Evaluating the Introduction of a National Minimum Wage: Evidence from a New Survey of Firms in Ireland

Abstract. In April 2000 the Irish government introduced a national minimum wage of IR£4.40 (€5.58) an hour. We use data from a specifically designed survey of firms to estimate the employment effects of this change. Employment growth among firms with low‐wage workers prior to the legislation was no different from that of firms not affected by the legislation. A more refined measure of the minimum wage, however, suggests that the legislation may have had a negative effect on employment for the small number of firms most severely affected by the legislation. However, the size of these effects is relatively modest.     

More Jobs Through Less Employment Protection? Evidence for West Germany

ABSTRACT: In reaction to growing criticism of the allegedly negative employment effects of job protection regulations (lay-off and dismissal restraints), the West German government in 1985 introduced new legislation facilitating the conclusion of temporary (i.e. fixed-term) work contracts in order to stimulate employment growth (‘Employment Promotion Act 1985‘AZPA). The research unit ‘Labour Market and Employment‘ at the WZB has evaluated the employment and labour market impact of the new legislation for the period 1985-1988, and apart from providing a detailed analysis of the socio-economic and institutional diversity of job arrangements covered by the category of temporary (i.e. fixed-term) employment, the project‘s focus has been on the impact of minor changes in the institutional frame- work as effected by the EPA on firms‘ employment policies, as well as on the overall level of employment. Results show that like in most other European countries the temporary work force in Germany has considerably grown over the past years in both absolute and relative terms, this increase, however, being largely due to cyclical factors as well as medium-term structural changes on the supply and demand side of the labour market rather than to changes in the regulatory framework as effected by the EPA. The impact of the new regulations on firms‘ hiring decisions and on the overall number of hirings in the total economy have to be regarded as rather modest, in fact amounting to not more than an estimated 25,000 additional hires per year or roughly 0.5|X% of all employment contracts concluded in the private sector. This marginal positive impact on firms‘ employment decisions, however, is counterbalanced by unintended substitution effects and an increase in involuntary quits arising from them when labour demand declines. Even under the overall positive employment development given in the period under investigation the net employment effects of the EPA temporary work legislation thus are shown to be at best marginal. In case of a deterioration of the overall economic situation, however, the increase in temporary job arrangements supported by the new legislation is likely to lead to accelerated workforce adjustments by firms and thus over time to result in a depression of the overall level of employment. From a theoretical point of view, the findings suggest that measures aiming at de-regulating labour relations such as the EPA largely fail to modify essential behavioral parameters of economic actors in economic environments which for decades have adjusted to a relatively high level of welfare state regulation, as has been the case in Western Germany.     

Employment Adjustment at the Firm Level. A Theoretical Model and an Empirical Investigation for West German Manufacturing Firms

In this paper, employment adjustment at the firm level is estimated with a large panel of business survey data from West German manufacturing. The specification is based on a framework of monopolistic competition in the product market. Special emphasis is devoted to the analysis of the impact of demand uncertainty, capacity constraints, technological change and competition. The empirical results reveal that demand uncertainty and capacity constraints significantly affect employment adjustment. Innovative firms are more successful; they increase employment and exhibit a higher utilization of capacities. Employment adjustment also depends on competition. In monopolistic markets, the volatility of employment is higher.     

Managerial prerogatives,employee expectations,and property rights in job security: Institutionalizing the “new equity”

Changes in the structure and provisions of the employment relationship create substantial challenges for the management community. The employer-manager's traditional prerogatives to terminate at will are being eroded in response to changing socioeconomic values that recognize the emergence of an employee's reasonable expectations of job security. The United States lags far behind the international community in protecting these expectations. The authors survey the erosion of the employment-at-will doctrine, and review the concepts of corporate due process and property rights relating to employment. To ensure the institutionalization of this new equity, the authors call on the management community to take the initiative in crafting progressive legislation that strikes a sensible balance between managerial prerogatives and employee expectations of job security.     

Approaches to Equity Management and their Relationship to Women in Management

Developing equitable practices that provide fair access for all individuals to the benefits and burdens within an organization remains a dilemma for management both in policy and in practice. Research continues to show that the employment status and representation for members of some groups is significantly less than in relation to those of other groups. Addressing the issue of disparity has resulted in a number of different approaches. The main aim of this paper is to explore the ability of a typological theory of equal employment opportunity implementation to account for the differences in the numbers of women in management and in management tiers. This paper identifies and analyses four ideal-typical equity management approaches to achieving workplace parity: traditional (non-compliance), anti-discrimination, affirmative action and equal employment opportunity. While the objective of these approaches may be to ensure equity management in order to encourage equal outcomes the results tell a different story. Results show that an affirmative action approach to equity management predicts increases in women in management across all tiers of management.     

DISENTANGLING THE MINIMUM WAGE PUZZLE: AN ANALYSIS OF WORKER ACCESSIONS AND SEPARATIONS

Changes in the legislation in the mid‐1980s in Portugal provide remarkably good conditions for analysis of the employment effects of mandatory minimum wages, as the minimum wage increased sharply for a very specific group of workers. Relying on a matched employer‐employee panel data set, we model gross worker flows—accessions and separations—in continuing firms, as well as in new firms and those going out of business, using a count regression model applied to proportions. Employment trends for teenagers, the affected group, are contrasted to those of older workers before and after the raise in the youth minimum wage. The major effect on teenagers of a rising minimum wage has been the reduction of separations from the employer, which, during the period under analysis, has compensated for the reduction of accessions to new and continuing firms. In this sense, our results can reconcile some of the previous evidence in the empirical literature when analyzing the aggregate impact of the minimum wage on youth employment without decomposing it by type of worker flow. (JEL: D21, J23, J38)     

Women and Part-time Work: The Careers of Part-time NHS Nurses

This paper examines theoretical explanations of the employment disadvantage experienced by many female part-time workers. Data from a survey of 643 qualified National Health Service (NHS) nurses is used to establish employment profiles of respondents. Employment profiles reveal that, contrary to many predictions, part-time female nurses do not 'invest less' in their careers than their full-time counterparts in terms of qualifications and experience. Neither are part-time nurses relatively 'uncommitted' to their careers compared to full-time nurses. It is found that the organizational context affects how opportunities are structured for part-time nurses. The management implications of the findings for the NHS are also considered.     

Financing Unemployment Benefits: Dismissal versus Employment Taxes

Abstract. This paper investigates the effects of using dismissal taxes to finance unemployment benefits. We compare dismissal and employment taxes in a model with search frictions. Employment taxes give rise to externalities because firms do not take into account the effects their dismissal decisions have on others. These externalities can be tackled by using dismissal taxes to finance unemployment insurance. Taking into account the budget for unemployment insurance, employment taxes can be reduced by more than is necessary to offset the adverse effect of dismissal taxes on the value of the firm. The introduction of dismissal taxes leads to higher job creation and lower unemployment.     

Brexit,Private Equity and Management

We analyse the expected impact of Brexit on private equity and its implications for management research. Specifically, we explore the implications for private equity funds and funding, and at the portfolio firm level with respect to employment and performance.     

The Interaction between Income Support Programs

Employment insurance (EI) and social assistance (SA) represent two key income support programs in Canada. The structure of these programs is similar to those found in many countries where unemployed individuals may use a number of sources to fund job‐search activities and provide income support during periods of diminished employment income. In this paper, we examine the nature of the interaction between the programs and their overall impact on labor market outcomes. We use the 1997 Canadian Out of Employment Panel data set to examine behavior of a set of individuals following the loss of employment. Results indicate that reductions in the generosity of SA results in lower use of both income support programs. Conversely, if the generosity of the EI program is curtailed this reduces use of the EI program and leads to greater use of the SA program.     

Impact of the Equal Employment Opportunity and Affirmative Action Programs on the Employment of Women in the US

Abstract. This study examines the impact that Equal Employment Opportunity and affirmative action programs that were implemented in 1965 have had on the employment of women relative to that of men in the United States. Using time series data covering the period 1947-1988. the results indicate that women in the 20-54 age group benefitted in terms of greater stability of employment (i.e. less sensitivity to short-run variations in employment) over the period 1965-1980 while they lost some of these gains over the period 1981-1988 (corresponding to the tenure of the Reagan Administration). Men in the same age group, on the other hand, experienced the opposite effect. That is. men in the 20-54 age group became more sensitive to short-run variations in employment over the period 1965-1980 and less sensitive over the period 1981-1988. The evidence also indicates that the EEO and affirmative action programs had the effect of increasing the share of projected employment of women in the 20-24 age group and in the 55-64 age. group while decreasing the share of projected employment of men in the comparable age groups.     

Internet‐Based Employer Search and Vacancy Duration: Evidence from Finland

This study investigates the effect of the introduction of the public employment agency's Internet‐based service on the duration of employer search. The analysis exploits the introduction of a web‐based service by the Finnish Employment Agency in October 2002. The results, based on information on job vacancies announced via the public employment agency between 2002 and 2003, indicate that the introduction of the web service, in general, shortened the duration of employer search. However, we find that the introduction of the web‐based service shortened the average duration of vacancies in some regions but not in others. In addition, employers in urban areas were more likely to benefit from the introduction of the online service.     

THE EFFECT OF EMPLOYMENT PROTECTION ON WORKER EFFORT: ABSENTEEISM DURING AND AFTER PROBATION

Employment protection systems are widely believed to generate distortions in firms' hiring and firing decisions. However, much less is known about the impact of these regulations on workers' behavior. In this paper we provide evidence on the latter question using data from a large Italian bank. Our analysis is based on weekly observations for 545 men and 313 females hired as white‐collar workers between January 1993 and February 1995. These workers begin to be protected against firing only after the 12th week of tenure, and we observe them for one year. We show that—particularly for men—the number of days of absence per week increases significantly once employment protection is granted at the end of probation. This suggests that the provision of employment protection causes the increase in absenteeism. Alternative explanations based on career concerns or on learning about social norms would predict a smooth relationship between absenteeism and tenure instead of the observed discrete jump. This consequence of employment protection seems to have been neglected in European policy debates so far. (JEL: J2, D2, D8, M5)     

JEEA‐FBBVA Lecture 2012: USE AND ABUSE OF AUTHORITY: A BEHAVIORAL FOUNDATION OF THE EMPLOYMENT RELATION

Employment contracts give a principal the authority to decide flexibly which task his agent should execute. However, there is a tradeoff, first pointed out by Simon (1951, Econometrica, 19, 293–302), between flexibility and employer moral hazard. An employment contract allows the principal to adjust the task quickly to the realization of the state of the world, but he may also abuse this flexibility to exploit the agent. We capture this tradeoff in an experimental design and show that principals exhibit a strong preference for the employment contract. However, selfish principals exploit agents in one‐shot interactions, inducing the latter to resist entering into employment contracts. This resistance to employment contracts vanishes if fairness preferences in combination with reputation opportunities keep principals from abusing their power, leading to the widespread, endogenous formation of efficient long‐run employment relations. Our results inform the theory of the firm by showing how behavioral forces shape an important transaction cost of integration—the abuse of authority—and by providing an empirical basis for assessing differences between the Marxian and the Coasian view of the firm, as well as Alchian and Demsetz's (1972, American Economic Review, 62, 777–795) critique of the Coasian approach.     

Why Rates of Growth of Employment Differ: A Quantitative Approach to an International Comparison

ABSTRACT: This essay aims at presenting a quantitative assessment of the incidence of structural differences in output and employment composition, and of differential dynamics of the sectoral production and productivity, in order to explain the divergences in net employment growth in advanced market economies. The point of reference is the extremely divergent record, in terms of employment creation, of the United States on one hand, and Western European countries on the other. In the period 1973-80, for example, although the average growth rates of GNP were, on a cyclical average, similar in the U. S. A. and the EEC areas as a whole, additional job openings were about 14 million in the USA against less than half a million in the EEC. A structural, medium-run differential in the aggregate Employment/GNP elasticity appears to have characterized the performances of these economic systems. The 'source’of this differential are analyzed, utilizing a model of sectoral decomposition of employment and output trends. Simulation exercises are carried out, in order to assess the specific role of productivity, sectoral demand composition and sectoral employment composition, in determining the overall elasticity result. The comparative analysis takes into consideration the differential factors for the USA and Japan, together with the four major Western European countries (German Fed. Rep., France, Italy, and the United Kingdom).     

The Effect of Unemployment Insurance Generosity on Unemployment Duration and Labor Market Transitions

This paper examines the impact of unemployment insurance (UI) benefit generosity on labor market transitions in Turkey from 2002 to 2012. Using a unique administrative dataset, I take advantage of a sharp discontinuity in treatment assignment at 900‐paid‐premium‐days to identify the impact of generosity on the outcome variables. I find that unemployment benefit duration is increased by approximately 0.07 weeks per additional week of UI. However, more generous benefits lead to lower probabilities of transition to employment and the impact is greater compared to developed countries. In addition, workers who are entitled to longer UI periods have lower probabilities of cheating the system and rejecting the services of the Turkish Employment Agency.     

Working women in the European community—The future prospect

EEC regulations direct that as well as equal pay for equal work, women should have equal access to employment. However, obvious distinctions between male and female employment still abound in European countries—though they vary from one country to another—and the difficulties in implementing the legislation are further compounded by the effects of the recession. Business and government will have to plan for the growing demand of women to work and the authors examine the major problems which have to be addressed.     

Economic Growth,Employment and Labour Force Development in Western Europe: Trends and Prospects to the Year 2000

ABSTRACT: One of the most disquieting features of the situation prevailing in many European market-economy countries over the last fifteen years has been the persistence of high levels of unemployment. Employment and labour force prospects were recently examined by the experts of the United Nations Economic Commission for Europe as part of the process for the preparation of an Overall Economic Perspective to the Year 2000. The purpose of this paper is to briefly present some of the scenarios which were prepared for this project and to examine some of their main implications, particularly with respect to the overall labour demand and supply balance in western Europe. Particular attention is paid in the paper to the process of working time reduction, the emergence of new patterns of work and their possible impact on employment prospects.     

IDENTIFYING THE SOURCES OF LOCAL PRODUCTIVITY GROWTH

Using firm‐level based TFP indicators (as opposed to employment‐based proxies) we estimate the effects of alternative sources of dynamic externalities at the local level. In contrast to previous empirical work, we find that industrial specialization and scale indicators affect TFP growth positively, while neither product variety nor the degree of local competition have any effect. Employment‐based regressions yield nearly the opposite results, in line with most of previous empirical work. We argue that such regressions suffer from serious identification problems when interpreted as evidence of dynamic externalities. Our results question the conclusions of most of the existing literature on dynamic agglomeration economies. (JEL: R11, O47)