UNDERSTANDING THE EVOLUTION OF THE US WAGE DISTRIBUTION: A THEORETICAL ANALYSIS

In this paper, we propose an analytically tractable overlapping‐generations model of human capital accumulation and study its implications for the evolution of the US wage distribution from 1970 to 2000. The key feature of the model, and the only source of heterogeneity, is that individuals differ in their ability to accumulate human capital. Therefore, wage inequality results only from differences in human capital accumulation. We examine the response of this model to skill‐biased technical change (SBTC) theoretically. We show that in response to SBTC, the model generates behavior consistent with some prominent trends observed in the US data including (i) a rise in overall wage inequality both in the short run and long run, (ii) an initial fall in the education premium followed by a strong recovery, leading to a higher premium in the long run, (iii) the fact that most of this fall and rise takes place among younger workers, (iv) a rise in within‐group inequality, (v) stagnation in median wage growth (and a slowdown in aggregate labor productivity), and (vi) a rise in consumption inequality that is much smaller than the rise in wage inequality. These results suggest that the heterogeneity in the ability to accumulate human capital is an important feature for understanding the effects of SBTC and interpreting the transformation of the US labor markets since the 1970s.     

Higher Education Levels,Firms’ Outside Options and the Wage Structure

Abstract. We analyze the consequences of an increase in the supply of highly educated workers on relative and real wages in a search model where wages are set by Nash bargaining. A key insight is that an increase in the average education level exerts a negative externality on wages through its positive externality on the firms’ outside option. As a consequence, the real wage of all workers decreases in the short run. Since this decline is more pronounced for less educated workers, wage inequality increases. In the long‐run a better educated work force induces firms to invest more in physical capital. Wage inequality and real wages of highly educated workers increase while real wages of less educated workers may decrease. These results are consistent with the US experience in the 1970s and 1980s. Based upon differences in legal employment protection we also provide an explanation for the diverging evolution of real and relative wages in Continental Europe.     

Size,Skill and Sorting

Abstract. The rise in inequality between the 1970s and the 1990s and the persistent gap in pay between large and small employers are two of the most robust findings in the study of labor markets. Mainstream economists focus on differences in observable and unobservable skills to explain both the overall rising inequality and the size–wage gap. In this paper we model how increasing returns to skill can affect the size–wage gap both with constant sorting and with size‐biased, skill‐biased technological change (e.g. if large firms always had access to computers, but small firms gained access to computers with the rise of affordable personal computers). We analyze the Current Population Surveys from 1979 to 1993 to determine whether large and small employers are converging in terms of mean wages (the employer size–wage effect), wage structures by occupation and education, characteristics of employees, and wage structures by region. We find mixed evidence of convergence and no consistent support for any single version of human capital theory.     

Redistribution Through Education and Other Mechanisms Under Capital‐Market Imperfections and Uncertainty: A Welfare Effect Analysis

Abstract. This paper considers a two‐period model of endogenous human capital formation under the credits‐market imperfection and uncertainty assumptions. We compare in the first part of the paper ex‐ante and ex‐post general‐equilibrium effects of the education subsidy policy to those of the negative income tax and the unskilled wage subsidy regimes. We show that the education subsidy policy raises an efficiency‐inequality trade‐off issue, and therefore it is optimal unless the degree of inequality aversion is relatively high and financing the subsidy is not too distorsive. Public loans are generally claimed to provide a solution for such issue. We explore the implications of implementing the public loan under several schemes in the second part of the paper. We show that combining between a pure public loan and education subsidies provides higher levels of welfare than these two policies taken separately provided that the inequality aversion degree is high. For low degrees of inequality aversion, the pure public loan is the optimal policy.     

The Structure of Wages in the Netherlands, 1986–98

Abstract. For many OECD countries an increase in wage inequality has been documented since the early 1980s. This is often attributed to a general rise in the demand for skilled workers resulting from recent technological change. Using the Organization for Strategic Labour Market Research (OSA) Labour Supply data, this paper studies the wage structure in the Netherlands over the period 1986–98 and demonstrates that wage inequality did not increase to any significant extent in the Netherlands. Using the accounting framework proposed by Juhn et al. (Journal of Political Economy 101: 410–442, 1993), it is shown that the relatively stable wage structure until at least the late 1990s can be attributed mainly to returns to observable components, such as education and experience, while residual wage inequality is found to be of minor importance in explaining the Dutch wage structure. These estimates suggest that the demand for skill in the Netherlands is likely not to have been rising to the extent it did in many other countries over this period.     

CROSS‐COUNTRY VARIATION IN THE IMPACT OF INTERNATIONAL MIGRATION: CANADA,MEXICO, AND THE UNITED STATES

Using data drawn from the Canadian, Mexican, and U.S. censuses, we find a numerically comparable and statistically significant inverse relation between immigrant‐induced shifts in labor supply and wages in each of the three countries: A 10% labor supply shift is associated with a 3%–4% opposite‐signed change in wages. Despite the similarity in the wage response, the impact of migration on the wage structure differs significantly across countries. International migration narrowed wage inequality in Canada; increased it in the United States; and reduced the relative wage of workers at the bottom of the skill distribution in Mexico. (JEL: J31, J61)     

Macroeconomic Effects of Public‐Sector Unions

Motivated by the highly unionized public sectors, the high public shares in total employment, and the public‐sector wage premia observed in Europe, this paper examines the importance of public‐sector unions for macroeconomic theory. The model generates cyclical behavior in hours and wages that is consistent with data behavior in an economy with highly unionized public sector, namely Germany during the period 1970–2007. The union model is an improvement over a model with exogenous public employment. In addition, endogenously determined public wage and hours add to the distortionary effect of contractionary tax reforms by generating greater tax rate changes, thus producing higher welfare losses.     

Fiscal Rules and Discretion Under Persistent Shocks

This paper studies the optimal level of discretion in policymaking. We consider a fiscal policy model where the government has time‐inconsistent preferences with a present bias toward public spending. The government chooses a fiscal rule to trade off its desire to commit to not overspend against its desire to have flexibility to react to privately observed shocks to the value of spending. We analyze the optimal fiscal rule when the shocks are persistent. Unlike under independent and identically distributed shocks, we show that the ex ante optimal rule is not sequentially optimal, as it provides dynamic incentives. The ex ante optimal rule exhibits history dependence, with high shocks leading to an erosion of future fiscal discipline compared to low shocks, which lead to the reinstatement of discipline. The implied policy distortions oscillate over time given a sequence of high shocks, and can force the government to accumulate maximal debt and become immiserated in the long run.     

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.     

基于演化博弈的绿色技术创新环境政策选择研究：政府行为VS.公众参与

在中国“双碳”目标背景下,如何通过有效的环境政策驱动绿色技术创新以缓解节能减排压力是亟需解决的重要现实问题。本文基于多主体关系分析、演化博弈理论、情景模拟仿真方法,构建政府和企业、公众和企业的两方演化博弈模型以及政府、公众和企业的三方演化博弈模型,并在此基础上,进行不同情景模式和不同执行力度下的政策模拟仿真,综合探究政府、公众、企业在绿色技术创新中的行为策略选择和系统演化轨迹。研究发现：(1)两方演化博弈模型下,企业绿色技术创新行为与其成本收益密切相关,但有效的公众参与为企业在成本小于收益情况下进行绿色技术创新行为提供了可能,即公众参与是企业改变短视行为、进行前瞻性创新的关键因素;(2)三方演化博弈模型下,政府和公众的稳态条件与单独考虑政府和单独考虑公众的稳态条件相同;但企业的稳态条件则需考虑公众举报对企业声誉带来的影响,其是企业进行绿色技术创新行为决策的重要参考因素;(3)情景模拟仿真结果表明,随着环保宣传、技术创新激励、环境管制、公众关注、公众举报强度的增加,企业绿色技术创新行为的演化速度不断加快,即不同类型的政府行为与公众参与均会对绿色技术创新有显著促进作用。总结而言,在政府行为外生引导的基础上,应着重激发公众参与的重要调节效应,从而以企业利润为抓手引导绿色技术创新行为进入内生演化路径。     

The Impact on Inequality of Raising the Minimum Wage: Gap‐narrowing and Reranking Effects

Raising the minimum wage may reduce inequality by increasing the wages of low‐skill workers, but it may also increase inequality due to negative impacts on employment that produce wage losses. Using previous estimates of the elasticities of wages and employment to changes in the minimum wage in Colombia and Brazil, we show that the net impact on inequality of increasing the minimum wage may depend on the distributional weights used for inequality measurement. The results are obtained by decomposing the Gini index into reranking and gap‐narrowing effects. Inequality‐increasing reranking effects, which are associated with job losses, may dominate inequality‐decreasing gap‐narrowing effects, which are associated with wage gains, when high weights are placed on workers with low earnings. For standard distributional weights, however, the likely net impact is a reduction in wage inequality.     

Corporate raiders don't cut investment in R & D

A focal point of the public debate over the effects of corporate mergers and acquisitions is their impact on the level of spending on long term projects. This study examines the pre-and post-merger levels of spending on R & D and the more general category of capital expenditures. Analysis of expenditures for a sample of firms drawn from the largest corporate mergers in the US during the late 1970s indicate that long term spending rises significantly in the post-merger environment. This supports the view that acquiring firms. whether hostile or friendly, recognize the relationship between such spending and firm value.     

The role of government in industrial innovation

U.S. attempts to foster technological innovation include recognition of the significant role played by policy makers within the federal government. This research seeks to provide all policy makers, including those directly or indirectly involved in industrial innovation, with an analytical framework for tracing and evaluating the potential impacts of Congressional legislation as well as federal agency regulations and incentives on business operations, and potentially upon industrial innovation.     

Schumpeterian Growth Theory and the Dynamics of Income Inequality

In this lecture, it is argued that Schumpeterian Growth Theory, in which growth is driven by a sequence of quality‐improving innovations, can shed light on two important puzzles raised by the recent evolution of wage inequality in developed economies. The first puzzle concerns wage inequality between educational groups, which has substantially risen in the US and the UK during the past two decades following a sharp increase in the supply of educated labor. The second puzzle concerns wage inequality within educational groups, which accounts for a large fraction of the observed increase in wage inequality, although in contrast to between‐group wage inequality it has mainly affected the temporary component of income.     

Does the Public Sector Lead the Wage Evolution in the French Economy?

Has the wage policy of the State in the French public sector (government services and State owned enterprises) had a leading effect on wages in the private sector up until the early 1980s? This paper firstly aims at verifying the existence and analysing the causes of this leading effect. The second aim is to estimate the scope of the changes which took place from the early 1980s. It shows that the wage policy of the State did influence disinflation in the 1980s and early 1990s. Indeed, it not only slowed down the growth of wages in the public sector but, by this means, it also influenced indireclty the growth of wages in the private sector.     

Unemployment Benefits and Employment Policies in the Presence of a Strong Trade Union: A Comparison

Abstract. The paper analyses, within a game theoretic approach, the consequences on private employment and real wages of a government policy of raising unemployment benefits following a fall in employment. The effects of such a policy are then compared with those arising from a more conventional demand policy. Under the policy regime described the reaction of the unions will cause, when the economy is hit by a negative shock on employment, a tendency for the real wage to rise and for private employment to decrease further. As far as the comparison of such policy with a policy of direct employment by the government is concerned we have reached the following conclusions. A policy based on unemployment benefit will give rise to a smaller increase in the real wage than a policy based on public employment if the change in the marginal utility of being employed due to change in the unemployment benefit is smaller than the utility that the union will obtain from an extra employed person. Moreover it appears that a policy based on unemployment benefits has a smaller negative effect on private employment, than a policy based on direct employment. if such a policy is adopted just after an employment benefits represent also a subsidy to the firms. We have shown that the effects on the real wage of the Policy rule considered are in this case stronger. The effects on employment depend on the relative strength of the union reaction and of the policy's supply side effects.     

“U.S. Pharmaceutical Gray Markets: Why Do They Persist—and What to Do about Them?”

This article illustrates how a traditional U.S. pharmaceutical industry supply chain operates, beginning with pharmaceutical compounds and ending at patient‐dispensing hospitals or pharmacies. Furthermore, to place the problem of U.S. drug shortages in historical perspective, a review of the annual volume of such shortages over the last decade is undertaken. Following this review of recent drug shortages is an analysis of the market forces and business decisions that drive the creation of a pharmaceutical gray market, its attendant “price gouging” and product integrity issues, and the alterations in the traditional pharmaceutical industry supply chain model. In response to persistent drug shortages, the U.S. Food and Drug Administration (FDA) has recently been empowered by the executive and legislative branches of the U.S. government to actively address this issue. To reflect these FDA challenges, a thorough review of these new agency charges and responsibilities is undertaken. Lastly, an analysis of the results of recent FDA public policy actions on mitigating drug shortages, as well as recommendations tor market‐based solutions to the gray market problem that pharmaceutical manufacturers, hospitals and pharmacies could institute as industry‐wide standards of business practice, are discussed in the conclusion.     

Temporary/Permanent Workers' Wage Gap: A Brand‐new Form of Wage Inequality?

By easing restrictions on the use of short‐term contracts, the 30/2003 act represents contemporaneously the more extensive and the more radical policy aimed at introducing flexibility in the Italian labour market. By virtue of a difference‐in‐differences estimator, the paper provides an estimate of the impact of the 30/2003 reform on the wage gap across fixed‐term and long‐term employees. It will be given evidence that the policy has widened the wage differentials and the effect is particularly stronger to skilled workers compared with unskilled workers. These findings would suggest the existence of a possible brand‐new form of wage inequality.     

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.