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.     

Befristete Beschäftigung: Chance oder Risiko?

The paper investigates whether increased labor market flexibility leads to a reinforcement of the existing segmentation of the labor market or whether it is dismantling the barriers in the labor market. Using spell data (employment and unemployment periods) from the German Socio-economic Panel (GSOEP, time period: 1984–1999) both determinants of fixed-term contracts and their consequences (renewed temporary employment, unemployment) are investigated with the help of random-effects logit-models. The results show that respondents’ characteristics (amount and type of human capital, formerly experienced periods of unemployment), structural variables (branch, firm size), and occupational characteristics (position, marginal employment) are influencing the risk of getting a temporary job. Furthermore it becomes evident that fixed-term contracts are increasing the risk of getting a temporary job again or of becoming unemployed after termination of the temporary job. These results show that fixed-term contracts above all are part of the secondary labor market, and that they especially have negative consequences for the employees in this segment. On the other hand fixed-term contracts can be seen as a chance in the way that they offer at least an alternative to unemployment. Hence, a too narrow evaluation of temporary employment would be too simplistic.     

Labor’s inequality of bargaining power: Changes over time and implications for public policy

A major justification for enacting the Wagner Act and encouraging collective bargaining was that in the wage-determination process individual workers suffer from an inequality of bargaining power vis-á-vis employers. This critical review of this justification examines the analytical meaning of the concept of an inequality of bargaining power, the factors responsible for this inequality, the change that has taken place in labor’s disadvantage since the 1930s, and the implications for national labor policy. It is concluded that some employers continue to have significant market power over wages but that the extent and degree of labor’s disadvantage in bargaining has diminished substantially since World War II. The implication is that the Wagner Act’s protection of the right to organize remains in the social interest but that the bargaining power of labor unions should be further circumscribed to preserve a balance of power in wage determination. The author thanks Paul Swiercz for helpful comments.     

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)     

An ordered choice model of promotion rules

This paper continues an important but short line of research investigating non-pecuniary outcomes of collective bargaining. These outcomes define the rules governing the employment relationship. The determinants of one of the most important of these rules — the one that governs the intrafirm allocation of labor — are analyzed. Specifically, micro-level data are used to estimate the determinants of promotion rules in major collective bargaining agreements in U.S. manufacturing. A multinomial choice model is estimated once these rules have been ordered along the joint dimension of increasing weight attached to seniority across a broadening seniority unit. The evidence suggests that contracts involving small, capital-intensive firms, whose technologies value specific training, in single-employer bargaining units, that contain an increasing proportion of men, are most likely to exhibit promotion rules that heavily weight company-wide seniority. This paper has greatly benefited from the comments of Cynthia Gramm, Wallace Hendricks, Jan Ondrich, Michael Wasylenko, and the participants in workshops at The Metropolitan Studies Program, Syracuse University, and at The New York State School of Industrial and Labor Relations, Cornell University, and from an anonymous referee. Excellent research assistance was provided by Sally Wallace. The usual disclaimer applies.     

THE CONSEQUENCES OF (DE)REGULATION ON EMPLOYMENT DURATION AND EFFICIENCY: AN EXPERIMENTAL STUDY

If the future market wage is uncertain, engaging in long‐term employment is risky, with the risk depending on how regulated the labor market is. In our experiment long‐term employment can result either from offering long‐term contracts or from repeatedly and mutually opting for rematching. Treatments differ in how regulations restrict the employer's flexibility in adapting the employment contract. All treatments allow for longer contract duration as well as for mutually opting to be rematched. Effort is chosen by employees after a contract is concluded. Treatments vary from no contract flexibility to no restriction at all. Will more (downward) flexibility be used in ongoing employment but reduce labor market efficiency? And will regulation crowd out long‐term employment, in the form of long‐term contracts or voluntary rematching? (JEL C72, C90, F16, J21, J24, L10)     

Organizational Uncertainty and Labor Contracts in China's Economic Transition

Lifetime employment was a cornerstone of the Chinese socialist system constructed under Mao. In this system, organizations served the function of social security, and as a result, many organizations were overburdened with bloated work forces and retirees that drew from organizational coffers well into old age. Labor contracts fundamentally alter this system, as they allow firms to end the socialist institution of lifetime employment. Yet there is significant variation on the institutionalization of labor contracts in organizations. Based on a sample of 81 firms in industrial Shanghai, I show that organizations that are experiencing uncertainty in the economic transition are more likely to institutionalize labor contracts on an organizationwide basis. There are two types of organizational uncertainty in the economic transition: economic uncertainty and administrative uncertainty. In cases of economic uncertainty, firms that lost money in 1990 and firms that are burdened by large forces of retired workers are more likely to place their workers on labor contracts. In the case of administrative uncertainty, firms that are at the highest levels of the industrial hierarchy are also significantly more likely to place their workers on labor contracts. Although these upper level firms were the most protected under the command economy, they are being forced to handle the greatest among the responsibilities in the economic transition, and as a result, they experience the greatest sense of being set adrift by the state.     

Impact of rural employment guarantee schemes on seasonal labor markets: optimum compensation and workers’ welfare

The recent enactment of the National Rural Employment Guarantee Act in India has been widely hailed as a policy that provides a safety net for the rural poor with the potential to boost rural income, stabilize agricultural production and reduce rural-urban migration. This paper models the impact of such employment guarantee schemes in the context of an agrarian economy characterized by lean season involuntary unemployment as a consequence of tied-labor contracts. Specifically, we examine labor and output market responses to a productive rural Employment Guarantee Scheme (EGS) and determine the optimal compensation to public work employees consistent with the objectives of (i) productive efficiency in agriculture and (ii) welfare maximization of the laborers. Our framework provides a theoretical framework for the evaluation of a number of (sometimes) conflicting observations and empirical results on the impact of an EGS on agricultural wages, employment and output, and underscores the importance of the relative productivity of workers in the EGS program vis-à-vis their counterparts engaged in agricultural production in determining the success of these programs.     

Vocational Rehabilitation: Profession and Process. American Lecture Series,John G. Cull,Richard E. Hardy,Publication 831. Charles C. Thomas,Publisher, Springfield,Illinois. 1972. 547 Pages. $18.50, Hardbound

As unionization of professional social workers increases, so will the demand to better prepare social work students for their roles as managers and employees in the collective bargaining process. This paper explores labor relations developments as they apply to the unionization of social work personnel. Current research is reviewed, and labor contracts representing personnel in Wisconsin, Pennsylvania, Illinois, and Michigan are examined in order to identify typical contract clauses. Areas of needed research are outlined. Suggestions are made for introducing labor relations studies into the social work curriculum and a course taught at the University of Illinois is offered as an example.     

Labor union coercion of employees: The use of fringe benefits

In bargaining on fringe benefits, labor unions violate Section 8(b)(1)(A) of the National Labor Relations Act if they restrict benefits to members only. Even if fringe benefits are provided for nonunion members, a violation of the Act occurs if more stringent eligibility rules are required for nonmembers than for members. Sometimes unions deny fringe benefits to union members if fines or dues are not paid, but National Labor Relations Board has ruled that workers are restrained in violation of Section 8(b)(1)(A) if fringe benefits are withheld due to nonpayment of fines or dues.     

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.     

Airline deregulation and the airline labor market

The Airline Deregulation Act of 1978 has had a significant impact on the airline industry and its labor market. The structure of the airline labor market before the Act is examined in light of certain significant historical events including legislative intervention and regulatory practice. The Act and other coincident extraneous events are considered to show how deregulation and other unrelated economic and technological factors operated as a catalyst, sparking substantial short-term upheaval in the airline labor market. It is argued that in the longer term airline employees have little to fear from deregulation and that deregulation may eventually enhance labor’s position in view of the increased employment opportunities that an expanded market may bring and the abolition of the industry strike insurance scheme. I thank Bo Carlsson, Paul Gerhart, and Paul Salipante for their comments and suggestions.     

Eternal legitimacy of New Zealand trade unions: An update

This paper examines the current state of play in New Zealand’s industrial relations policy following the first general election under a system of proportional representation. The implications of the new Coalition Government’s policy statements are examined in light of the current outcomes under the Employment Contracts Act. It is concluded that radical reforms, and therefore radical changes, are unlikely. With the exception of the role of the Employment Court, institutional arrangements and bargaining outcomes under the Employment Contracts Act have become reasonably stable and are unlikely to be radically altered. The role of the Employment Court and to a lesser extent the Employment Tribunal is under threat and a more gradual move towards further liberalization of the labor market through changes to personal grievance procedures and bargaining process requirements cannot be ruled out. This research was funded by a grant from Public Good Science Fund administered by the Foundation for Research, Science and Technology (FRST Contract: VUW F514).     

Union membership,economic rents,and migration behavior

This study represents an extension of the human capital paradigm as it relates to an individual’s decision to migrate. It differs from previous studies by incorporating union membership, a labor market variable, into the model. In effect, the National Labor Relations Act of 1935 granted a monopoly bargaining position to unions. The theoretical implication of a union’s monopoly bargaining position is that union wage levels will increase relative to nonunion wages. The increase of relative wages results in union membership granting a property right that possesses positive net present value and hence reduces an employed union member’s probability of migrating. Additionally, the supra-competitive remuneration of union members results in a surplus of labor supplied to union firms. Employers respond by using quality screening to hire workers from the larger labor pool. As a result, unemployed union members will on average possess higher levels of human capital, which will increase their probability of migrating above that of their unemployed nonunion cohorts.     

集体协商与“国家主导”下的劳动关系治理——指标管理的策略与实践

中国集体协商依靠"国家主导"模式,走出了一条完全不同于欧美国家的道路。国家推动集体协商的主要目的不在于推动劳资博弈,而是要把劳资双方都纳入到法律制度框架之内,使劳资双方行为能够法制化和契约化。但是,国家规范劳动关系并非简单控制,而是通过指标管理实现对基层产业秩序的治理。所以,指标管理成为国家推动集体协商制度建设的核心策略,地方政府和工会围绕考核指标,调用各种资源来提高集体合同数量。在实践工作中,地方政府"第三方"的角色发生了转变,同时工会"代理政府"的角色也得以强化,集体协商的本质则从劳资博弈转变成党政联合工会与资方的讨价还价行为。     

Partial strikes under the railway labor act: The need for a doctrine of unprotected concerted activity

In light of use by airline unions of partial-strike tactics, such as concerted refusals to bid for overtime work and so-called ” CHAOS” tactics involving unannounced refusals to fly after passengers have been ticketed and are ready to board, the authors examine whether the Railway Labor Act (RLA) should be interpreted to permit employers to discipline employees for engaging in such tactics, or whether these are a protected form of economic pressure. Although in many respects bargaining duties and economic weapons under the RLA are read consonant with precedents under the National Labor Relations Act (NLRA) (which governs all industries other than rail and air transport), there are a few decisions suggesting that during the period when self-help may be resorted to, employees can engage in partial strike activities as long as they violate no court order but are subject to permanent replacement in limited circumstances. These decisions, the authors submit, fail to take account of Supreme Court decsions since the 1930s that some economic pressures by unions, such as slowdowns and sitins, may not violate the labor laws but nor are they protected by those laws so as to immunize partial strikers from employer discipline. These decisions are not based on unique features of the NLRA. Rather, they give recognition to the background assumptions of Congress that employers may act to protect their property interests as long as they do not run afoul of NLRA or RLA protections and that employees who engage in partial-strike activities are subject to employer discipline even where not strictly necessary to maintain operations. Moreover, these tactics skew the bargaining process by giving employees an essentially risk-free gambit to pressure their economic position through planned disruption of carrier operations. Professor Estreicher is also labor and employment counsel to O’Melveny & Myers, LLP. The views expressed herein are the authors’ and should not be attributed to any organization. Hannah Breshin and Tom Jerman of O’Melveny & Myers, assisted the authors with this article. We also thank Professor Herbert Northrup for his helpful comments.     

Optimal income taxation with Kalai wage bargaining and endogenous participation

This paper characterizes the optimal redistributive tax schedule in a search–matching framework where (voluntary) nonparticipation and (involuntary) unemployment are endogenous and wages are determined by proportional bargaining à la Kalai. The optimal employment tax rate is given by an inverse elasticity rule. This rule depends on the global response of the employment rate, which depends not only on the participation (labor supply) responses, but also on the vacancy posting (labor demand) responses and on the product of these two responses. For plausible values of the parameters, our matching environment induces much lower employment tax rates than the usual competitive model with endogenous participation only. However, optimal employment tax rates are larger (in absolute value) when a given level of the global elasticity of employment is more due to search frictions and less due to participation responses.     

新形势下上海促进就业的机制研究

为推动上海实现更高质量就业,必须通过健全促进就业政策,充分发挥政府、市场、企业与劳动力的合力,以经济发展创造就业岗位,不断提升就业质量,持续扩大就业总量。深入推进城市空间结构调整,有效加快郊区新城建设步伐,充分发挥郊区新城分流人口、扩大就业与推动增长的作用。继续完善创业环境,构建鼓励创业的城市文化与社会氛围,深入促进新兴业态发展,切实发挥创业促就业的作用。进一步构建和谐劳动关系,努力维护劳动者权益,适时制订、修改、完善劳动政策法规,推进劳动合同签订与工资集体协商机制,充分发挥失业保险和社会保障体系推动就业的应有作用。     

The impact of deregulation on labor demand in class-I railroads

This paper examines the impact of the Staggers Rail Act of 1980 on labor demand in Class-I railroads during 1961–1990. The demand for labor is a function of output, hourly wage rates, a time trend, and a vector of interactive dummy variables. Since deregulation, the labor demand curve has shifted downward; wage elasticities have become more elastic, ranging from −0.668 in 1980 to −1.187 in 1990; output elasticities trended upward from 0.557 to 0.809; and the marginal product of labor rose from 3.421 to 5.296 during 1980–1990. These findings suggest that unions’ bargaining power has declined, that the total wage bill is likely to decrease if the real wage rate rises further, and that cost savings and efficiency gains are realized through increases in the marginal product of labor. We thank an anonymous referee and Henry McFarland for insightful comments and assistance.     

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.