Seasonality and Flexible Labor in Resorts: Organizations,Employees, and Local Labor Markets

Seasonality, a chronic problem in the resort industry, is addressed in this seven-year participant observation and in-depth interview study of five Hawaiian resorts contiguously arrayed along a sandy beachfront strip. In order to operate profitably, these organizations must keep their labor costs trimmed as they move through annual cyclical fluctuations that place different labor demands on each department. We examine their use of various kinds of "flexible" employees, including both seasonally contingent and adaptable full-time workers. We examine the way these organizations expand and constrict their labor force annually. Studies of contingency labor have shown the benefits of this solution for organizations but have ignored the effects of labor flexibility on employees and local labor markets. In this article we take this broader view, looking at the integration of organizations, employees, and local labor markets and the way their interplay is forged in symbiotic and exploitive ways to maintain a system of human resources that reinforces a stratified social relations of production.     

EFFICIENCY WAGES AND SUBJECTIVE PERFORMANCE PAY

This paper studies optimal relational contracts in motivating workers in a market setting. We find that labor markets with higher turnover costs will use more subjective performance pay and less efficiency wages and that in those markets, the total wage payment is lower and the equilibrium employment level is higher. Surprisingly, under certain conditions, an increase in turnover costs leads to higher social welfare. Incorporating workers' search costs, we show that wages are procyclical in booms and are either rigid or countercyclical during recessions. The predictions of the model are consistent with some empirical evidence. ( JEL D82, J33, J41, J63)     

The role and significance of endogenous firing costs in a matching model with endogenous job destruction

Traditional models of the labor market assume fixed firing costs. This paper explores the implications of variable firing costs, building this new assumption into a matching model with endogenous job destruction. The available evidence on the outcomes of cases brought to labor courts suggests that firing costs are negatively related with labor market tightness. In such a case, we may no longer invoke “rigidities” on labor markets as the cause of their poor performance. Our model yields three interesting results. First, labor markets may have multiple equilibria that cannot be Pareto-ordered; each with its own configuration in terms of average duration of unemployment and filled jobs, as well as employment protection. Second, the variability of firing costs produces a positive externality affecting the stability properties of these equilibria. Finally, the two externalities affect the efficiency of the social optimum, modifying the Hosios [Hosios, A.J., 1990. On the efficiency of matching and related models of search and unemployment. Review of Economic Studies 57, 279–298] condition. We use these results to interpret the recent history of European unemployment.     

Markets,Networks, and Risk: An Analysis of Labor Remuneration in the Lake Victoria Fishing Industry

This study applies concepts from Habermas' Theory of Communicative Action to the problem of identifying the circumstances under which networks replace markets as the primary governance mechanism for economic activities. The suggestion derived from this theory is that markets govern economic activities tied to material phenomena; whereas networks control such activities when they are tied to social relationships. This suggestion is subjected to an empirical test. Labor transactions in the Lake Victoria fishing industry are used to test the hypothesis that risk factors arising from natural contingencies will distribute according to a risk market model, whereas those arising from social relationships will be distributed through a logic of social power tied to networks and identities. The hypothesis is generally supported by data on the effects of kinship and, more strongly, ethnicity.     

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.     

EVIDENCE ON PRICE ADJUSTMENT COSTS IN U.S. MANUFACTURING INDUSTRY

This paper investigates the degree of rigidity in prices of manufactured products in the U.S., conditional on labor costs. I extend Rotemberg's model of quadratic price-adjustment costs and find that prices are costly to adjust: after a year, about 40 percent of adjustment remains to be completed for aggregate manufacturing, while for some industries the adjustment is twice as slow. But manufacturing prices are less sluggish than prices in the U.S. economy as a whole. Thus, nominal rigidity in other markets, such as those for services or labor, may be important.     

Labor emigration and economic development

"This article is concerned with the extent to which labor migration is advantageous to the labor exporting country. It focuses on development consequences of labor emigration with a view toward the formulation of policies which can shape those consequences into a positive force for development, discussing a wide variety of potential costs and benefits generated by labor emigration. The issue of private versus public choice relative to emigration is examined, as [are] the major economic benefits and costs of labor emigration and the influence of development objectives on the valuation of these costs and benefits. Policies by which emigration countries may increase the benefits from labor emigration and reduce the costs are outlined."     

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.     

The social costs and benefits of gambling: an introduction to the economic issues

This paper surveys the range of economic issues that need to be addressed in attempting to evaluate the social costs and benefits of gambling. It considers, inter alia, the nature of private and social costs and benefits and their policy significance, the important distinction between real and pecuniary costs, the incidence of gambling costs and benefits and the sources of gambling costs and benefits. Similarities and differences between the analysis of gambling and alcohol are considered. The paper concludes with a consideration of why various estimates of the social costs of gambling have produced such divergent results.     

The Fragile Families study: social policies and labor markets in seven cities

An analysis of the welfare, child support, and labor market environments in the first seven Fragile Families cities confirms that, as intended, these cities represent the extremes in terms of their social policies and labor markets. Studying families in cities with extreme environments—generous or stingy welfare policies, strict or lenient child support enforcement, tight or slack labor markets—will allow us to better understand how policies and labor markets interact to affect the living arrangements and wellbeing of families. Based on our theoretical framework, we expect to find more marriage and cohabitation in cities with stingy welfare benefits and policies, strict child support enforcement, and strong labor markets. In contrast, we expect less marriage and cohabitation in cities with generous and accessible welfare benefits, weak child support enforcement, and weak labor markets. In future papers, Fragile Families data in twenty cities will be brought to bear on these predictions.     

Comparing the Experiences of Highly Skilled Labor Migrants in Sweden and Japan: Barriers and Doors to Long-term Settlement

As labor markets become increasingly global, competition among industrialized nations to attract highly skilled workers from abroad has intensified. Spurred by concerns over future economic needs caused by the demographic challenges of an aging population, both Japan and Sweden have joined this global competition. This article examines Japanese and Swedish immigration policies for highly skilled migrants and compares the highly skilled migrants’ experiences in the two countries through interviews with these migrants. Despite Japan and Sweden's completely different approaches to immigration itself, both countries’ policies, as well as the experiences of the skilled migrants, are strikingly similar. Highly skilled migrants experience language barriers and prejudice in both countries, making it difficult to build social networks with natives. Career development seems to be perceived as a common problem, although less so in Sweden, where labor markets are more flexible. Overall, these issues reduce both Japan's and Sweden's ability to retain skilled migrants. While they share similarities, Sweden's famed work–life balance and gender equality give it an edge in the competition for skilled migrants, which Japan does not share. This comparison identifies which social conditions facilitate or impede skilled migrant settlement.     

The Effects of Race and Family Structure on Women's Spatial Relationship to the Labor Market

This study examines the intersection of race, family structure, and economic inequality through women's spatial relationships to the labor market. Using survey data from three major metro labor markets, we operationalize spatial relationships in two ways: first, using a conventional measure of commute time, and second, using an indicator of neighborhood job contacts to obtain employment. Results indicate that family structure exerts no direct effect on women's spatial relationship to the labor market. Race, by contrast, plays a strong role, mediating women's reliance on mass transit, their response to teenage kids in the household, and their likelihood of using neighbors to find employment. The result is a situation in which black and Latina women are more likely than white women to rely on localized job networks to obtain employment that requires longer commutes from home.     

Needed but Not Liked – The Impact of Labor Market Policies on Natives’ Opinions about Immigrants

This article builds on the notion that immigrants’ integration into the labor market benefits migrants and shapes natives’ opinions about immigrants. Using insights from the newest literature on labor immigration and drawing upon the literature on attitudes toward immigrants, the article explores in a multilevel design the impact that regulations in the EU member states concerning immigrants’ access to domestic labor markets have on threat perceptions and on opinions about immigrants’ economic role. It finds that labor market regulations have a positive effect on opinions about immigrants’ economic role and reduce the negative relationships between precarious labor market status and opinions about the economic role. However, a robust effect of labor market regulations on threat perceptions was not found. Our results imply that labor market incorporation rules need to be accompanied by other measures to close the gap between natives and immigrants.     

The quantity and quality of new immigrants to the US

Since immigration to the US began to accelerate in the 1970s, economic and social policy issues surrounding immigration frequently raise concern and generate debate. These policy debates often aim to mitigate the costs of immigration and augment the benefits. Key to this is understanding the characteristics of immigrants, especially those related to economic success and integration. A commonly accepted finding in the economic literature regards the declining economic “quality” of successive immigrant cohorts as measured by differences in entry wages across cohorts. In this paper, I refine our understanding of immigrant cohort quality. I show that increasing competition in the labor market among immigrants can explain a significant portion of declining “quality”. This result suggests that labor market interactions are as important to immigrant economic integration as their inherent “quality”.     

Temporary Help Firms as Entrepreneurial Actors

Competing explanations of growth in the temporary help supply (THS) industry stress its role in meeting the needs and desires of workers vs. those of employers. Until now, less attention has been paid the growth agenda of the THS industry itself. Yet evidence from a study of THS firms in Wisconsin suggests that their entrepreneurial efforts may be an important, overlooked factor driving the industry's expansion. This paper examines the growth and geographic dispersal of Wisconsin's THS firms through a theoretical framework of entrepreneurial action. Data from in-depth interviews with their owners and managers reveal strenuous efforts to create new markets for THS services. THS firms' highly proactive stance is reflected in their decisions about where to locate, efforts to become part of local social networks, and innovative approaches to product development and marketing. Previous studies have implied that THS firms opportunistically and reactively respond to changes in labor supply or demand factors. This study finds THS firms actively promoting their own growth, intervening in labor markets to forge a role for themselves as employment intermediaries and gatekeepers to permanent jobs.     

The stability of exchange networks

Economic and sociological exchange theories predict divisions of exchange benefits given an assumed fixed network of exchange relations. Since network structure has been found to have a large impact on actors’ payoffs, actors have strong incentives for network change. We answer the question what happens to both the network structure and actor payoffs when myopic actors change their links in order to maximize their payoffs. We investigate the networks that are stable, the networks that are efficient or egalitarian with varying tie costs, and the occurrence of social dilemmas. Only few networks are stable over a wide range of tie costs, and all of them can be divided into two types: efficient networks consisting of only dyads and at most one isolate, and Pareto efficient and egalitarian cycles with an odd number of actors. Social dilemmas are observed in even-sized networks at low tie costs.     

LABOR FORCE MIGRATION AND ALLOCATIVE EFFICIENCY IN THE UNITED STATES: THE ROLES OF INFORMATION AND PSYCHIC COSTS

This paper examines the relative importance of information, psychic and other costs of relocation as mitigating factors (off-sets to spatial earnings differentials) within the migration decision. The methodology employed for this examination is based upon: (1) observation of relationships between the geographic allocation and personal characteristics of labor force migrants, and (2) inferences, drawn from these observations, on the relative importance of various relocation cost components. Empirical analyses of the migration decision based upon this indirect methodology provide important insights on both the determinants and allocative efficiency of interstate labor force migration in the United States.     

Criminal behavior in general equilibrium: Who benefits from crime?

Analyses of the social costs and benefits of crime generally focus attention on the perpetrator and victim, with secondary incidence limited to public and private enforcement costs, and possible efficiency losses from punishment. Professors Jorge Martinez-Vazquez and Bruce Seaman extend the notion from the tax evasion literature that variations in the frequency of illegal behavior across sectors of the economy necessitates a full intersectoral approach to the determination of the long run general equilibrium incidence of crime. An algebraic model of three product markets is used to derive the total social costs per dollar of crime under four different market structures in the “crime prone” industry, and similar differences in the related substitute and complementary goods markets. The differing social impacts suggest that industry market and cost structures are potentially relevant factors in devising optimal law enforcement strategies.     

Fashions, habits and changing preferences: Simulation of psychological factors affecting market dynamics

Markets can show different types of dynamics, from quiet markets dominated by one or few products, to markets with constant penetration of new and reintroduced products. This paper explores the dynamics of markets from a psychological perspective using a multi-agent simulation model. The behavioural rules of the artificial consumers, the consumats, are based on a conceptual meta-theory from psychology. The artificial consumers have to choose each period between similar products. Products remain in the market as long as they maintain a minimum level of market share, else they will be replaced by a new product. Assuming a population of consumats with different preferences, and social networks, the model simulates adoption of new products for alternative assumptions on behavioural rules. Furthermore, the consequences of changing preferences and the size of social networks are explored. Results show that the behavioural rules that dominate the artificial consumer's decision making determine the resulting market dynamics, such as fashions, lock-in and unstable renewal. Results also show the importance of psychological variables like social networks, preferences and the need for identity to explain the dynamics of markets.     

Explaining movements of the labor share in the Korean economy: factor substitution,markups and bargaining power

This paper emphasizes the role of market power, in both product and labor markets, in determining the labor share of income in the Korean economy. It presents an efficient bargaining model incorporating imperfect competition in product markets. This model shows how capital-labor substitution due to capital-augmenting technological progress or other factors, and changes in markups and the bargaining power of workers affect the labor share. Empirical analyses show that there is little support for explanations based on capital-labor substitution. Furthermore, a structural vector autoregression (VAR) model is proposed that can identify the effects of changes in markups and the bargaining power on the labor share. The VAR model applied to the period since the early 1980s demonstrates that both changes are influential, and especially for the manufacturing sector, long-run movements of the labor share are explained almost equally by variations in the markup and bargaining power.