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.     

Job turnover, wage rates, and marital stability: How are they related?

This study examines the interplay between job stability, wage rates, and marital stability. We use a Dynamic Selection Control model in which young men make sequential choices about work and family and estimate the model using an approach that takes account of self-selection, simultaneity and unobserved heterogeneity. The results quantify how job stability affects wage rates, how both affect marital status, and how marital status affects earnings and job stability. The study reveals robust evidence that job changes lower wages and the likelihood of getting married and remaining married. At the same time, marriage raises wage rates and job stability. To project the sequential effects linking job change, marital status, and earnings, we simulate the impacts of shocks that raise preferences for marriage and that increase education. Feedback effects cause the simulated wage gains from marriage to cumulate over time, indicating that long-run marriage wage premiums exceed conventional short-run estimates.     

Employment protection legislation and job stability: A European cross‐country analysis

Based on Eurostat data on wage employment for the period 1999–2006, this article investigates the dynamics of job tenure across the European Union. The authors’ analysis shows no generalized decline in job tenure, but a trend towards shorter tenure among young workers (aged 15–24 years) in many European countries. Their regression results indicate that this trend is associated with the weakening of employment protection provided by law and by trade unions. Given young workers’ weak individual bargaining power, the trend towards individualization of the employment relationship may thus affect them disproportionately.     

LABOR SUPPLY ESTIMATION BIASES FROM DISREGARDING NONWAGE BENEFITS

Labor supply models and research underpinned by labor supply decisions often assume that workers' choices are functions of wage and wage offers. However, the literature shows evidence that such decisions at least partly depend on nonwage benefits encompassed in jobs and occupations. In this paper, I develop and estimate a stochastic dynamic model of occupation and job choice, where nonwage benefits are directly incorporated into the decision alongside wages (a full model). Nested within the full model is a wage model, which represents the common practice in the literature of basing selection solely on wages and disregarding nonwage benefits. I separately estimate the full model and the nested wage model to compare the implications (biases) of omitting nonwage benefits. I compare the two models' estimates of elasticities and an inequality reduction intervention policy. I find that disregarding nonwage benefits generally causes biases. There are cases when the two models predict very similar outcomes and have close estimates, such as in occupation‐specific elasticities and job transition elasticities. But these special cases are products of canceling biases. In most cases, ignoring nonwage benefits will bias estimates by overestimating the importance of wage in the selection process and by disregarding changes in relative prices between wage and nonwage benefits. (JEL J20, J32, D91)     

The Impact of Privatization on the Earnings of Restructured Workers: Evidence From the Oil Industry

We study the long-term impact of job displacement from a big state owned enterprise as a result of its privatization in a developing country. Our results suggest large reductions in earnings, which persist throughout the years. However, we also find that the displaced worker’s post-displacement earnings are in line with competitive market wages, and unrelated to sector of employment or to tenure losses, indicating that the long-term reduction in earnings as a result of displacement because of privatization can be traced to the loss of wage rents. Our results indicate that job displacement in SOEs may have very large redistributive implications for the workers involved but that this loss does not necessarily reflect the loss of specific human capital associated to these jobs.

Occupations,Human Capital and Skills

Economists have long recognized that occupations can be used as proxies for skills in wage regressions. Yet the potential existence of non-market factors such as discrimination and occupational choice (sorting) on the basis of job attributes that are separate from, but potentially correlated with, wages makes occupations an imperfect control for skills. In this paper, we consider whether inter-occupational wage differentials that are unexplained by measured human capital are indeed due to differences in unmeasured skill. Using the National Compensation Survey, a large, nationally-representative dataset on jobs and ten different components of job requirements, we compare the effects on residual wage variation of including occupation indicators and these skill requirements measures. We find that although these skill requirements vary across 3-digit occupations, occupation indicators decrease wage residuals by far more than can be explained by skill alone. This indicates that “controlling for occupation” does not equate to controlling for only these skill measures, but also for other factors. Additionally, we find that there is considerable within-occupation variation in skill requirements, and that the amount of variation is not constant across skill levels. As a result, including occupation indicators in a wage model introduces heteroskedasticity that must be accounted for. We suggest that caution be applied when using and interpreting occupation indicators as controls in wage regressions.     

How Wage Compression Affects Job Turnover

I use Swedish establishment-level panel data to test the hypothesis of Bertola and Rogerson (Eur Econ Rev 41:1147–1171 1997) of a positive relation between the degree of wage compression and job reallocation. Results indicate that the effect of wage compression on job turnover is positive and significant in the manufacturing sector. The wage compression effect is stronger on job destruction than on job creation, consistent with downward wage rigidity. Further results include a strong positive relationship between the fraction of temporary employees and job turnover and a negative relationship between the amount of working-time flexibility and job reallocation.

International job search: Mexicans in and out of the US

It is argued that migration from Mexico to the US and return migration are determined by international wage differentials and preferences for origin. We use a model of job search, savings and migration to show that job turnover is a crucial determinant of the migration process. We estimate this model by Simulated Method of Moments (SMM) and find that migration practically disappears, it goes down from 19 to 0.5%, had Mexico US arrival rates while employed. A lower decrease in migration, to 7%, occurs by an increase in Mexican wage offers. On the other hand, doubling migration costs reduces migration rates from 19 to 5%, while subsidizing return migration in $300 reduces migration rates only to 14%.     

The Effects of Being Out of the Labor Market on Subsequent Wages: Evidence for Uruguay

Based on administrative data combining workers’ earnings histories and unemployment insurance benefits, we document short and long term wage losses for a large sample of Uruguayan formal workers with high tenure. The contribution of this paper is to provide original evidence about job separation costs in a developing country, based on a unique array of social security and unemployment insurance administrative micro-data. Our main findings indicate that workers lose around 38 % of their previous wages in the first quarter after separation, and 1 year after, losses are still more than 14 %. If we consider earnings plus unemployment insurance benefits, losses at the quarter of separation are considerable lower, amounting 22 % of previous wages. We also provide original evidence about how wage losses vary across age groups, gender, industry and size of the firm. Differences between switchers and non switchers, as well as the effects of the economic cycle are also analyzed.     

Unionization and tenure and rank outcomes in Ohio Universities

We explore whether unionization affects tenure and promotion outcomes. Using data on 4,276 faculty from seven Ohio public universities, we find that unionization increases the probability that an individual will be tenured. Unionization also increases (decreases) the probability that an individual will be a full (assistant) professor. Moreover, unionization may standardize the promotion process across disciplines. The largest effect on the promotion process is related to length of service. Faculty who are with an institution longer are more likely to be tenured or in higher ranks. This result occurs for two reaization (1) The tenure and promotion processes are directly related to the number of years an individual works at an institution. Tenure decisions usually have time limitations, and although promotion decisions are not as directly tied to time, one generally becomes a full professor after the attainment of tenure and the rank of an associate professor; (2) Controlling for other factors, senior union faculty are more likely to be tenured or full professors, and they appear to be able to obtain higher ranks more easily. Our thanks to the session participants at the 1996 Missouri Valley Economics Association Conference, to Professor Michael Magura of the University of Toledo who provided most of the data and to an anonymous referree for insightful comments.     

Occupational Human Capital and Wages: The Role of Skills Transferability Across Occupations

This paper examines the effect of accumulated human capital, and particularly occupational human capital, on the workers’ wages. Unlike previous studies that apply occupational tenure as a proxy for occupational human capital, this paper applies the concept of Shaw’s (1984) occupational human capital to capture the transferability of occupational skills and estimates a new measure of occupational human capital, so-called occupational investment. Using the National Longitudinal Survey of Youth (NLSY) from 1979 to 2000, the key findings of this paper suggest that occupational skills from the previous jobs can also affect the workers’ wages at the current job and that occupational investment is one of the important sources of wages supporting the Shaw’s original work on wage determination. Specifically, 5 years of (3-digit) occupational investment relative to current occupational tenure could lead to a wage increase of 7.7 to 18.4 %. I also find that the general labor market experience accounts for a large share of workers’ wages.     

A multidimensional employment quality index for Brazil, 2002–11

In countries where informal, insecure jobs are widespread, traditional labour market indicators – such as the unemployment rate, labour force participation rate and wages – are not necessarily the most meaningful. The authors use a multidimensional employment quality index to analyse the Brazilian labour market over the period 2002–11, across three dimensions: earnings, formality (measured by the existence of an employment contract and social security contributions) and job tenure. The results show a significant increase in employment quality overall, especially in the years 2009–11, but with considerable differences between wage employees and self‐employed workers, and between industries.     

JOB VALUES, REWARDS, AND WORK CONDITIONS AS FACTORS IN JOB SATISFACTION AMONG MEN AND WOMEN

Sex differences in job satisfaction are explored utilizing data from the National Opinion Research Center (NORC) General Social Surveys, 1974–1982. Theoretically, differences in job satisfaction are accounted for by job rewards, job values, work conditions, and individual attributes. This study confirms that women receive significantly fewer job rewards than men, have significantly different job conditions, and possess slightly different work values. However, there is no difference in job satisfaction between women and men. As a consequence, these factors may not affect levels of job satisfaction, or men's and women's job satisfaction may be determined by different determinants. Alternatively, the relative level of these factors compared to one's past or expected levels may be more important than absolute levels. The multiple regression analyses reveal that similar determinants influence women's and men's job satisfaction, but that the determinants operate differently. Age and occupational prestige were significant predictors in both full models. Moreover, for both men and women a sense that one's personal situation is improving is more important than concrete rewards.     

RISK PREFERENCE AND THE WORK-LEISURE TRADE-OFF

The paper investigates the interrelationships between the wage rate, period of employment, work-leisure choice and the attitude toward risk. The model makes risk preference endogenous given external forces acting on individual choice. Beginning with assumptions normally considered consistent with risk aversion –––namely concave utility with respect to leisure and wealth along with perfect markets–––rational behavior consistent with the "insurance buying gambler" is shown to be a reasonable possibility. The theory also provides an explanation for the "repeating gambler paradox."     

MONEY, CREDIT, and WAGES IN HYPERINFLATION: POST-WORLD WAR I GERMANY

An important feature of the German hyperinflation is the way in which accelerating monetization of both government and private debt by the Reichsbank fueled the inflation process. The stimulus to private credit demand arising from more rapid adjustment of money wages over this period is often ignored, however. The present empirical results strongly support the importance of wage pressures in augmenting fiscal influences on nominal money growth during 1920–1923. Our findings also suggest that wage claims provided the main conduit through which higher inflationary expectations were accommodated by faster rates of monetary expansion.     

Right-to-work and union compensation structure

There are many reasons to expect that right-to-work legislation should affect unionism, independently of whether or not such legislation reflects the sentiments of the electorate. The strongest reason is that employees protected by right-to-work legislation can quit a union without quitting their job. This should make collective job actions more difficult and prompt local union leaders to strive more for consensus among members. If so, unions in right-to-work states should negotiate less pay for seniority than do unions in non-right-to-work states. PSID wage data generally confirm this prediction. The authors thank James Bennett, Art Blakemore, Dan Heldman, Barry Hirsch, Stuart Low, and an anonymous referee for comments on an earlier draft.     

MOBILIZING SOCIAL RESOURCES: Race, Ethnic, and Gender Differences in Social Capital and Persisting Wage Inequalities

Drawing on a social capital theoretical framework, I examine race, ethnic, and gender wage inequalities. Specifically, I extend past research by analyzing differences in the mobilization of different types of job contacts, what these types of contacts and their level of influence "buy" job seekers in the labor market, and the extent to which differences in social resources explain between-group variations in wages. Four aspects of job contacts are implicated: the race and gender of the job contact, the strength of the relationship between the job seeker and the job contact, and the job contact's influence. Employing the Multi-City Study of Urban Inequality, I find that white men are more likely to mobilize weak, white, male, and influential contacts, those contacts hypothesized to positively impact employment outcomes. Moreover, their greater mobilization of male and influential ties helps to explain a substantial part of their wage advantage over white women and Lations. However, in many ways, their overall social resource advantage seems somewhat overstated. They reap no advantages over blacks, Latinos, and white women in their use of weak and white ties. Furthermore, results indicate that the benefits of social resources appear largely contingent on the social structural location of job seekers mobilizing them, less on any benefits inherent in different "types" of job contacts.     

WORKER EFFORT DECISIONS AND EFFICIENT GENDER—SPECIFIC WAGE—TENURE PROFILES

Despite theoretical arguments that predict the opposite, empirical estimates of workers' returns to tenure tend to be greater for female than for male workers. This paper develops an agency model of wage contracts to explain this empirical finding. If male and female workers differ only in the expected length of their working lives, efficient wage-tenure profiles are steeper for women than men as a direct result of their shorter working life. This result implies that returns to tenure for women and men will become comparable as women's and men's labor force attachments converge.     

WAGE REDUCTION, UNEMPLOYMENT AND SPECIFIC HUMAN CAPITAL

This paper re-examines the specific human capital hypothesis concerning short-run employment variation to analyze the circumstances in which wage reductions and/or layoffs will occur. By relaxing the usual assumption of downward wage rigidity, we show that the specificity of training influences the attractiveness of wage reduction compared to job separation. The choice of adjustments is analyzed and implications are drawn concerning the impact of the level of specific skill and of other factors on the choice and on the magnitude of such wage reductions as occur. These implications are tested with data on the Seattle recession of 1970-72.     

Transportation of Older People in a Rural Community

Abstract

This paper documents changes over the period 1982 to 1997 in the risks and costs of involuntary job loss among different occupational groups. Using data from the Displaced Workers Surveys, it shows that the rate of job loss increased among white-collar workers. This increased displacement risk results from the growing proportion of jobs lost because positions or shifts were abolished, a reason that likely captures the much-publicized effects of corporate restructuring. The evidence regarding occupational shifts in the costs of job loss is mixed: The reemployment rates of all occupational groups rose during the recent economic expansion, and the reemployment chances of those displaced from professional and managerial jobs remained comparatively high. However, the post-displacement wage losses of managerial employees have increased both over time and relative to those of other occupational groups. The increase in the proportionate wage loss of this occupational group is not explained by compositional effects and may be the result of organizational change.