Skilling and deskilling: technological change in classical economic theory and its empirical evidence

This article reviews and brings together two literatures: classical political economists’ views on the skilling or deskilling nature of technological change in England, during the eighteenth and nineteenth centuries when they wrote, are compared with the empirical evidence about the skill effects of technological change that emerges from studies of economic historians. In both literatures, we look at both the skill impacts of technological change and at the “inducement mechanisms” that are envisaged for the introduction of new technologies. Adam Smith and Karl Marx both regarded the deskilling of the labour force as the predominant form of biased technical change, but other authors such as Charles Babbage also took account of capital-skill complementarities and skill-enhancing effects of technological change. For Smith, the deskilling bias was an unintended by-product of the increasing division of labour, which in his view “naturally” led to ever more simplification of workers’ tasks. As opposed to Smith, Marx considered unskilled-biased technical change as a bourgeois weapon in the class struggle for impairing the workers’ bargaining position. Studies of economic historians lend support to Marx’s hypothesis about the inducement mechanisms for the introduction of unskilled-biased innovations, but have produced no clear-cut empirical evidence for a deskilling tendency of eighteenth- and nineteenth-century technological change as a whole. Industrialization in the eighteenth and nineteenth centuries rather led to labour polarization, by simultaneously deskilling a large part of the workforce and raising the demand for some (but fewer) high-skilled workers.     

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.     

The influence of legal status on the labor market impact of immigration

This article explores US labor market changes that would take place as a result of an amnesty that would regularize the status of undocumented workers without changing the total size of the alien workforce. The theoretical analysis suggests that the influence of legal status on market wage rates and on minimum wage enforcement is weak and that to the extent that there is an effect, it depends on particular institutional arrangements. Although data are not adequate for a definite measurement of these effects, those data that are available support this conclusion. It appears that the presence of undocumented as opposed to resident aliens can weaken union organizing efforts.     

FEAR AND LATHING IN THE MICHIGAN FURNITURE INDUSTRY: EMPLOYEE-BASED DISCRIMINATION A CENTURY AGO

We analyze employee-based discrimination using historical data on workers attributes from Michigan's furniture industry. The data provide compelling evidence of employee-based discrimination in the form of a compensating wage differential. A one percentage point decrease in the share of the work force from the worker's own ethnic group increased the wage about 0.1 percent. This response was larger in small firms, in small towns, and among certain ethnic groups. Protestants were generally paid more to work with Catholics. The additional labor costs generated by employee-based discrimination were probably offset by several benefits which rendered complete segregation unnecessary.     

A DISEQUILIBRIUM MODEL OF A HIRING-HALL LABOR MARKET

This paper analyzes a labor market in which workers possess incomplete information about their exchange opportunities. Within this environment workers allocate time to the acquisition of job-related information. Rules are specified determining where workers will seek employment and how firms will vary wages in response to workers' choices. Assuming a change in workers' notional labor supply, the paper then analyzes the dynamics of labor market disequilibrium. Two principal conclusions emerge: (1) Workers' time costs of acquiring information rise during disequilibrium. (2) In general the final wage differs from the wage that would prevail if a Walrasian auctioneer guided the labor market's adjustment.     

The Wages of Aging: Time-Related Determinants of Earnings in the Southern Textile Industry*

The author distinguishes three time-related worker characteristics: physical facility, skill, and firm attachment. In an analysis of wage determination for a sample of textile production workers physical facility and firm attachment, but not skill, had significant curvilinear effects, These, along with exogenous effects of gender and race and endogenous effects of assignments to machine maintenance and to a weave room, are interpreted as reflecting power relations in the contemporary context of the southern textile labor process and labor market. The analysis emphasizes the critical importance of contextual considerations in operationalization, specification, and interpretation for wage determination studies.     

The relationship between employer‐provided training and the retention of older workers: Evidence from Germany

A substantial portion of Germany's workforce will soon retire, making it difficult for businesses to meet their human capital needs; training older workers may help to manage this demographic transition. The authors therefore examine the relationships between employer‐provided training programmes, wages and retirement among older workers. They find that when establishments offer special training programmes targeted at these workers, women – especially low‐paid women – are less likely to retire, possibly because of consequent wage growth. Their results suggest that such targeted training can indeed play an important role in retaining low‐wage older women and advancing their careers.     

PARETO IMPROVING MINIMUM WAGE LAWS

By increasing the expected wage in low skill jobs, a minimum wage law can reduce the incentive for low skill workers to imitate high skill workers in the signalling process. The gain from reduced investment in the signal can more than offset the loss from unemployment among low skill workers so that total output increases. Moreover, with an appropriate poll tax on workers to compensate owners of capital, the law can make all workers and owners of capital better off.     

The Causes and Consequences of Immigrant Labour in the Construction Sector in Malaysia

Malaysian construction is highly dependant on immigrant labour; immigrants account for nearly 70 per cent of its workforce. Although they have aided the sector's rapid expansion, it has not been without costs. This paper examines the impact of immigrant labour on construction. The main finding is that immigrants, being largely unskilled, did not contribute to skill formation. Instead, they accumulated skills on‐the‐job, which were lost when they returned home. There was no evidence that immigrants displaced domestic workers since they were concentrated in jobs rejected by Malaysians. Furthermore, unlike in earlier periods, legal immigrants were no longer a cheap option, given the regulations governing their employment. They were not used to cut costs per se, but were used because domestic workers were not available in sufficient numbers. Despite the large immigrant presence, the general wage level increased, though admittedly not as rapidly as it might have in their absence. The reliance on immigrant workers has increased the need for supervision and quality control, thereby reducing the savings in cost; nonetheless, immigrants have helped keep costs in check. Surprisingly, rising wages and the continued shortage of labour have not led to a widespread adoption of labour‐saving methods. This is partly because productivity increases have managed to outpace wage increases, though this advantage is petering out. Also, immigrant presence has kept wages, as a proportion of total costs, manageable. The over reliance of the sector on immigrant labour is not desirable, especially since the majority is drawn from one source ‐ Indonesia. Any disruption of supply from this source can undermine the Malaysian economy. To avoid this, Malaysia must vary its source of immigrant labour and intensify efforts to attract domestic workers by improving conditions in construction.     

MINIMUM WAGE EFFECTS WITH OUTPUT STABILIZATION

What are the effects of legal minimum wage rates on the U.S. economy? Does minimum wage legislation promote the economic self-interest of high wage union labor and impede the economic self-interest of capitalists as our earlier research [Cox and Oaxaca 1982] suggested? This paper uses a nine sector econometric/simulation model of U.S. industry from 1975–1978 to answer these questions in the context of stabilization policies which hold aggregate real output constant. While most simulated percentage effects are small, those for the unskilled workers themselves are not. A 15.7 percent increase in the average nominal wage rate of unskilled labor, as a result of minimum wage legislation, produced an 11 percent decrease in unskilled employment, 2.2 million jobs lost, while increasing the real wage of unskilled workers by 15 percent. Simulated changes in several key variables support our earlier observations that the self-interests of labor unions, with skilled workers, conflict with those of capitalists over the issue of minimum wage legislation.     

The nonprofit leadership deficit: A case for more optimism

Recent headlines claim that a looming nonprofit leadership crisis will soon be precipitated by retiring baby boomers. Analysis of baby boom demographics, using national census data on the age distribution and other demographic characteristics of top leaders by sector, confirms the aging nonprofit workforce. However, the issue of whether the aging workforce portends a nonprofit leadership crisis, when analyzed within a theoretical framework of supply and demand in the market for nonprofit executives, reveals flaws in most commentaries about the leadership crisis. Workings of the labor market and nonprofit organizations themselves suggest trends that could be expected to affect labor supply and demand and mitigate a leadership deficit. Reasonable—and likely—market and organizational adjustments, including higher executive pay, increased labor force participation of older workers, skill acquisition of younger workers, possible consolidation of nonprofit organizations, board and volunteer skill sharing, and even venture philanthropy, can be expected to moderate the shock of baby boom retirements, much in the way that schools, job markets, and housing markets have accommodated the movement of this “bulging” generation through earlier decades of their lives.     

The role of foreign workers in the seasonal fluctuations of the French economy

The few studies that have been carried out only take into account the annual inflows of seasonal immigrants. This present article covers 2 other aspects of the problem: 1) the seasonal nature of immigration in general and 2) above all the role of permanent immigrant workers in certain sectors influenced by seasonal changes. The number of permanent first-time immigrants is determined, among other causes, by the need for a certain seasonal regulation of overall economic activity. The role of the foreign work force is o fparticular importance in 3 sectors influenced by seasonal changes, and it fulfills a function of seasonal regulation of activity in at least 2 of these sectors: the building trade and agriculture. However, the recognition of the need for seasonal regulation has been used as a pretext for making employment more unstable, in particular for permanent immigrant workers, many of whom cannot find work for the whole year. Seasonal work also plays a key role in agriculture and the hotel trade. Moreover, the part played by illegal immigrants is decisive, not only in these 2 sectors, but throughout the illegal labor market. In the years to come it is likely that seasonal immigration will continue to fall perhaps by half, as a result of mechanization in general, its application in grape-harvesting, and the adoption of new farming techniques. However, it will probably remain sufficiently high to make up for the lack of a national reserve of seasonal labor, especially in vegetable and fruit farming, lumbering, and catering. Seasonal immigration will doubtlessly continue also because it puts a downward pessure on the average wage and makes employment more precarious. It also constitutes a reserve of illegal labor, which can be used in sectors which have a crucial impact on the balance of goods and services in France. These advantages for the French government and employers are above all disadvantages for the seasonal immigrant workers themselves, whose living and health conditions are increasingly catastrophic.     

DO MINIMUM WAGE INCREASES INFLUENCE WORKER HEALTH?

This study investigates whether minimum wage increases impact worker health in the United States. We consider self‐reported measures of general, mental, and physical health. We use data on lesser‐skilled workers from the 1993 to 2014 Behavioral Risk Factor Surveillance Survey. Among men, we find no evidence that minimum wage increases improve health; instead, we find that such increases lead to worse health outcomes, particularly among unemployed men. We find both worsening general health and improved mental health following minimum wage increases among women. These findings broaden our understanding of the full impacts of minimum wage increases on lesser‐skill workers. (JEL I1, I11, I18)     

Union wages, rents, and skills in health care labor markets

We examine the effect of unions on the earnings of health care workers, with emphasis on the measurement and sources of union wage premiums. Using data constructed from the 1973 though 1994 Current Population Surveys, standard union premium estimates are found to be substantially lower among workers in health care than in other sectors of the economy, and to be smaller among higher skill than among lower skill occupational groups. Longitudinal analysis of workers switching union status, which controls for worker-specific skills, indicates a small impact of unions on earnings within both high and low skilled health care occupations. Evidence is found for small, but significant, union threat effects in health care labor markets. It has been argued that recent legal changes in bargaining unit determination should enhance union organizing and bargaining power. Although we cannot rule this out, such effects are not readily apparent in our data. The authors appreciate the assistance of David Macpherson, who helped develop the CPS data files used in the paper.     

Contracts,Labor Supply and Income Targeting

In many professions and personal services, a firm offers a contract with either proportional revenue sharing of the worker’s output or a contract with 100% revenue accruing to the worker in exchange for a fixed (debt) payment. Contingent on the contract, the worker chooses the mechanism to achieve the desired level of productivity. A higher revenue split induces the worker to be more productive in output per hour resulting in a higher wage. The relevant price of effort is the after-split, after-tax wage controlled for after-tax household income. Incentives through a higher split raise productivity and the return to effort. The sample is 1,559 U.S. real estate sales professionals paid on contract splits in 2007 and choosing their hours and effort. The compensated labor supply elasticity is positive and between approximately zero and 0.3 suggesting the absence of income targeting for these workers on split and 100% revenue contracts. But the inclusion of contractual income split provisions in the model substantially increases the labor supply elasticity.     

Labor market adjustments in the unionized contract construction industry

The unionized construction labor market reaches equilibrium by means of three adjustment mechanisms: wage changes, changes in the quality of workers hired, and the migration of workers in and out of the market. The relative importance of the three mechanisms in local labor markets depends on laws and institutional rules. This paper examines some of the important institutional rules and presents a model of market clearning where wage adjustments are infrequent.     

The Effects of Prevailing Wage Laws: A Comparison of Individual Workers'' Wages Earned on and off Prevailing Wage Construction Projects

I evaluate the effects of prevailing wage laws using a unique data set that shows the wages paid to workers on prevailing wage projects and the wages paid to the same workers during the same time period for work on projects not covered by prevailing wage regulations. The wage comparison shows that workers are generally paid more for work on prevailing wage projects than they are for work on non-prevailing wage projects. Thus, prevailing wage laws likely do increase the cost of public construction. In addition, to the extent that the quality of construction is improved, prevailing wage laws appear to be an inefficient mechanism by which to achieve additional quality, as the regulations often result in workers being paid more than they earn in the private market.     

THE POLITICAL ECONOMY OF MINIMUM WAGE LEGISLATION

Two questions are addressed in this paper. (A) Why do labor unions and certain employer organizations respectively promote and impede minimum wage legislation? (B) Do these groups have significant impacts on minimum wages? Question (A) is examined in the context of models that identify the economic self-interest of unionized skilled workers and capitalists in legal wage floors. Question (B) is approached by a median legislator utility maximization model that leads to Tobit estimation of the relationship between state minimum wage rates and measures of statewide organized labor and capital and average hourly earnings.     

Voluntary contributions and wages in nonprofit organizations

Voluntary work provides a major source of labor for many nonprofit organizations. Consequences of volunteers and paid staff working alongside each other in nonprofits are well documented. This article contributes to this strand of literature and investigates whether the presence of volunteer work influences paid employees' wages in nonprofit organizations. We estimated a multilevel wage equation accounting for personal characteristics of workers and characteristics of nonprofits. The analysis revealed that nonprofit organizations engaging volunteers pay lower wages to their employees. Our findings contribute to the understanding of wage‐setting behavior of nonprofits and improve the methodological approach of empirical research in this field.