BROADBAND INTERNET,FIRM PERFORMANCE,AND WORKER WELFARE: EVIDENCE AND MECHANISM

This paper examines the effect of high-speed internet on firm's productivity and worker's wage in China. We exploit a national policy reform and devise a difference-in-difference strategy to address the endogeneity. We find that high-speed internet significantly increases firm's productivity and worker's wage, and the estimate is larger for firms in industries with high skill intensity and for more educated workers. We provide suggestive evidence that the mechanism is likely from firm's increased use of skill-biased technology and the flattened management organization. (JEL O2, O3, J3)     

The minimum wage and productivity differentials

A firm’s ability to adjust its production process to economize on low-skilled labor when faced with a minimum wage increase will differ greatly depending on industry or occupation. For example, more capital-intensive means of cleaning hotel rooms or serving customers at restaurants may not be readily available without degrading service quality. In such situations, the productivity of labor is essentially capped, and firms have few options when the minimum wage increases. This simple observation has implications for studies that rely on microdata to examine the effects of minimum wage increases. If firms only increase prices in response to a minimum wage increase, employment effects are likely small. If the goal of the minimum wage is to redistribute income from firms and consumers to workers, minimum-wage increases targeted at industries and occupations where such rigidities result in an inelastic demand for labor may achieve the desired goal at a lower cost than across-the-board increases. However, such a scheme causes an inefficient allocation of labor and would be subjected to substantial political pressures that may lead to anomalous results. Additionally, it is unreasonable to conclude that policy makers have the necessary information to skillfully set the minimum wage. I thank Brian E. Chezum and Jeff Waddoups for helpful comments. All mistakes, of course, are my own.     

Bonuses and investment in intangibles

Traditional analyses of bonuses have focused on performance measures such as output or profit as the sole determinant of bonus pay plans. However, com-panies now use bonuses for a variety of purposes, including employee recruit-ment and retention and to obtain better outcomes in quality and customer service. These trends suggest that a host of strategic considerations influence company decisions about bonus payouts, ranging from traditional concerns such as employee performance to the company’s reputation among prospective employ-ees and customers, stakeholder influence, and support for technological and organizational change as part of company plans to develop intangible assets. Using data from 2000 ELCS (European Labor Cost Survey), I investigate the determinants of bonus payouts, in particular how a company’s concerns about intangible assets affect its bonus outlays. Consistent with a growing body of evidence, both individual and workplace effects are important in explaining the variation in the incidence of bonus payments. Specifically, the findings suggest that human capital investments are positively related to bonus payments.     

PAYING MORE TO HIRE THE BEST? FOREIGN FIRMS,WAGES, AND WORKER MOBILITY

In the context of the debate on the labor‐market consequences of globalization, we adopt an original approach toward the identification of the wage differences between foreign and domestic firms: worker mobility. Using matched employer‐employee panel data for Portugal, we consider virtually all spells of interfirm mobility over a period of 10 yr. We find that foreign firms offer significantly more generous wage policies, although there is also a (smaller) selection effect. The results are robust to the consideration of displaced workers, wage growth differences in the new firms, and different subsets of workers. (JEL J31, J63, F23)     

An integrated model of the economic effects of right-to-work laws

This study derives an empirical model which simultaneously traces the effect of Right-to-Work laws on the worker’s decision to join the union, the union’s decision to set the wage rate, and the firm’s decision to employ inputs. The model identifies two channels through which Right-to-Work laws affect these decisions: the wage effect and the productivity effect. Our results show that RTW laws tend to affect economic decisions through the wage effect, because the effect of RTW laws on productivity is small in most states. We thank an anonymous referee for helpful comments. Any errors that remain are the responsibility of the authors.     

How international trade affects union wages: New evidence

We reexamine the effect of import competition on union wages using the NBER Industry Data for Imports and Exports by SIC category 1987– 1994 (Feenstra, 1996). We find that the effect of import share on union wage levels and wage growth is zero by the end of the twelve-year period covering 1983– 1994. These results suggest that although import competition initially reduced union wages in the late 1970s and early 1980s, by 1987 union wages were largely unaffected by import competition. Apparently, the diminished import effect results from increased union strength over the period, particularly in highly organized industries. The authors appreciate the comments of Barry T. Hirsch and Wm. S. Mounts. David Macpherson aided in the development of our CPS data sets.     

Learning and the Form of Compensation

Using data from the PSID and an empirical setup similar to the one used in Altonji and Pierret (Q J Econ 116(1):313–350, 2001)’s paper on wages and employer learning, we find that the coefficient of a hard-to-observe correlate of productivity—parents’ educational attainment—in a wage regression increases more rapidly with experience in performance pay jobs than in nonperformance pay jobs. This result is driven entirely by bonus pay jobs as opposed to commission/piece rate jobs. In the latter, there is no evidence that the importance of parental education in the wage determination process increases over time. This is consistent with the notion that explicit pay-for-performance compensation schemes are, by design, revealing workers’ productivities and that employers need not infer anything about worker productivity when the payment is ex post as is the case for commissions and piece rates as opposed to having to set pay ex ante.     

WORKFORCE COMPOSITION AND FIRM PRODUCTIVITY: EVIDENCE FROM TAIWAN

We study the relationship between workforce composition and firm productivity based on a new employee‐employer‐matched data set, using an array of workforce characteristics and three alternative measures of firm productivity. While firm age is not essential for the performance of firms, those of smaller size and those in the steel and transportation industries outperform others. Moreover, labor quality, particularly the middle‐aged with higher education, contributes significantly to firms' productivity. Furthermore, economic incentives and market competition both play important roles in the performance of firms. Finally, there is an employer‐size premium with larger firms paying higher wages and nonwage benefits. (JEL C33, D20, J30)     

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.     

WAGES,EMPLOYMENT, AND STATISTICAL DISCRIMINATION: EVIDENCE FROM THE LABORATORY

We report results from laboratory experiments designed to examine statistical discrimination. Our design expands upon existing research by generating data both on wage contracts and unemployment rates of directly competing worker groups. We find some evidence for statistical wage discrimination against workers having an identical expected productivity but a higher productivity variance. However, those same subjects are less likely to be unemployed, suggesting that our employer‐subjects view hiring choice and wage contracts as substitutable. A clear implication is that field data discrimination estimates based on wages alone may overestimate the true impact of such discrimination. (JEL C90, J71)     

上海服务业“结构奖赏”与“结构惩罚”效应分析

2012年,上海第三产业增加值占GDP比重首超60％,达到服务经济的国际标准。借助shift—share方法对2003-2012年上海第三产业劳动生产率变动进行分解得出：“结构奖赏”和“结构负担”假说并存,且前者效应已高于后者,表明结构转换有助于提升劳动生产率,但力度有限;各行业内部劳动生产率的提升才是上海第三产业劳动生产率提升的主体。上海调整第三产业结构的前提是各行业能按自身发展规律协调发展,即须在发展中实现结构转换,而非片面追求结构调整。     

INDUSTRIAL OUTPUT VARIABILITY AND REAL WAGE FLUCTUATIONS: DETERMINANTS AND IMPLICATIONS

The cyclical behavior of the real wage differentiates between the empirical validity of major new Keynesian sticky-wage and sticky-price explanations of business cycles. Across industries of the United States, an increase in price flexibility relative to wage flexibility correlates with a reduction in output fluctuations in the face of demand shocks. Further, industrial real output variability does not vary significantly with nominal wage flexibility. In contrast, an increase in price flexibility moderates industrial real output variability. Consistently, an increase in the real wage response to demand shocks correlates with an increase in industrial output variability. ( JEL E32, E31)     

The Within‐Job Motherhood Wage Penalty in Norway, 1979–1996

The motherhood wage penalty is a substantial obstacle to progress in gender equality at work. Using matched employer–employee data from Norway (1979–1996, N = 236,857 individuals, N = 1,027,462 individual‐years), a country with public policies that promote combining family and career, we investigate (a) whether the penalty arises from differential pay by employers or from the sorting of employees on occupations and establishments and (b) changes in the penalties during a period with major changes in family policies. We find that (a) the penalty to motherhood was mostly due to sorting on occupations and occupation‐establishment units (mothers and nonmothers working in the same occupation and establishment received similar pay), and (b) the wage penalties to motherhood declined substantially over the 18‐year period.     

Does consensus bargaining control labor costs in Japan? Evidence from the “bubble economy” and its aftermath

Japan’s system of labor negotiations provides an opportunity to see whether consensus bargaining restrains labor costs. The recent volatility of the Japanese economy affords a unique chance to observe how consensus-based labor settlements adjusted to sudden, sharp changes in market conditions. It is also possible to evaluate the role of bonus payments in amending labor settlements. With observations for 1986–1995,1 use measures of productivity gains to calculate the capacity for increasing worker pay and then analyze whether pay increases exceeded that capacity. I report the extent to which changes in labor earnings were scheduled or resulted from adjustments in bonus pay. During the boom years of the late 1980s, employers inflated bonuses so that workers’ pay increased more than had been scheduled, but not enough to exceed the capacity for growth. But during the sluggish years of the early 1990s, pay agreements were excessive. Employers cut workers’ bonuses to keep earnings growth in check. Thus, bonus pay provided a “degree of freedom” allowing employers to adjust labor costs following sudden upswings and downturns in the economy. I am grateful to Professor Hideo Kawada and Mr. Kenichi Matsuki, both of Senshu University, for their assistance in gathering the earnings data for this study. Thanks are also due to Craig MacPhee, Roger Riefler, and Hendrik Van den Berg for thoughtful comments and suggestions. I am responsible for any remaining shortcomings.     

Employee perceptions of the effects of a two-tier wage structure

This exploratory study examines three research questions related to employees’ perceptions concerning the effects and purposes of a permanent two-tier wage structure in their employment setting. Although much of the popular literature on employee dissatisfaction with tiers has focused on low-wage tier employees, the results of this study indicate overall dissatisfaction with the effects of tiers amongboth high- and low-wage tier employees. Financial support for this study was provided by the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan, and the Master of Arts in Industrial Relations Program at Wayne State University.     

The relationship between work/family benefits and earnings: A test of competing predictions

Using data from a random statewide telephone survey, this study examines the relationship between four specific types of work/family benefits (child care, flextime, and two types of flexible leaves) and employee earnings. The research is guided by two competing theoretical perspectives. One—compensating wage differential theory—is based on the presumed cost of the benefits, and the other is based on their potential productivity enhancing effects. Despite the prevalence of the former perspective for guiding work on the impact of job characteristics on earnings, we found limited supporting evidence. Instead, earnings more closely related to work/family benefits were likely to have a positive impact on productivity, but only among those groups that stood the most to gain. Building on the findings of this study, suggestions are made to examine further how and in what ways this important new class of benefits might affect employee earnings.     

DOES OFFSHORING PAY? FIRM‐LEVEL EVIDENCE FROM JAPAN

This article explores the impact of offshoring on productivity using firm‐level data for the Japanese manufacturing industries during the period 1994–2000. We find that intrafirm offshoring, that is, sourcing of intermediate inputs to foreign affiliates within a particular multinational firm, has generally a positive effect on productivity of the offshoring firm, while arm’s‐length offshoring, that is, sourcing to unaffiliated foreign firms, does not have such an effect. In addition, the impact of arm’s‐length offshoring is negative for nonmultinationals and nonexporters but nonnegative for multinationals and exporters. These results suggest that the costs of searching foreign firms suitable for offshoring are nonnegligible. (JEL F14, L23)     

Does International Outsourcing Really Lower Workers’ Income?

We analyze the impact of international outsourcing on income, if the domestic labor market is imperfect, i.e. there is a bilateral bargaining between a firm and a labor union. In our analysis we distinguish between the cases where the parties negotiate over the wage only and where they negotiate over both wage and profit sharing. We find in the first case that outsourcing has an ambiguous effect on the workers’ income, while it increases the workers’ income in the second case. For the optimal amount of international outsourcing, we find that, depending on the wage effect of outsourcing, in a pure wage bargaining system it can be higher or lower than the level where domestic and foreign marginal labor costs are the same. In contrast, in a wage and profit share bargaining system, the amount of outsourcing lies below this level.     

Race and prevailing wage laws in the construction industry: Reply to Azari-Rad and Philips

In the Winter 1999 issue of the Journal of Labor Research (“Prevailing Wage Laws and Black Employment in the Construction Industry”), I reported a significant inverse relationship between the strength of states’ prevailing wage laws and the prospects for black employment in the construction industry. My conclusions are challenged by Azari-Rad and Philips in “ Race and Prevailing Wage Laws in the Construction Industry,” in this issue. This reply responds with new evidence reinforcing the previously asserted relationship: black employment ratios in construction are better in states that don’t have prevailing wage laws than in states that do, and they lessen as the strength of those laws increase. Furthermore, prevailing wage law repeal has apparently benefited black employment opportunities in the construction industries of the states where it has occurred.     

Determinants of executive compensation: The neoclassical model versus concept formation

Neoclassical economic theory describes employee compensation as being equal to the worker's marginal revenue product. Other explanations of the wage formation process exist. For example, concept formation may enable employees to manipulate organizations and thereby receive higher compensation without changing their physical productivity. This study tests the two wage models on a 1983 data set of the 100 highest paid American chief executive officers. During 1983, the data appears to support the neoclassical economic model; while, the psychological model is not fully rejected. By contrast in an earlier study, for 1981, the psychological model took precedence over the economic model. The study fully reconciles the contrasting findings by introducing `stickiness in wages to explain why concept formation impacts executive wages during stagnant economic periods, and why productivity assumes a greater role in setting executive compensation levels during robust economic periods.