Have unions impeded growing wage dispersion among young workers?

Wage inequality is examined for young males over the period 1980–1993. While wage inequality increased substantially for nonunion workers over this period, wage inequality increased only modestly for union workers. In part, this difference results from divergent trends in skill prices—returns to skill rose in the nonunion sector but contracted slightly in the union sector. In particular, returns to education increased sharply in the nonunion sector while remaining stagnant in the union sector. At least for young workers, these findings suggest that unions have been largely successful in resisting market pressures for greater wage inequality. We also uncover evidence suggesting that, as relative returns to education decline in the union sector, highly educated young workers become less likely to choose union employment. We acknowledge the helpful comments of Dek Terrell, Steve Trejo, and Carol Horton Tremblay.     

Wage Inequality and Performance in Nonprofit and For‐Profit Organizations

This article examines the effects of several forms of wage inequality on service quality and employee effort. We suggest that two popular theories, tournament and fair wage/equity, are not necessarily competing. Each theory accurately describes aspects of employee behavior, but because of sectoral differences in organizational objectives and employee attitudes, tournament theory's predictions are relatively stronger in the for‐profit sector, while fair wage/equity theory's predictions are relatively stronger in the nonprofit sector. Using an employer–employee matched data set of nursing homes linked to a federal regulatory database and a resident survey, we found that ownership moderates the relationship between wage inequality and service quality. Although wage inequality positively affects service quality in the for‐profit sector, the reverse is true among nonprofit organizations. We also found that overall wage inequality in the workplace has a more pronounced influence on employee discretionary effort than does the employee's place in the distribution of wages.     

Calling capital: call centre strategies in New Brunswick and New Zealand

This article compares government promoted call centre initiatives in New Zealand and New Brunswick, Canada, thereby identifying differing policies and practices associated with ‘globalization’. Both New Brunswick and New Zealand are small resource based economies in which policy makers aspire to attract foreign investment into call centres as a new means of economic growth and job creation. However there are significant differences between the two call centre strategies. In New Brunswick the provincial government plays a central role, most notably through the use of incentives to lure companies to the province but also through the coordination of education and training. In New Zealand an informal network made up of public and private sector actors drives the strategy, and the relevant government agency (Trade NZ) plays only a coordinating role. Despite these differences both call centre strategies aspire to link service sector activities into global flows and networks, and foster low wage and feminized forms of employment.     

INFORMAL LABOR MARKETS AND ON‐THE‐JOB TRAINING: EVIDENCE FROM WAGE DATA

This study examines whether informal sector jobs are a source of training for young less‐educated workers. Controlling for worker and job characteristics, it is found that, in the early years of workers' careers in Mexico, wage growth in the informal sector is higher than in the formal sector. This result is consistent with general human capital investment on‐the‐job if the informal labor market is more competitive than the formal labor market due to frictions generated by labor regulations. (JEL O17, J24, J310)     

Minimum Wages in a Segmented Labor Market: Evidence from South Africa

The segmented labor market model describes the impacts of minimum wages on covered and uncovered sectors. This paper examines the impacts of an industry-specific minimum wage in South Africa, a state characterized by high unemployment, a robust union movement, and the presence of a large informal sector. Under the industry-specific wage law, formal agricultural and household workers are covered, while workers in other sectors are not. The unique aspect of this paper lies in the ability to compare the impacts of minimum wage legislation on formal covered, informal covered, formal uncovered, and informal uncovered workers. This natural experiment allows us to test whether industry-specific minimum wage legislation leads to higher wages, whether wage increases are restricted solely to covered formal sectors or if there are spillover effects, and whether such legislation manifests in disemployment effects. We find evidence of higher wages yet disemployment among black workers in formal markets. In informal markets we find no employment effects, but higher wages in formal markets appear to have spilled over into informal markets in covered sectors.     

Women’s Tertiary Education Masks the Gender Wage Gap in Turkey

This paper investigates the gender wage gap for full-time formal sector employees, disaggregated by education level. The gap between the labor force participation rate of women with tertiary education and those with lower levels of education is substantial. There is no such gap for men. Hence, existing gender wage gap studies for Turkey, where we observe lopsided labor force participation rates by education levels, compare two very different populations. We disaggregate the whole sample by education level to create more homogenous sub-groups. For Turkey, without disaggregation, the gender wage gap was 13% in 2011, and women are significantly over-qualified relative to men on observed characteristics. Once we disaggregate the sample by education level, we show that the gender wage gap is 24% for less educated women and 9% for women with tertiary education in full-time formal employment. Observed characteristics only explain 1 % of this gap in absolute terms. We further disaggregate the data by public and private employment. The gender gap is higher in the private sector. However, women with tertiary education in the public sector are significantly better qualified compared to men, and consequently the adjusted gender wage gap is higher for women with tertiary education in the public sector. Our estimates also indicate a rise in the gender wage gap between 2004 and 2011.     

Between- and within-group wage inequalities, and the advent of new technology

We present a simple model that explains two features of the dynamics of wage inequalities: between-group and within-group. Individuals are assumed to be heterogeneous in their innate abilities. With the advent of a new technology, each individual decides whether or not to acquire the skill for the new high-tech sector. The heterogeneity explains not only the between-group wage inequality but also the within-group wage inequality, which are observed in advanced countries such as the US and UK.     

The Indian informal sector: The impact of globalization and reform

Globalization and economic reforms typically affect the formal sector, the informal sector existing outside regulation. Yet, numerous links between them mean the informal sector is variously affected. Traditionally, the model used to explain the impact of these forces was labour market segmentation and migration: workers laid off in the formal sector increase informal labour supply, leading to wage decline and increased poverty. The author examines whether this pattern applies in India following economic reforms in the 1990s, and finds a more appropriate model, driven by expansion both in labour supply and in demand, through outsourcing, skill transfers and new enterprises.     

Financial intermediation in a model of directed technological change

In this paper, the financial sector is introduced into a directed technological change economic model. The paper shows that, although financial development reduces the incidence of the researcher’s moral hazard, it will not necessarily promote growth. In addition, financial development may have a positive, negative or non-existent effect on wage inequality. One possible implication of this paper is that financial development decreases the growth rate while it increases skill premia. The impact of taxes on economic growth and wage inequality is also investigated in this paper.     

Unions and wage inequality

Summary and Conclusions The impact of unions on the structure of wages has recently attracted renewed interest as analysts have struggled to explain the rise in earnings inequality in several industrialized countries. Canada, the United Kingdom, and the United States provide a potentially valuable set of countries for examining this question. All three countries now collect comparable data on wages and union status in their regular labor force surveys. Several features of the collective bargaining institutions of these countries make them suitable for studying the relationship between unions and wage inequality. Bargaining is highly decentralized; there are no general mechanisms for extending collective bargaining provisions beyond the “organized” sector; and the fraction of the work force covered by collective bargaining is relatively modest. Thus it is possible to compare the structure of wages for workers covered by union contracts to those who are not covered, and potentially infer the effect of unions on overall wage inequality.     

Why employment matters: Reviving growth and reducing inequality

The global economic crisis has led to a sharp slowdown in growth and an even greater slowdown in employment creation. The resulting deterioration in the quality of employment has exacerbated the longer‐term trend of rising inequality. Jobless growth has dampened output growth through a worsening income distribution. Wages are costs on the supply side but are also incomes on the demand side, so that profit‐led growth and wage‐led growth are complements, not substitutes. Thus, growth can create jobs, while added jobs can drive growth. More employment and better jobs can also mitigate rising inequality. If macroeconomic policies focus on fostering employment creation and supporting economic growth, rather than on price stability and balanced budgets, employment would revive growth and reduce inequality.     

Day Labourers' Work Related Injuries: An Assessment of Risks,Choices, and Policies

Literature and theory surrounding the informal economy in international contexts suggest that informal work arrangements may entail assuming various levels of risk, and that the higher the level of risk in an employment arrangement, the higher the premium paid to the worker. This study is designed to assess if a wage compensation for risk exists within the United States' day labour job market ‐ the most visible sector of the United States' informal economy. Using data from the 2005 National Day Labour Survey we find a statistically significant wage premium indicating that a risk‐wage tradeoff within the day labour informal economy exists. Ultimately, we argue that current policy interventions facilitated through day labour centres into the day labour market appear to be effective in mitigating the risks associated with this type of employment.

• Evidence of a risk‐wage premium in the day labour market suggests there is an incentive to assume higher levels of risk in work arrangements which presents significant concerns for worker safety.
• Higher levels of work related risks assumed by day labourers, may be minimized if they receive proper safety training through a formal venue such as a worker centre.
• Worker centres only serve 20 per cent of all day labourers in the United States, suggesting a need for the establishment of additional worker centres in other connected or industry based work sites, to help mitigate potential work related risks and injuries in the day labour market.

     

Parenthood wage penalties in a double income society

We estimate how parenthood affects hourly wages using panel data for Norwegian employees in the years 1997–2007. Though smaller than for most other OECD countries, we find substantial wage penalties to motherhood, ranging from a 1.2 % wage reduction for women with lower secondary education to 4.9 % for women with more than four years of higher education. Human capital measures such as work experience and paid parental leave do not explain the wage penalties, indicating that in the Norwegian institutional context, mothers are protected from adverse wage effects due to career breaks. We do however find large heterogeneity in the effects, with the largest penalties for mothers working full time and in the private sector. Contrary to most studies using US data and to previous research from Norway, we find a small wage penalty also to fatherhood. Also for men, the penalty is greater for those who work full time and in the private sector. A substantial share of the fatherhood wage penalty is explained by paternity leave.     

Wages of regular and irregular workers, the price of education, and income inequality

In this paper, we develop a model characterized by skill-biased technological change and increasing costs of education to investigate income inequality. Irregular workers cannot escape poverty by commencing investment in education because wage inequality between regular and irregular workers widens and the price of education increases with the average level of education. Moreover, if the productivity of elementary education is low relative to that of higher education, middle-income individuals are eventually unable to pursue higher education because the threshold for education expenditure rises with the price of education. Thus, income inequality may widen, even among regular workers.     

Public enterprise and the rise and fall of labor share

Developed economies experienced a rise and fall in labor share (LS) in the postwar period. We present a novel explanation of these trends – public enterprise employment. We document a link between it and both LS and wage compression in 15 developed nations. We then build a model that shows how overstaffing public enterprises can increase LS and reduce wage inequality. Overstaffing directly increases public enterprise LS and indirectly increases private sector LS by reducing available labor. We examine several public enterprise reforms. Consistent with the model’s predictions, reforms reduce public enterprise LS permanently and private sector LS temporarily.     

REDUCING PUBLIC‐PRIVATE SECTOR PAY DIFFERENTIALS: THE SINGLE SPINE PAY POLICY AS A NATURAL EXPERIMENT IN GHANA

Empirical studies have documented the existence of the public‐private pay differentials in both developed and developing countries. The implementation of policies aiming to reduce this gap has however been mitigated or inconclusive. This paper exploits the Single Spine Pay Policy (SSPP) in Ghana as a natural experiment to examine the effectiveness of wage policies in developing countries. The SSPP was implemented in 2010 by the Government of Ghana to address the public‐private sector wage gap and improve productivity in the public sector. Using a quantile treatment effect approach based on a difference‐in‐difference estimation, we show that the SSPP has yet to reduce the wage gap between the public and private sectors across the entire distribution of earnings in Ghana. The improvement observed is only at the lower tail of the distribution of earnings. However, the SSPP has a larger effect on the earnings of female workers than that of males in the education and health services sectors while male workers have benefited more in the administration sector, suggesting that the policy was successful in reducing the gender wage gap in the education and health services sectors but has widened this gap in the administration sector. Moreover, the SSPP has decreased the productivity of workers across the distribution of earnings, mainly due to a decrease in the effort of female public sector workers in the education and health sectors and male workers in the administration sector. (JEL C31, G15, J24, J31, J45)     

Skill-biased technical change, educational choice, and labor market polarization: the U.S. versus Europe

This paper analyzes the effect of recent technical change on the labor market and explains the observed differences in wage inequality among advanced countries. In particular, we focus on the difference between the inequality in the U.S. and in continental Europe. Many studies have indicated a rise in wage inequality in the U.S. over the past three decades. On the other hand, there has been little change in wage inequality in continental Europe. By introducing human capital investment into the model by Acemoglu (Am Econ Rev 89:1259–1278, 1999), we show that ex ante homogeneous economies would have distinct ex post wage distribution. The strategic complementarity between human capital investment and firms’ hiring strategies yields the possibility that multiple equilibria exist, which explains the difference in wage distribution between the U.S. and Europe. In addition, we show that differences in tax or education systems can explain the difference in wage distribution between the U.S. and Europe.     

Female labour force integration and the alleviation of urban poverty: a case study of Kingston,Jamaica

The author posits that female labor force integration in Jamaica accomplishes little in alleviating poverty and making maximum use of human resources. Women are forced into employment in a labor market that limits their productivity. Women have greater needs to increase their economic activity due to price inflation and cuts in government spending. During the 1980s and early 1990s the country experienced stabilization and structural adjustment resulting in raised interest rates, reduced public sector employment, and deflated public expenditures. Urban population is particularly sensitive to monetary shifts due to dependency on social welfare benefits and lack of assets. Current strategies favor low wage creation in a supply-side export-oriented economy. These strategies were a by-product of import-substitution industrialization policies during the post-war period and greater control by multilateral financial institutions in Washington, D.C. The World Bank and US President Reagan's Caribbean Basin Initiative stressed export-oriented development. During the 1980s, Jamaican government failed to control fiscal policy, built up a huge external debt, and limited the ability of private businessmen to obtain money for investment in export-based production. Over the decade, uncompetitive production declined and light manufacturing increased. Although under 10% of new investment was in textile and apparel manufacturing, almost 50% of job creation occurred in this sector and 80% of all apparel workers were low-paid women. Devaluation occurred both in the exchange rate and in workers' job security, fringe benefits, union representation, and returns on skills. During 1977-89 women increased employment in the informal sector, which could not remain competitive under devaluation. Women's stratification in the labor market, high dependency burdens, and declining urban infrastructure create conditions of vulnerability for women in Jamaica.     

The globalization of production,national labour regulations and income inequality in the global North and South, 1980–2013

A central concern over global value chains (GVCs) is whether the integration of national firms into GVCs exacerbates income inequality within countries. However, despite decades of research, the distributional consequences of GVCs remain unclear in the empirical literature. Drawing on panel data from 96 countries between 1980 and 2013, we examine the effects of GVC integration on market income inequality and whether national labour regulations moderate these effects. We find integration increases inequality in the global North and South. More importantly, we find labour regulations amplify the inequality effects of integration in Southern countries by expanding the size of the informal sector while suppressing these effects in Northern countries by promoting unionization. This suggests institutional power from national labour regulations may enhance the bargaining power of labour in the North through increasing collective resources while disempowering labour in the South through reinforcing labour market segmentation between formal and informal sectors.     

Verteilungseffekte von Finanzialisierung

Financialisation is often associated with rising income inequality. The article describes the major aspects of financialisation in the foreign, financial, business and household sector, and identifies several hypotheses how financialisation affects functional income distribution. We discuss enhanced exit options of firms, rising financial overhead costs for businesses, increased competition in capital markets, and weakened bargaining power of workers due to indebtedness. The different hypotheses are operationalised through empirical measures and their effect on the wage share is tested econometrically by means of a panel data set of 14 OECD countries over the period 1992–2014. We find statistically significant negative effects of financial payments of firms and financial openness on the wage share.