Does Rent‐sharing Profit Female and Male Workers? Evidence from Israeli Matched Employer–Employee Data

This paper analyses the impact of workplace characteristics on individual wages based on a unique cross‐section matched employer–employee data set for the Israeli private manufacturing sector in 1995. Specifically, we examine the effects of the interaction between profit‐sharing and wages on the gender wage gap. The empirical findings show that individual compensation is significantly and positively correlated with firms’ profits‐per‐employee, even when controlling for all of the following: group effects in the residuals, individual and firms’ characteristics, industry wage differentials and endogeneity of profits. Wage–profit elasticity is found to be 11 per cent and it does not significantly differ between genders. With respect to the overall gender wage gap (on average women earn 28 per cent less than men), the results show that within firms there is no gender discrimination and that 12 per cent of this gap can be explained by the wage–profits profile and by the fact that women are more likely to be employed in less profitable firms than men.     

The Determinants and Some Consequences of Unemployed Workers' Wage Demands

This paper studies the determinants and consequences in the early stages of the hiring process of unemployed workers' wage demands using direct data on workers' wage requests. We show that most unemployed workers want a wage close to their previous wage, and thus much more than they get in unemployment benefits. However, some groups, such as women, tend to demand lower wages. Moreover, we find that workers with high wage demands are contacted by firms less often than otherwise similar workers with lower wage demands. Thus, our results suggest that too high wage demands may contribute to high unemployment.     

Employability of Young Italian Men after a Jobless Period, 1989–98

In this paper we investigate the existence of negative jobless duration dependence and the impact of jobless spells on future wages. Our findings are somewhat out of line compared with analogous explorations. We find evidence of very long unemployment duration of the young male labor force, higher than reported anywhere else in Western Europe, as well as large negative unemployment duration dependence. On the other hand, young Italian men experiencing jobless periods in their early careers face small re‐employment wage losses. Such losses do increase with the duration of joblessness, but they are lower than reported in the USA, Canada, the UK, France, and Spain.     

The Widening Black‐White Wage Gap among Women

We utilize over 30 years of the Current Population Survey to examine labor force participation and wage patterns among five cohorts of white and black women. By estimating wages using four selection correction techniques in determining the wage gap for women who are not in the labor force, we provide evidence of the changing role of selection among women over time. We find an increasing observed wage gap between white and black women for younger cohorts; however, the decline in selection for both black and white women does not explain the rising wage gap.     

Social Network and Wage: Evidence from Cameroon

Using Cameroonian data, this paper investigates the effects of social network on wage. Social network is measured in terms of using friends and relatives while looking for a job. In order to evaluate the effectiveness of social network with regard to wage, we make use of Heckman selection model. Our findings contrast with previous studies. After factoring the endogeneity and sample selection, we find that Job seekers who make use of social network exhibit a wage premium of 1.53 per cent of average wage. We also find that social network contributes to explain wage differential according to gender and institutional sectors (formal versus informal).     

Unemployment Duration of Spouses: Evidence From France

This paper analyses the conditional probability of leaving unemployment of French married individuals from 1991 to 2002. We find that the effect of spousal labor income on unemployment duration is asymmetric for men and women. In particular, the probability of men to find a job is increasing in wife's labor income, while it is decreasing in husband's earnings for women. To adjust for endogenous selection into marriage, we use the quarter of birth as an instrumental variable for the spousal wage. Finally, we show that introducing a breadwinner stigma in a joint job search model generates the positive correlation observed for men in the data.     

Wage and Productivity Differentials in Japan: The Role of Labor Market Mechanisms

This paper aims at explaining two stylized facts of the Lost Decade in Japan: rising wage inequalities and increasing firm‐level productivity differentials. We build a model where firms can choose between efficiency wages with endogenous effort and competitive wages, and show that it can replicate those facts. Using Japanese microeconomic data, we find support for the existence of efficiency wages in one group of firms and competitive wages in the other group. Based on those results, a simulation shows that the share of firms using efficiency wages has declined, within sectors, during the Lost Decade, as predicted by the model.     

SOCIAL COMPARISON AND EFFORT PROVISION: EVIDENCE FROM A FIELD EXPERIMENT

Social comparison has potentially far reaching consequences in many economic domains. We conducted a field experiment to examine how social comparison affects workers' effort provision if their own wage or that of a co‐worker is cut. Workers were assigned to groups of two, performed identical individual tasks, and received the same performance‐independent hourly wage. Cutting both group members' wages caused a decrease in performance. But when only one group member's wage was cut, the affected workers decreased their performance more than twice as much as when both workers' wages were cut. This finding indicates that social comparison among workers affects effort provision because the only difference between the two wage‐cut treatments is the other group member's wage level. In contrast, workers whose wage was not cut but who witnessed their group member's pay being cut displayed no change in performance relative to the baseline treatment in which both workers' wages remained unchanged. This indicates that social comparison exerts asymmetric effects on effort.     

Better Safe than Sorry? The Effects of Income Risk and Unemployment Risk on Wages

We study the effects of income risk and unemployment risk on individual wages simultaneously. Starting point for the empirical analysis is a portfolio model for the labor market. This model shows positive wage effects for both risks but also a negative interaction effect. Using German administrative panel data we estimate the effects of the income risk, the unemployment risk and their interaction on individual wages separately for men and women in East and West Germany. We find the expected positive wage effects for both risks as well as a negative interaction effect. The marginal effect of income risk on wages is positive, whereas the marginal effect of unemployment risk is negative.     

The Effect of Early Cognitive Ability on Earnings Over the Life‐Cycle

This paper utilizes information on cognitive ability at age 10 and earnings information from age 20 to 65 to estimate the return to ability over the life‐cycle. Cognitive ability measured at an early age is not influenced by the individual's choices of schooling. We find that most of the unconditional return to early cognitive ability goes through educational choice. The conditional return is increasing for low levels of experience and non‐increasing for experience above about 15–25 years. The return is similar for men and women, and highest for individuals with academic education. Only a small part of the return can be explained by higher probability of having a supervisory position.     

Is There a Double‐Negative Effect? Gender and Ethnic Wage Differentials in Italy

This paper investigates the gender and ethnic wage differentials for female migrants in Italy by applying the Oaxaca–Blinder decomposition, with and without Heckman correction, to account for self‐selection into the labour market. The gender wage gap is nearly 15 per cent, more than 60 per cent of which is unexplained by observable differences. The ethnic wage gap is much larger (39 per cent), but endowments explain 53 per cent of the gap. We also estimate the double‐negative effect of being both female and a migrant. A female migrant earns 42 per cent less than an Italian male; the unexplained component is estimated to be 53–65 per cent. Results are robust to different specifications.     

The Gender Wage Gap and Poverty in Colombia

Abstract. Using 19 years of cross‐section wage data, we look at the trend of the ratio of male to female wages in Colombia. First, we observe a long‐term trend towards an increase in the gender wage gap that may be related to new labor regulations giving more protection to women and thereby raising the cost of female employment for firms. Second, we measure the impact on poverty of the increasing gap by producing estimates of the income distribution for the subsequent years had the wage gap remained at the low level it used to be in the early 1990s. As mainly low‐skilled women suffered from the increase in the wage gap, we find that the phenomenon contributed to an overall increase in poverty during the decade.     

SORTING AND THE OUTPUT LOSS DUE TO SEARCH FRICTIONS

We analyze a general search model with on‐the‐job search (OJS) and sorting of heterogeneous workers into heterogeneous jobs. For given values of nonmarket time, the relative efficiency of OJS, and the amount of search frictions, we derive a simple relationship between the unemployment rate, mismatch, and wage dispersion. We estimate the latter two from standard micro data. Our methodology accounts for measurement error, which is crucial to distinguish true from spurious mismatch and wage dispersion. We find that without frictions, output would be about 9.5% higher if firms can commit to pay wages as a function of match quality and 15.5% higher if they cannot. Noncommitment leads to a business‐stealing externality which causes a 5.5% drop in output.     

Minimum Wages as a Barrier to Entry: Evidence from Germany

This study analyses employers' support for the introduction of industry‐specific minimum wages as a cost‐raising strategy in order to deter market entry. Using a unique data set consisting of 800 firms in the German service sector, we show that high‐productivity employers support minimum wages. We further find some evidence that minimum wage support is higher in industries and regions with low barriers to entry. This is particularly the case in East Germany, where the perceived threat of low‐wage competition from Central and Eastern European countries is relatively high. In addition, firms paying collectively agreed wages are more strongly in favour of minimum wages.     

Impact of the Minimum Wage on Youth Labor Markets

We study the effect of the minimum wage on labor market outcomes for young workers using US county‐level panel data from the first quarter of 2000 to the first quarter of 2009. We go beyond the usual estimates of earnings and employment effects to consider how differences across states in the minimum wage affect worker turnover via separations and accessions and job turnover through new job creation and job losses. We find that a higher minimum wage level is associated with higher earnings, lower employment and reduced worker turnover for those in the 14–18 age group. For workers aged 19–21 and 22–24, we find less consistent evidence of minimum wage effects on earnings and employment. But, even for these age groups, a higher minimum wage is found to reduce accessions, separations and the turnover rate.     

Heterogeneous Firm Responses to Rising Teenage Wages

Substantial youth minimum wage changes in New Zealand between 2000 and 2007 raised teenage average wages by 5–10 per cent relative to those for adults. We use Statistics New Zealand's Linked Employer–Employee Database (LEED) to examine whether firms' teenage labour demand responses to these changes are greater for firms with higher teenage‐employment share. We find evidence that high teen‐employers reduced their teen employment relative to other firms and had lower survival rates over the period. However, firms that entered the main teen‐employment industries had higher teen‐employment shares than continuing firms. The results are consistent with endogenous technology adoption in response to non‐marginal changes in relative wages.     

GETTING IT DONE: DYNAMIC INCENTIVES TO COMPLETE A PROJECT

A principal wants an agent to complete a project. The agent undertakes unobservable effort, which affects in each period the probability that the project is completed. We characterize the contracts that the principal sets, with and without commitment. With full commitment, the contract involves the agent's value and wage declining over time, in order to give the agent incentives to exert effort. The best sequentially rational equilibrium for the principal also involves the agent's wage declining over time, while the worst sequentially rational equilibrium for the principal has a constant wage (and is in fact the unique stationary equilibrium). The best (weakly) renegotiation‐proof equilibrium for the principal is achieved by a constant wage that maximizes the principal's payoff, conditional on wages being constant. We compare these solutions to the efficient outcome.     

IMMIGRATION,JOBS, AND EMPLOYMENT PROTECTION: EVIDENCE FROM EUROPE BEFORE AND DURING THE GREAT RECESSION

In this paper we analyze the impact of immigrants on the type and quantity of native jobs. We use data on 15 Western European countries during the 1996–2010 period. We find that immigrants, by taking manual‐routine type of occupations pushed natives towards more “complex” (abstract and communication) jobs. This job upgrade was associated to a 0.7% increase in native wages for a doubling of the immigrants' share. These results are robust to the use of an IV strategy based on past settlement of immigrants across European countries. The job upgrade slowed but did not come to a halt during the Great Recession. We also document the labor market flows behind it: the complexity of jobs offered to new native hires was higher relative to the complexity of lost jobs. Finally, we find evidence that such reallocation was larger in countries with more flexible labor laws.     

The Gender Wage Gap in the Turkish Labor Market

Abstract. This paper examines the sources of the gender wage gap in the Turkish labor market by using matched employer–employee data and the standard wage regression estimations as well as the Oaxaca decomposition method. The extensive number of variables in the data set enables a thorough quantitative analysis of the role of various individual‐ as well as firm‐related factors leading to wage differentials between men and women, namely human capital endowments including job tenure, occupational and industrial segregation, private/public sector location, coverage of the workplace under collective labor bargaining, and firm size. It also examines the extent of gender‐based industry and occupational segregation within the confines of data set and computes the Duncan & Duncan segregation index. We find that a large portion of the gender wage gap is attributable to women's considerably lower levels of work experience and job tenure. Other important variables that lead to pay differentials are women's lower concentration in jobs covered by collective labor bargaining and a substantial degree of occupational and industrial segregation. The differential rates of return to many of the wage determinant variables are also found to be significant in the formation of the gender wage gap.