Information and communication technology adoption in micro and small firms: Can internet access improve labour productivity?

The rapid spread of information and communication technologies (ICT) may increase firms’ productivity with important consequences for job creation and for economic growth. This article contributes to this discussion by analysing the impact of internet adoption on labour productivity and the mechanisms shaping this relationship in Peruvian micro and small manufacturing firms over the period 2011–2013. The article estimates a reduced form where labour productivity is a function of internet adoption and other explanatory factors. Internet adoption is instrumented using a measure of the availability of financial opportunities for micro and small firms in Peru. Findings indicate that internet adoption: (a) increases firms’ labour productivity; (b) reallocates employment away from temporary administrative workers and non‐remunerated workers and expands employment of permanent production workers; (c) leads to the formalization of labour relationships, to the implementation of new organizational practices and to the improvement of training measures. While changes in employment and formalization of workers are linked to labour productivity gains, increases in training measures and organizational changes do not generate any additional productivity increase. Policies oriented to promote the adoption of ICT in micro and small firms can be beneficial to close the productivity gap with larger firms in Peru. Moreover, policies directed to the formalization of the workforce can provide an extra benefit, i.e. additional labour productivity gains in firms adopting the internet. Finally, policies oriented to the development of digital skills are also important to ease the re‐employment of those workers losing their jobs and the achievement of additional productivity gains that new organizational practices can provide.     

SOURCES OF ORGANIZATIONAL COMMITMENT: THE EFFECTS OF INTERNAL LABOR MARKETS AND WORKER VALUES

Data from the 1991 General Social Survey and National Organizations Survey are used to assess how organizational commitment is structured by one “demand side,” organizational-based factor, firm internal labor markets, and one “supply side,” individual-based factor, the values/preferences of workers. Findings indicate that organizational commitment is best explained by the joint influence of these two factors rather than by their independent effects. Specifically, firms with internal labor markets are conducive to the development of high levels of organizational commitment to the extent that what they offer, namely, opportunities for career-status and long-term employment “fit” what workers desire: job security and possibilities for promotion with their current employer. We offer directions for future research that may shed additional light on the manner in which internal labor markets and the values/preferences of workers may structure organizational commitment.     

LABOR CONTRACTS AND FLEXIBILITY: EVIDENCE FROM A LABOR MARKET REFORM IN SPAIN

This paper evaluates the effects of a labor market reform in Spain that removed restrictions on fixed‐term or temporary contracts. Our empirical results are based on longitudinal firm‐level data that cover observations before and after the reform. We posit and estimate a dynamic labor demand model with indefinite and fixed‐term labor contracts, and a general structure of labor adjustment costs. Experiments using the estimated model show important positive effects of the reform on total employment (i.e., a 3.5% increase) and job turnover. There is a strong substitution of permanent by temporary workers (i.e., a 10% decline in permanent employment). The effects on labor productivity and the value of firms are very small. In contrast, a counterfactual reform that halved all firing costs would produce the same employment increase as the actual reform, but much larger improvements in productivity and in the value of firms. (JEL J23, J32, J41)     

Structural shifts in the employment of foreign workers in Austria

The full economic importance of immigration becomes clear only when one examines the concentration of immigrant workers in certain industries and occupations, and this is done in the case of Austria to show the degree of segmentation of the labor market between indigenous and foreign labor. In the course of the 1960s the employment of foreign labor gained importance in Austria. As a consequence, bilateral agreements with the major recruiting countries were made, e.g., with Spain in 1962 and 1969, with Turkey in 1964, and with Yugoslavia in 1966. The reason for the increasing demand for foreign labor was the short supply of indigenous labor due to increasing participation rates and strong economic growth. The demand-pull for foreign labor gained momentum with the onset of the economic boom in 1970, so that by the end of 1973 the number of foreign workers had doubled in comparison to 1970. The 226,800 foreign workers accounted for 8.7% of total employment. The 1974-75 recession and the weak economic development ever since resulted in a decreasing demand for labor. At the same time, the supply of indigenous labor increased as a consequence of a demographic effect and because of increasing participation rates of women. From 1981 to the present, foreign employment decreased again due to the unusually long period of economic stagnation. During 1983, 145,300 foreign workers were engaged, i.e., 5.3% of total employment. The structure for foreign employment now differs greatly from that in the 1960s. The share of women in foreign employment has increased steadily from some 20% in the early 1960s to 31% in 1973 and 40% in 1983 -- a value comparable to the Austrian female share in employment. The reduction of foreign employment since 1973 affected, above all, Yugoslav men. the share of Yugoslavs in foreign employment decreased from 196,300 or 79% in 1973 to 92,200 or 61.7% in 1983. With the duration of foreign employment rising, the disribution of foreign labor over economic branches increased. In the early 1960s the employment of foreign workers was concentrated in 3 branches -- the construction sector (32% of all foreign workers), metal industries (16%), and textile industries (10%). In 1982 only 1/3 of all foreign workers were still employed in these branches as an infiltration by foreign labor had taken place in all sectors. The services sector showed the greatest increase in foreign employment since 1975. There has never been as strong a concentration of 1 nationality in a particular economic branch as in Switzerland, Germany, or France. Case studies in Austria reveal that it was an explicit policy for firms (and also unions and entrepreneur representatives) not to depend on only 1 nationality of foreign workers. According to the case studies, about 1/3 of all foreign workers today occupy jobs which are in direct competition with indigenous labor. Another 1/3 fill jobs which are complementary to indigenous labor. For the remainder it is difficult to say to what extent they belong to one or the other segment of the labor market, because there is no information available on the occupational job structure.     

Does the early bird always get the worm? market institutions and the timing of employment decisions

Unravelling of appointment dates can be observed in some entry-level labor markets but not in others. A comparison of different markets shows how the costs of breaking contracts and being rematched can affect the timing of appointments and market behavior. If contracts can be terminated at any time by workers and if rematching costs are relatively small compared to the benefits from changing matches, early appointments in an entry-level labor market confers no benefit on firms. Firms then have no incentives to make early offers. However, if the costs offset the benefits from changing employment, firms that cannot compete with their principal competitors may prefer to make offers before some critical information becomes available rather than wait for the time when employment can actually start. Such a labor market may experience early appointments. But if the most desirable firms do not issue early offers, other firms may be rejected in any early period. Therefore, the most desirable firms can work together to halt unravelling. I am indebted to Esquire Donna Gerson and Koh Song Hui who extended help in writing this paper. My special thanks should be given to Alvin Roth for his suggestions and comments.     

OPTIMAL ENFORCEMENT OF NONCOMPETE COVENANTS

Noncompete covenants or covenant not to compete (CNC) are clauses in employment contracts in which the employee agrees not to gain employment with a competitor firm. In this article, we study the efficiency aspects of such contracts by incorporating the effect of labor mobility restrictions on knowledge transfer across firms, investment decisions by firms, and investment by workers. Following research that shows state‐wise variations in the degree of CNC enforcement, we allow the strength of CNC enforcement to vary as a matter of regulatory policy and derive the optimal strength of enforcement. We also look at how regulations around CNCs should be optimally designed when employers can use collusive agreements, such as “no poaching” agreements, as an alternative to noncompete clauses. Given recent allegations of employer collusion among large Silicon Valley firms, we argue for a cautious approach in designing policies on CNC enforcement. (JEL J24, J41, J63, K31)     

THE IMPACT OF LABOR CONTRACTS: EVIDENCE FROM BRAZIL

The conventional Keynesian model suggests that frictions created by nominal wage contracts generate a positive relationship between inflation and output. On the other hand, the New Classical/Real Business Cycle theory claims that firms and workers base their employment behavior, and hence output, on the marginal product of labor ignoring the efficiencies of fixed nominal wage contracts. Using Brazilian data, where nominal wages were indexed by law, tests show that fixed nominal wage contracts insignificantly affected output. Thus, the data support the view that fixed nominal wages play an insignificant role in determining the evolution of output. ( JEL E31)     

BACK-LOADED WAGES AND ON-THE-JOB TRAINING IN A FRICTIONAL LABOR MARKET

This paper analyzes the coexistence of on-the-job (general) training and on-the-job search in a frictional labor market where firms post skill-dependent labor contracts to preemptively back-load compensation after training. The back-loaded compensation scheme discourages trained workers' efficient job-to-job transition, as if they accumulated relationship-specific capital, which induces overintensified training among more productive firms. The quantitative analysis predicts that the market equilibrium, relative to the efficiency benchmark, gets more skilled workers (training inefficiency) and less output (allocation inefficiency). It further demonstrates that efficiency loss is moderate due to positive externality and can be improved, as search friction is mitigated. (JEL J24, J31, J64)     

The role of local stakeholders in transforming economic upgrading into social upgrading in Ethiopian textile and garment firms

The authors examine the links between economic and social upgrading in a developing country with stringent industry policy and employment legislation, focusing on the strategies of local firms participating in global apparel production networks. Based on the 2015 case studies of five textile and garment firms in Ethiopia, they find that employment security and physical well-being were driven mainly by government labour regulations negotiated by local employers, workers and trade unions rather than by global buyers and conclude that upgrading and downgrading can occur simultaneously within a firm.     

新生代农民工融入城市的预期与构想——以珠三角“民工荒”为例

新生代农民工的社会心理比较脆弱,他们虽然生活在城市,却无法融入城市。每年春节前后,人们都在关注农民工返乡与回厂问题,于是产生一个热门话题——“民工荒”。“民工荒”是真荒还是假荒？“民工荒”的真正原因何在？值得一辩。如今,新生代农民工已经登上了城镇化进程的舞台,并成为新产业工人阶层的主体部分。新生代农民工往往把自己看成“准城里人”,希望在公民权利、择业就业、工资待遇、生活方式、社会保障等方面,能够与城里人享有同等待遇,他们不再是廉价的劳动力。     

Wage indexation: Social benefits and private incentives

The question addressed in this paper is: Do social benefits from wage indexation coincide with private incentives to incorporate COLA clauses in union contracts? In general, market forces provide an “approximately correct” solution so that legislative remedies are not required. Based on the work of Gray and Fischer, full indexation is beneficial when the economy is subjected to stochastic nominal shocks, but only partial indexation is optimal when real disturbances dominate. If unions and management of firms are risk-averse they both have an incentive to adopt full indexation when monetary uncertainty exists. On the other hand, when the economy faces real shocks, union negotiators oppose indexation if the demand for labor is elastic, but insist on full indexation if demand is inelastic. Managers of firms prefer nominal wage contracts in either case. This suggests that both parties will agree to omit COLA clauses in the first case, but are likely to compromise with partial indexation in the second case. A role for government intervention is indicated only to the extent that bargaining strength may dictate a degree of indexation that deviates from the social optimum. The analysis is extended briefly to other assumptions about the utility function of the two parties at the bargaining table.     

How temporary is temporary employment in Spain?

I use a multinomial logit model and the Spanish Active Population Survey (EPA) for the period 1987–1996 to study labor force transitions of temporary workers. These workers hold fixed-term employment contracts, which Spanish labor law distinguishes from indefinite contracts. Since the EPA questionnaire allows the identification of workers with either type of contract, I use matched EPA files to analyze transitions from temporary to permanent employment and explore the extent to which workers holding fixed-term employment contracts tend to be trapped in temporary employment relationships. I am grateful to an anonymous referee for helpful comments and suggestions. Pedro Albarrán-Pérez provided excellent research assistance.     

Structural changes in the receiving country and future labor migration--the case of Kuwait

This article describes changes in the volume, age and sex composition, retention, productivity, types of occupation, and economic sector of the labor force in Kuwait. The focus is on the structural changes in the indigenous labor force. Data were obtained from censuses and labor force surveys during 1965-93. Policies after the 1990 invasion pertained primarily to security of public employment sector among natives. Over 98% of private sector employment is among non-Kuwaitis. Government programs support high fertility. Female illiteracy has declined, and the proportion of women with a higher education has increased. Natives comprised 20.4% of the total labor force in 1993. About 90% of native males work in the public sector. 45% of total male employment is in the production sector. Around 50% of non-Kuwaiti males have been employed in production work over the decades. Over 90% of Kuwaiti females in 1993 worked in professional or clerical work. Over 50% of total female labor force participation is in the service sector. Concentration in the public sector increased for Kuwaitis and declined for non-Kuwaitis. Labor force participation declined with increasing age. Retirement benefits encouraged early retirement. The private sector is experiencing the departure of long-term migrants and more rapid turnover of labor. Hours of work are longer in the private sector. Kuwait is still dependent on foreign workers in the production and service industries. It is likely that native male workers will replace foreign workers in professional work and administrative/clerical work. Policies that will assure future reliance on imported labor include the assurance of government jobs for Kuwaitis, retirement rules, and the profitability of the trade in labor.     

The use and abuse of female domestic workers from Sri Lanka in Lebanon

Women who migrate from Sri Lanka to become domestic workers in Lebanon face gender, class, and race discrimination that often results in abuse, yet the predicament of these women is largely ignored by local and international humanitarian and human rights agencies. Public consciousness about the plight of Asian domestic workers in the Persian Gulf region was raised in 1990 when domestic workers were repatriated in the wake of the Gulf War. In Lebanon, nearly half of the work permits granted to foreigners in 1997 were to women from Sri Lanka. This migration began in the 1970s and is sanctioned by the Sri Lanka government because of the economic benefits accruing from wages sent home by these women. Lebanese families procure domestic positions through an employment agency that arranges transportation and entry for the Sri Lankan women. These women, especially minors, often have to bribe Sri Lankan government agents to falsify travel documents. Upon arrival in Lebanon, the women have no support systems or job security. Most employment contracts last 3 years and pay $100/month with no benefits or protection from local labor laws. Domestic workers are made vulnerable by employers who withhold salaries or travel documents. Upon return to Sri Lanka, former domestic workers face social disapproval and marital problems. To redress this situation, the governments of sending and receiving countries must take action to protect female migrant workers, and nongovernmental organizations must publicize the plight of these women and take action to address the abuses they face.     

OUTSIDE OWNERSHIP AND WORKERS' EARNINGS AND TENURE

Increasing aggregate concentration in the economy has increased attention to the issues surrounding the outside ownership of enterprises. Outside ownership entails both industrial diversification and various forms of conglomerate ownership and represents an important new direction for studies of economic sociology and labor market segmentation. The article shows that the influence of four measures of outside ownership on worker's earnings and tenure is largely, though not universally, negative. Outside ownership tends to suppress earnings otherwise accruing to workers in companies with high levels of unionization, rapid growth, and high profits. Workers' tenure is influenced negatively by some types of outside ownership but positively by others. Tenure is reduced in subsidiary firms and in industries predominately owned by other industries due to reduced union influence on job tenure in these settings. Average tenure is increased in companies that are spread across several industries. These findings provide little support for dual labor market theories and other economic theories that argue that workers benefit from the market power of their employing organizations. Instead, the findings provide support for theories that stress the dangers to workers' fates arising from the increasing dominance of financial management in economic decision making.     

STICKY WAGES AND IMPLICIT CONTRACTS: A TRANSACTIONAL APPROACH

Sticky wages have been explained in the recent implicit contracts literature as a risk shifting device. Risk averse employees purchase insurance via an implicit contract from risk neutral firms. This paper offers an alternative explanation of the phenomenon. Various alternative organizational forms for labor markets are analyzed from a transactions cost viewpoint. Observed labor market institutions (including sticky wages) are seen as ways to economize on transactions costs. In fact, it is argued that sticky wages would be observed even if workers were risk neutral. Thus the emphasis on risk shifting in the implicit contracts literature seems misplaced.
A fall (in price) arising from temporary distress will be attended probably with no correspondent fall in the rate of wages: for the fall in price, and the distress, will be understood to be temporary, and the rate of wages, we know, is not so variable as the price of goods.     

Fair Trade Flowers: Global Certification,Environmental Sustainability,and Labor Standards

This article analyzes the organization of the fair trade flower industry, integration of Ecuadorian enterprises into these networks, and power of certification to address key environmental and social concerns on participating estates. Pursuing a social regulatory approach, I locate fair trade within the field of new institutions that establish and enforce production criteria in international markets. My research finds that while firm owners and managers support fair trade's environmental and social goals, these commitments are delimited by mainstream market expectations related to production efficiency and product quality. In environmental arenas, certification helps ensure that conditions exceed legal mandates and industry norms. In social arenas, certification helps ensure that labor standards exceed legal and industry expectations and funds important programs benefiting workers and their families. Where unions are absent, fair trade's greatest impact may be in the establishment of workers' committees that can build collective capacity. Although these new labor organizations face numerous challenges, they may strengthen the social regulation of global flower networks, making firms accountable to their workers as well as to nongovernmental organizations, retailers, and consumers.     

A Note on Dual Internal Labor Markets and Wages of Temporary Workers: Evidence from Linked-Employer-Employee Data

I use linked employer-employee data from the German Federal Statistical Office to estimate within-firm wage differentials between temporary workers with fixed-term contracts and workers with permanent contracts in the context of dual internal labor markets. Wage-tenure profiles of permanent workers are estimated separately for each firm to obtain a proxy for the prevalence of internal labor markets. Temporary workers earn significantly lower wages in firms with steeper wage-tenure profiles. This finding is consistent with the segmentation in a primary permanent workforce with high wages and a secondary temporary workforce with low wages, if internal labor markets are more prevalent.     

TRADING UNCERTAINTY, ENFORCEMENT AND LABOR UNIONS

It is shown that when contracts can be perfectly enforced, trading uncertainty leads to discrimination among workers with the same skills and experience. In this case anti-discrimination laws lead to inefficiencies. In the absence of perfect enforcement, anti-discrimination practices may be used as enforcement devices and need not lead to inefficiencies. In particular, firms may wish to precommit to an anti-discrimination policy, say by inviting in a labor union, in order to offer credible insurance to its workers. This leads to an equilibrium in which union workers get a higher wage than non-union workers, but unions do not have monopoly power.     

On the Job: White Employers,Workers of Color,and Racial Triangulation Theory

This article offers that Claire Jean Kim's theory of racial triangulation provides an ideal framework to study workers of color, the racialization of their labor and the ways in which actual and potential employers neglect and discriminate against these workers. Specifically, the piece determines that racial triangulation theory bolsters analysis of race‐based power that employers exert in the construction and maintenance of racial inequality in regard to management of labor and employment possibilities for workers of color. A triangulated approach allows for a sharp focus on employer engineered labor market inequality as they oversee, hire, and refuse to be racially inclusive in hiring practices. Most significantly, racial triangulation theory addresses the forces of racial inequity within the meso‐level of U.S. social structure when applied to study of organizational dynamics such as workplaces. I open the article by assaying historical and contemporary studies on workers of color to illustrate white employer domination and the ways in which workers of color are referenced to each other as inferior and superior workers. Subsequently, the article looks to fresh analytical directions in which sociologists can evaluate racism as a triangulated, multidimensional social force in the workplace and other social contexts.