Do minimum wages increase job satisfaction? Micro‐data evidence from the new German minimum wage

On January 1, 2015, a new statutory minimum wage of € 8.50 per hour of work was introduced in Germany. Using a difference‐in‐differences approach, we estimate effects on worker‐level outcomes of continuing employees. The results reveal a meaningful absolute increase in the affected workers' pay satisfaction. The increase in job satisfaction is modest and predominantly driven by changes in pay satisfaction implying only a small effect on all other dimensions of job satisfaction. Moreover, effects from the minimum wage on work engagement and turnover intention are virtually zero.     

In Search of Workers' Real Effort Reciprocity—a Field and a Laboratory Experiment

We present a field experiment to assess the effect of own and peer wage variations on actual work effort of employees with hourly wages. Work effort neither reacts to an increase of the own wage, nor to a positive or negative peer comparison. This result seems at odds with numerous laboratory experiments that show a clear own wage sensitivity on effort. In an additional real‐effort laboratory experiment we show that explicit cost and surplus information that enables an exact calculation of an employer's surplus from the work contract is a crucial prerequisite for a positive wage–effort relation. This demonstrates that an employee's reciprocity requires a clear assessment of the surplus at stake. (JEL: C91, C92, J41)     

Informal Caregiving and Women's Work Choices: Lessons from the Netherlands

This paper focuses on the effects of Dutch long‐term care and labour market policies on women's labour market participation and informal caregiving decisions. Labour market participation and informal caregiving are estimated jointly through a multivariate dynamic binary probit on European Community Household Panel data. Under Dutch policy, informal care decisions appear to be independent of household non‐labour income and no significant impediment seems to hinder the contemporaneous practice of work activities and care. However, past informal care provision still slightly reduces the probability of currently working and vice versa, leaving room for policy improvements to enhance labour market participation.     

Explaining Labour Turnover: Empirical Evidence from UK Establishments

Abstract. This paper investigates the determinants of labour turnover using establishment‐level survey data for the UK. The main contribution of our paper is that it estimates the impact of wages, unionization, training and other aspects of working conditions on labour turnover. Our main findings are: (i) turnover is inversely related to the relative wage; (ii) unionism reduces turnover: this is due mainly to the ability of unions to improve conditions of work rather than the voice‐exit model of Freeman; (iii) there is a complex relationship between turnover and training; and (iv) turnover is lower in the ‘high‐tech’ sector.     

Standard of Living as a Right,Not a Privilege: Is It Time to Change the Dialogue from Minimum Wage to Living Wage?

Dating back to the 1930s, President Franklin D. Roosevelt argued that workers were entitled to a wage that allowed them to enjoy a decent standard of living—a conviction that led the president to propose the first federally‐mandated minimum wage. Mr. Roosevelt’s proposal was met with highly partisan resistance in congress and the courts—reactions not different in kind from the highly partisan resistance former President Obama experienced in his proposal to increase the federal minimum wage from its current level of $7.25 per hour. Reflecting President Roosevelt’s convictions, it is clear that many low wage workers today are not, and cannot, enjoying a decent standard of living at current minimum wage levels. Further, many of the economic arguments raised in opposition to increasing the minimum wage have been thoroughly discredited: empirical evidence suggests that increased minimum wages would not lead to dramatic spikes in unemployment, massive substitutions of capital for labor, business closings, and significantly increased consumer prices. However, as compelling as arguments for increasing the minimum wage may be, the reality is that this may not be sufficient to alleviate the plight of low income workers, particularly given the political nature of minimum wage adjustments. Indeed, it may be time to shift the national focus away from the minimum wage to an emphasis on viable living wage legislation, a proposition consistent with the social justice perspective of contemporary ethicists.     

Directed Search for Equilibrium Wage–Tenure Contracts

I construct a theoretical framework in which firms offer wage–tenure contracts to direct the search by risk‐averse workers. All workers can search, on or off the job. I characterize an equilibrium and prove its existence. The equilibrium generates a nondegenerate, continuous distribution of employed workers over the values of contracts, despite that all matches are identical and workers observe all offers. A striking property is that the equilibrium is block recursive; that is, individuals' optimal decisions and optimal contracts are independent of the distribution of workers. This property makes the equilibrium analysis tractable. Consistent with stylized facts, the equilibrium predicts that (i) wages increase with tenure, (ii) job‐to‐job transitions decrease with tenure and wages, and (iii) wage mobility is limited in the sense that the lower the worker's wage, the lower the future wage a worker will move to in the next job transition. Moreover, block recursivity implies that changes in the unemployment benefit and the minimum wage have no effect on an employed worker's job‐to‐job transitions and contracts.     

Why Do Women's Wages Increase So Slowly Throughout Their Career? A Dynamic Model of Statistical Discrimination

Abstract. The aim of this paper is to explain the growing wage differentials between men and women during their working careers. We provide a dynamic model of statistical discrimination, which integrates specific human capital decisions: on‐the‐job training investment and wages are endogenously determined. We reveal a small wage differential at the beginning of women's career, but women's wages increase more slowly; this is partly due to a lower level of human capital investment by women and partly because firms smooth training costs between different periods.     

The Wage Gap in Manufacturing in Germany: Size and Determinants

Wages in Germany are usually fixed in a two-step process. Firstly, unions and employers' associations negotiate wage agreements at industry level. Secondly, the sectoral wage is modified at establishment level according to the demands of management, works councils and individual employees. Since contract wages are minimum standards, the modifications may only favour the employees. A positive wage gap appears. The paper aims to analyse this second step of wage fixing. Data on the size of the wage gap are presented, determinants of the gap are discussed theoretically and, finally, the hypotheses are tested by regression analysis.     

Wage Inequality of US Truck Drivers

Using CPS data for the period 1979–2009, the wage dispersion of truck drivers (and subsets of the truck driving sample) is compared with the trends in wage dispersion of males economy‐wide. We find that truckers' wages experienced a decrease in inequality post‐deregulation, as expected given the literature on regulation's impact on the labor market. We also find that the wage dispersion for truckers is markedly different from males economy‐wide, providing evidence that the wage distribution of truck drivers has been dominated by the changing structure of the occupation post‐deregulation and largely immune to the factors that increased inequality for the aggregate labor market.     

David v. Goliath: A Brief Assessment of the U.S. Supreme Court's 2011 Ruling Denying Class Certification in Dukes v. Wal‐Mart

In 2001, Betty Dukes, then a 54‐year‐old African American, filed suit against her employer, Wal‐Mart, alleging that she had been the victim of gender discrimination. Ms. Dukes alleged that Wal‐Mart, the nation's largest private employer, routinely paid women less than men for comparable work and arbitrarily favored men over women in promotion decisions. In 2004, a U.S. District Court entered an order granting class certification, potentially extending the retailer's financial liability to thousands of current and past Wal‐Mart employees. At that time, the Wal‐Mart suit was the largest class action lawsuit ever approved in the United States. In 2011, the U.S. Supreme Court reversed the lower court's ruling. Writing for the majority, Justice Scalia cited Wal‐Mart's long‐standing explicit gender‐neutral employment policy and the decentralized manner in which local managers have discretion to adjust salaries and recommend applicants for promotion—factors that led the majority to question “the glue” binding the class together. Proponents of the Court's decision hailed the ruling as a victory for business and a step in the direction of needed legal reform. Critics viewed the decision as another in a series of defeats for minority interests by a pro‐business, ideologically divided Court. Did the Court get it right, or is this yet another example of might defeating right?     

Direct and Indirect Links Between Organizational Work–Home Culture and Employee Well‐being

The extent to which an organization's culture exhibits support for its employees' efforts to balance work and personal responsibilities has been shown to influence a number of work‐ and home‐related outcomes. This study tests a model with a mix of mediated and moderated relationships to investigate direct and indirect routes by which work–home culture may affect employee well‐being. Sex differences in these relationships are also explored. Data collected from public sector employees in the UK indicate that a supportive work–home culture is significantly associated with lower levels of psychosomatic strain among employees. For women, this relationship is mediated by reduced levels of work–home interference. Different types of support demonstrate different effects for men and for women: managerial support has a more beneficial impact on women's well‐being, and organizational time demands have a more detrimental impact on men's well‐being. Recommendations for managers to boost employee well‐being include shifting the focus away from presenteeism and toward work outputs in order to reduce gender stereotypes and improve attitudes toward those using flexible work practices and family‐friendly initiatives, incorporating work–home supportiveness into the managerial performance appraisal process, and compensating or otherwise recognizing employees taking on absent colleagues' workloads.     

Minimum Wages as a Barrier to Entry: Evidence from Germany

This study analyses employers' support for the introduction of industry‐specific minimum wages as a cost‐raising strategy in order to deter market entry. Using a unique data set consisting of 800 firms in the German service sector, we show that high‐productivity employers support minimum wages. We further find some evidence that minimum wage support is higher in industries and regions with low barriers to entry. This is particularly the case in East Germany, where the perceived threat of low‐wage competition from Central and Eastern European countries is relatively high. In addition, firms paying collectively agreed wages are more strongly in favour of minimum wages.     

Improving employees' work centrality improves organizational performance: work events and work centrality relationships

High work centrality is related to positive performance and behaviour of employees. This unique paper discusses a longitudinal study, comparing change in work centrality among individuals who experienced meaningful work events to individuals who did not experience these events, over the course of twelve years. The findings indicate that not experiencing expressive work events (which leads to an improvement in autonomy, interest, variety, and responsibility) reduces work centrality, whereas work events such as promotion, advancement (including to a managerial position) and qualifications, are effected by high work centrality. Work events, such as improvement in pay, working conditions, and interpersonal relations at work, had no effect on those who experienced them and those who did not. The theoretical and practical implications for Human Resources Development (HRD) are discussed.     

‘Full‐time is a Given Here’: Part‐time Versus Full‐time Job Quality*

This study explores full‐time workers' understanding of and assumptions about part‐time work against six job quality components identified in recent literature. Forty interviews were conducted with employees in a public sector agency in Australia, a study context where part‐time work is ostensibly ‘good quality’ and is typically long term, voluntary, involving secure contracts (i.e. permanent rather than casual) and having predictable hours distributed evenly over the week and year. Despite strong collective bargaining arrangements as well as substantial legal and industrial obligations, the findings revealed some serious concerns for part‐time job quality. These concerns included reduced responsibilities and lesser access to high status roles and projects, a lack of access to promotion opportunities, increased work intensity and poor workplace support. The highly gendered, part‐time labour market also means that it is women who disproportionately experience this disadvantage. To foster equity, greater attention needs to focus on monitoring and enhancing job quality, regardless of hours worked.     

Decentralizing Wage Bargaining in Germany — A Way to Increase Employment?

Abstract. The area‐wide wage agreement is at the centre of Germany's system of collective bargaining. In recent years, however, there has been a tendency towards the decentralization of collective bargaining. Individual wage agreements have led to more moderate wage developments, whilst collective agreements with individual firms, and agreements at the production unit level, have not had this moderating effect. On the other hand, collective bargaining has become more flexible, leading to greater pay differentiation. The further decentralization of collective bargaining, although desirable, has given rise to objections based in constitutional law and to resistance from employees and employers.     

SOCIAL COMPARISON AND EFFORT PROVISION: EVIDENCE FROM A FIELD EXPERIMENT

Social comparison has potentially far reaching consequences in many economic domains. We conducted a field experiment to examine how social comparison affects workers' effort provision if their own wage or that of a co‐worker is cut. Workers were assigned to groups of two, performed identical individual tasks, and received the same performance‐independent hourly wage. Cutting both group members' wages caused a decrease in performance. But when only one group member's wage was cut, the affected workers decreased their performance more than twice as much as when both workers' wages were cut. This finding indicates that social comparison among workers affects effort provision because the only difference between the two wage‐cut treatments is the other group member's wage level. In contrast, workers whose wage was not cut but who witnessed their group member's pay being cut displayed no change in performance relative to the baseline treatment in which both workers' wages remained unchanged. This indicates that social comparison exerts asymmetric effects on effort.     

Explaining the Desire for Local Bargaining: Evidence from a Finnish Survey of Employers and Employees

Abstract. This paper describes divergences in employers’ and employees’ opinions on the proper share of local bargaining in contract wage gains in Finland. Employers want the locally bargained wage share to be approximately half of the total wage rise, while the majority of employees would prefer this share to be in the region of 1–24 per cent. Employers in firms that are large, foreign owned or operate in the financial services industry desire the largest locally bargained share of contract wages. Employees in large firms, on the other hand, resist local bargaining. When the firm uses performance‐related pay, employees would prefer a large role for local bargaining in contract wage gains.     

Preference Change and Increasing Wage Inequality

Abstract. This paper argues that preference change could explain, in part, the growth of within‐group wage inequality in the USA and the UK in the 1980s. The absence of such preference change in continental European countries might also help explain why their wage inequality did not rise in the same way. The argument relies on evidence from the World Values Surveys and uses an efficiency wage model of within‐group wage inequality where there are differences in the degree of discretion at work across firms and workers value not just the wage but also the degree of discretion on the job.     

Context‐Specific,Scenario‐Based Risk Scales

Reacting to an emergency requires quick decisions under stressful and dynamic conditions. To react effectively, responders need to know the right actions to take given the risks posed by the emergency. While existing research on risk scales focuses primarily on decision making in static environments with known risks, these scales may be inappropriate for conditions where the decision maker's time and mental resources are limited and may be infeasible if the actual risk probabilities are unknown. In this article, we propose a method to develop context‐specific, scenario‐based risk scales designed for emergency response training. Emergency scenarios are used as scale points, reducing our dependence on known probabilities; these are drawn from the targeted emergency context, reducing the mental resources required to interpret the scale. The scale is developed by asking trainers/trainees to rank order a range of risk scenarios and then aggregating these orderings using a Kemeny ranking. We propose measures to assess this aggregated scale's internal consistency, reliability, and validity, and we discuss how to use the scale effectively. We demonstrate our process by developing a risk scale for subsurface coal mine emergencies and test the reliability of the scale by repeating the process, with some methodological variations, several months later.     

Health Promotion and Flexibility: Extending and Obscuring Power in Organizations

This paper explores the intersection between pursuits of improving organizational flexibility and pursuits of improving employees' health. It is argued that health promotion programmes have the potential of operating as mechanisms of power, which assist organizations in making up self-governing employees who flexibly adapt their lifestyles to the criteria of health and professional success. The paper shows how the fact that health promotion programmes are handled by 'independent' and legitimate health experts, and are provided to employees in the name of their health and well-being, obscures the forces of power in them, making them seem merely as informed ways of helping employees help themselves towards healthier and more successful lives. The paper concludes that health promotion programmes help to establish a new work ethic that challenges the boundary between work and private life. Furthermore, they make a healthy lifestyle part of the competencies that employees are responsible for developing and nurturing.