure effect is more important. This latter effect would appear to derive from differences between unknown factors, while the composition effect can largely be explained by differences in the following areas: education, proportion of workers with supervisory responsibilities, occupational structure, and, to a lesser extent, industrial structure.     

Job-search Networks and Wage Attainment in China: A Comparison of Job Changers and Non-changers

This article examines job-search networks and entry-level wage attainment using data from a large-scale survey conducted in eight cities in China in 2009. Two key issues are addressed: (i) how the use of social networks is associated with entry-level wage attainment in urban China, and (ii) whether the patterns of network effects on entry-level wage differ between job changers and first-job seekers. The results show that both strength of ties and social resources of job-search networks are significantly associated with entry-level wage attainment, and that the network effects on entry-level wage are greater for job changers than for first-job seekers. This study offers a solid empirical verification of the associations of weak ties with information and strong ties with influence in an analysis of entry-level wages for job changers and first-job seekers.     

More wages,more income,more leisure? Evidence from Thailand’s time use survey

ABSTRACT

Does more income mean more leisure? This paper investigates the impact of wages and income on leisure time using merged data from two nationally representative samples in Thailand: (1) the Time Use Survey, and (2) the Labor Force Survey. Results will depend on our definition of income or wages. The data indicate that Thai people tend to reduce their leisure time in response to monthly income changes. The reason for such a negative relationship is that monthly income is composed of extra income other than wages, for example, overtime and bonus pay, which are found to be inversely related to leisure time. However, when the relationship between leisure time and hourly wage is estimated, we find that an increase in hourly wage substantially and significantly induces people to engage in more leisure and that a percentage change in hourly wage also provides a positive percentage change in leisure time.     

Minimum Wages in a Segmented Labor Market: Evidence from South Africa

The segmented labor market model describes the impacts of minimum wages on covered and uncovered sectors. This paper examines the impacts of an industry-specific minimum wage in South Africa, a state characterized by high unemployment, a robust union movement, and the presence of a large informal sector. Under the industry-specific wage law, formal agricultural and household workers are covered, while workers in other sectors are not. The unique aspect of this paper lies in the ability to compare the impacts of minimum wage legislation on formal covered, informal covered, formal uncovered, and informal uncovered workers. This natural experiment allows us to test whether industry-specific minimum wage legislation leads to higher wages, whether wage increases are restricted solely to covered formal sectors or if there are spillover effects, and whether such legislation manifests in disemployment effects. We find evidence of higher wages yet disemployment among black workers in formal markets. In informal markets we find no employment effects, but higher wages in formal markets appear to have spilled over into informal markets in covered sectors.     

Employer attitudes towards refugee immigrants: Findings from a Swedish survey

Based on a large‐scale survey of Swedish firms, the authors identify significant heterogeneity in their attitudes towards refugee hiring, job performance, wage setting and discrimination, though experience of employing refugees reduces negative attitudes. Firms’ reasons for discontinuing their employment of refugees are not related to discrimination by staff or customers, but rather to refugees’ suboptimal job performance. While the majority of firms do not regard the collectively agreed minimum wages as an important obstacle to the hiring of refugees, firms with a large share of refugees on the payroll report that reducing those wage rates would enhance employment substantially.     

Gender segregation and the wage gap in Portugal: an analysis at the establishment level

Using a large linked employer-employee data set, this paper aims at quantifying the trend in worker segregation at the establishment level and its impact on wages in Portugal over a fifteen year period. We concentrate on the gender dimension, to answer the questions: What is the level of gender segregation across establishments in the Portuguese labor market and how has it evolved over time? What is the impact of segregation on wages? Is that impact different for men and women? Systematic and random components of segregation are computed. We use standard wage decomposition techniques to evaluate the impact of the composition of the labor force at the establishment level on wages. The results reveal a high degree of systematic gender segregation. A higher proportion of females in the establishment lowers females’ wages while, on the contrary, it raises males’ wages. The evidence gathered is consistent with the taste-based model of employer behavior and with the theory of sorting of workers across establishments based on their productivity.     

The Effect of the Minimum Wage on Covered Teenage Employment

Unlike previous studies on the minimum wage, which focused on its effect on total teenage employment, we examine its effect on covered employment. A covered job was defined to be one paying the minimum wage or more. Using contemporary wages to classify workers this way may inflate the estimated effect of minimum wages on covered employment. To avoid this bias, covered jobs are identified using a logit procedure run over years in which the minimum age was not increased. We find that minimum wages reduced covered employment significantly more than total employment. We also show that covered employment may be overstated in the period following an increase in the minimum wage.     

Education and wage inequality in the informal sector: The case of Cameroon

This article analyses the effects of education on wage inequality in the informal sector in Cameroon. The author uses quantile regression on data from the Second survey on employment and the informal sector in Cameroon (EESI 2) of 2010. The results indicate that both wages and wage inequality increase with education in the informal sector, with tertiary education creating greatest inequality. These findings point to a number of policy recommendations for a transition to formality, such as the creation of more jobs for a skilled workforce, the development of sites adapted to informal sector activities and the creation of more vocational schools.     

Competition in online job marketplaces: towards a global labour market for outsourcing services?

A new form of service outsourcing has emerged, namely the global online job marketplace for freelance contractors. Such platforms are currently the closest proxy to the idea of a global labour market where everyone competes for jobs regardless of location. In this article, we examine how competition manifests itself on one such global online platform, namely oDesk. We present a comparative analysis of the relative wages and the rewarding of skills and expertise of contractors from selected countries and investigate whether, via labour arbitrage, wage convergence takes place between Western and developing countries. We find that wage convergence is noticeable but experience and skills hardly translate into better remuneration. While service outsourcing (or microwork) via global online marketplaces provides new employment opportunities for freelancers around the world, the intense competition and the inherent restrictions of this type of marketplace limit the financial gains for most contractors.     

Unions and wage inequality

Summary and Conclusions The impact of unions on the structure of wages has recently attracted renewed interest as analysts have struggled to explain the rise in earnings inequality in several industrialized countries. Canada, the United Kingdom, and the United States provide a potentially valuable set of countries for examining this question. All three countries now collect comparable data on wages and union status in their regular labor force surveys. Several features of the collective bargaining institutions of these countries make them suitable for studying the relationship between unions and wage inequality. Bargaining is highly decentralized; there are no general mechanisms for extending collective bargaining provisions beyond the “organized” sector; and the fraction of the work force covered by collective bargaining is relatively modest. Thus it is possible to compare the structure of wages for workers covered by union contracts to those who are not covered, and potentially infer the effect of unions on overall wage inequality.     

Economic growth and inequality in Singapore: The case for a minimum wage

In the context of Singapore's ageing population, the employment of large numbers of low‐skilled foreign workers is proving to be a major challenge to inclusive growth because of the stagnation of low‐wage workers' incomes. In order to address this problem, the author makes the case for introducing a minimum wage to complement existing in‐work benefit schemes. After addressing the commonly voiced objections to a minimum wage system, he suggests ways in which a minimum wage could be implemented in Singapore. New measures to enhance the social safety net and foster more sustainable economic growth are also proposed.     

On‐the‐job training in Europe: Determinants and wage returns

Using data from the European Community Household Panel on six countries over the period 1995–2001, this article investigates the determinants of workers’ participation in training activities and the effects of training on wages. Based on measures of four distinct training types, the authors find that while OLS estimates yield significant wage returns to training for nearly all of the countries, fixed‐effects estimations show returns to be not statistically different from zero. This suggests that wage returns to training might be overstated due to failure to take adequate account of the correlation of training with confounding factors that affect wages.     

Immigrant Wage Disadvantage in Sweden and the United Kingdom: Wage Structure and Barriers to Opportunity1

This article examines immigrant/native-born wage inequalities among workers in two Western European countries: Sweden, social democratic and with comparatively low wage dispersion, and the United Kingdom, economically liberal and with comparatively high wage dispersion. The analysis includes immigrants from 26 countries of origin. Findings demonstrate that inequalities in terms of real wages are smaller in more egalitarian Sweden. However, in terms of relative positions within the labor market, inequalities are if anything smaller in the UK. These findings highlight the role of wage dispersion in magnifying immigrant disadvantage, but also the limits of wage compression for ameliorating barriers to immigrant opportunity.     

Career Sidestep,Wage Setback? The Impact of Different Types of Employment Interruptions on Wages

We examined the wage implications of different types of wage employment interruptions in a sample of 44,384 Belgian employees. The employment interruption types included are family leave, unemployment, self‐employment, educational leave and a category other interruptions (for example, travel, voluntary work). We conduct separate analyses for men and women. Results indicate that unemployment spells and family breaks are penalized by lower subsequent wages, while the wage impact of self‐employment spells and educational leave is insignificant. Family breaks and unemployment spells were found to be more harmful for men than for women. Implications of the results and directions for future research are discussed.