Union rent seeking and import competition

conclusion We empirically evaluate two issues: (1) how the union rent seeking responds to import competition and (2) whether union bargaining power, as proxied by the proportion of the labor force in an industry that is unionized, moderates the impact of import com-petition on union wage differentials. Unlike other studies, our emphasis is on the influ-ence of import competition on union rent seeking, rather than on union wages per se. Our primary results indicate that while import competition negatively and significantly affects union rent seeking, the extent of unionization does not substantially influence the impact of import competition on the union wage differentials. This is a somewhat surprising result since the literature suggests that union wages are greater in the pres-ence of stronger unions.     

Does International Outsourcing Really Lower Workers’ Income?

We analyze the impact of international outsourcing on income, if the domestic labor market is imperfect, i.e. there is a bilateral bargaining between a firm and a labor union. In our analysis we distinguish between the cases where the parties negotiate over the wage only and where they negotiate over both wage and profit sharing. We find in the first case that outsourcing has an ambiguous effect on the workers’ income, while it increases the workers’ income in the second case. For the optimal amount of international outsourcing, we find that, depending on the wage effect of outsourcing, in a pure wage bargaining system it can be higher or lower than the level where domestic and foreign marginal labor costs are the same. In contrast, in a wage and profit share bargaining system, the amount of outsourcing lies below this level.     

Firm Ownership and Rent Sharing

In this paper we analyse—theoretically and empirically—how the degree of private versus public ownership of firms affects the degree of rent sharing between firms and their workers. Using a particularly rich linked employer-employee dataset from Portugal, covering a large number of corporate ownership changes across a wide spectrum of economic sectors over more than 20 years, we find that rent sharing is significantly higher in firms with a larger share of private ownership. Estimates from our most preferred empirical specification suggest that an increase in the private ownership share of 10 percentage points increases (on average) the rent-sharing elasticity by 0.0002. Based on a theoretical analysis that incorporates union-firm wage bargaining and efficiency wage effects within the same modelling framework, this result cannot be explained by private firms being more profit oriented than public ones. However, the result is consistent with a scenario whereby privatisation leads to less job security for workers, implying stronger efficiency wage effects.     

RENT CREATION AND RENT SHARING: NEW MEASURES AND IMPACTS ON TOTAL FACTOR PRODUCTIVITY

This analysis proposes new measures of rent creation and rent sharing and assesses their impact on productivity on cross‐country‐industry panel data. We find first that: (1) anticompetitive product market regulations positively affect rent creation and (2) employment protection legislation boosts hourly wages, particularly for low‐skill workers. However, we find no significant impact of this employment legislation on rent sharing, as the hourly wage increases are offset by a negative impact on hours worked. Second, using regulation indicators as instruments, we find that rent creation and rent sharing both have a substantial negative impact on total factor productivity. (JEL E22, E24, O30, L50, O43, O47, C23)     

THE WELFARE COSTS OF RATIONING BY WAITING

With price controls and rationing by waiting, rational consumers increase the quantity bought per purchase. This individually rational response is socially wasteful and the cost of making it is a deadweight loss. This cost plus the value of time spent in queues may exceed the total rent transferred from suppliers to consumers by price controls; i.e., the value of resources spent competing for the rent may exceed the rent itself. This point is illustrated by an empirical application to gasoline price controls. Rent seeking exhausts an estimated 116 percent of the rent transferred.     

Union rent appropriation and ex post analysis

A data set of 106Fortune 500 firms is used to investigate the extent of union rent appropriation in 1977. The analysis identifies the existence of an appropriable asset with greater value in use than exchange as a necessary condition for union rent appropriation. The empirical analysis utilizes a new source of unionization data and explicitly addresses the problems associated with ex post analysis. The results suggest capital- and firm-specific efficiency are major sources for union rent appropriation. The authors thank Barry Hirsch for providing data used in this study and also thank Jon Nelson, David Macpherson, Mark Roberts, Chella Courington, seminar participants at The Pennsylvania State University, and an anonymous referee for helpful comments on an earlier draft of the paper. Machine readable copies of the unionization data and an appendix describing the programs used to generate the results are available from Ted W. Chiles at the Department of Economics, School of Business, Auburn University at Montgomery, 7300 University Drive, Montgomery, Alabama, 36117–3596.     

Moral hazard in marriage: the use of domestic labor as an incentive device

This paper argues that some women in developing countries use domestic labor as a tool to incentivize husbands. A theoretical model is derived based on the traditions of rural Malawi, where men often supplement farm income with wage labor. As wage labor is not observed by the wife, this creates moral hazard: husbands may not make enough effort to bring home wages. The model predicts that women overcome this by using domestic labor as an incentive device: they increase their domestic labor and reduce their leisure in response to good consumption outcomes, but only if they cannot rely on divorce threat as an alternative source of incentives. This prediction is confirmed using survey data from Malawi. Identification is based on the fact that Malawi’s kinship traditions exogenously determine women’s accessibility to divorce. Where divorce is not an option, women make inefficient labor choices in order to provide incentives.     

‘Generation rent’ and the ability to ‘settle down’: economic and geographical variation in young people’s housing transitions

The term ‘Generation Rent’ denotes young people who are increasingly living in the private rented sector for longer periods of their lives because they are unable to access homeownership or social housing. Drawing on qualitative data from two studies with young people and key-actors, this paper considers the phenomenon of ‘Generation Rent’ from the perspective of youth transitions and the concept of ‘home’. These frameworks posit that young people leaving the parental home traverse housing and labour markets until they reach a point of ‘settling down’. However, our data indicate that many young people face difficulties in this ‘settling’ process as they have to contend with insecure housing, unstable employment and welfare cuts which often force them to be flexible and mobile. This leaves many feeling frustrated as they struggle to remain fixed in place in order to ‘settle down’ and benefit from the positive qualities of home. Taking a Scottish focus, this paper further highlights the geographical dimension to these challenges and argues that those living in expensive and/or rural areas may find it particularly difficult to settle down.     

The effects of rent restructuring on social housing in English rural areas

This paper discusses the impact of central government's rent restructuring policy on social housing in rural areas in England. It examines the effect that restructuring will have on the rents set by social landlords in a set of case study areas then considers some of the likely impacts on affordability and on new investment in rural social housing. One of the primary aims of rent restructuring policy is to reduce unjustifiable differences between the rents of similar dwellings in the local authority and Registered Social Landlord sectors locally. This aim seems likely to be achieved. In doing so, it is likely that affordability will be reduced in the local authority sector but enhanced for tenants of some RSLs. However, the reduction in real RSL rents that improve affordability may further constrain RSLs’ ability to invest in new social housing in rural areas. The paper concludes that rent restructuring by itself will not materially improve the housing prospects of the less well off in rural areas.     

Minimum wages and poverty with income-sharing

Textbook analysis tells us that in a competitive labor market, the introduction of a minimum wage above the competitive equilibrium wage will cause unemployment. This paper makes three contributions to the basic theory of the minimum wage. First, we analyze the effects of a higher minimum wage in terms of poverty rather than in terms of unemployment. Second, we extend the standard textbook model to allow for income-sharing between employed and unemployed persons in society. Third, we extend the basic model to deal with income sharing within families. We find that there are situations in which a higher minimum wage raises poverty, others where it reduces poverty, and yet others in which poverty is unchanged. We characterize precisely how the poverty effect depends on four parameters: the degree of poverty aversion, the elasticity of labor demand, the ratio of the minimum wage to the poverty line, and the extent of income-sharing. Thus, shifting the perspective from unemployment to poverty leads to a considerable enrichment of the theory of the minimum wage.      

PROFIT SHARING, WAGE BARGAINING, AND UNEMPLOYMENT

The Paper examines the effects of profit sharing in an economy with decentralized wage bargaining. Profit sharing makes workers' income more sensitive to wage changes, and this leads to wage moderation. But economy-wide profit sharing may also improve worker's outside income opportunities, and this strengthens the union's hand in bargaining and tend to raise wages. It turns out that equilibrium unemployment is reduced by profit sharing as long as the elasticity of substitution between labour and capital is less than one, whereas unemployment is increased if the elasticity of substitution is greater than one.     

PRIMARY AND SECONDARY REFORM

An import competing industry hires lobbyists to obtain protection, where binding quotas may be utilized in the trade regime. Rent seekers compete with one another to obtain valuable import licenses. Rent seeking and lobbying are assumed to involve similar skills, so that a reform of the rent-seeking sector will have feedback effects on lobbying and vice versa. We show that the feedback effects from reform targeting the lobbying activity (primary reform) often tend to reinforce the original reform, while reforms targeting the rent-seeking sector (secondary reform) tend to have negative feedback effects on the reform process. ( JEL D72, F13)     

The influence of flexible management practices on the sharing of experiential knowledge in the workplace: a case study of food service helpers

Previous studies have shown that the job knowledge and prudent knowledge of experienced workers constitute a wealth that needs to be shared in workplaces to promote worker integration, job retention and occupational health and safety. It appears, however, that certain management practices undermine this knowledge sharing process. This case study of food service helpers in institutional food service departments is part of a research project aimed at comparing the impact of different work organization methods on knowledge sharing in the workplace on the basis of case studies carried out in several organizations. The results of this case study reveal that by destabilizing and weakening the work teams, flexible management practices create an environment that is not conducive to experiential knowledge sharing.     

Do Truly Comparable Public and Private Sector Workers Show Any Compensation Differential?

Using data from the Health and Retirement Study, we apply propensity score matching methods to examine evidence on the rent paid to public sector workers in the United States. Traditionally, wage differentials are computed assuming that workers from both public and private sectors are comparable, without actually controlling for the comparability of the units. Using this method, we are able to control for selection bias and, at the same time, select a subsample of comparable workers in terms of their conditional probability of choosing to work in the public sector on which to estimate separate wage equations.     

A family ecological analysis of child care use in Hong Kong

This study examines the views on and use of day care for young children among white‐collar working women from a family ecological perspective. Discrepancies between perceived ideal and actual choice of child care were observed. Care provided by family kin was an ideal used with reservation, the employment of foreign domestic helpers was a reluctant choice, while the use of formal care was largely unexplored. The findings of this study demonstrate how individual families' child‐rearing goals are supported and constrained by contextual factors within the ecology. Implications for policies on child care in Hong Kong are discussed. Copyright © 2001 John Wiley & Sons, Ltd.     

DO RENT‐SEEKING GROUPS ANNOUNCE THEIR SHARING RULES?

We study collective rent seeking between two groups in which each group has the option of releasing or not its sharing‐rule information. First, we show that the case where both groups release their sharing‐rule information never occurs in equilibrium; when the players are unevenly matched, one group releases its sharing‐rule information and the other does not. Then, we select the Pareto‐superior equilibrium when the players are unevenly matched. We show that, in this selected equilibrium, the underdog releases its sharing‐rule information, and the favorite does not; thus, the underdog becomes the leader, and the favorite the follower (JEL D72).     

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.     

Do employers pay efficiency wages? Evidence from Japan

Economists have long been interested in the seemingly cooperative nature of Japanese industrial relations. It has been hypothesized that information sharing in the wagesetting process has been used to promote efficiency. But have Japanese employers really paid efficiency wages, that is, can productivity gains be linked to pay raises? Efforts to test for efficiency wage setting face the problem of sorting out the extent to which pay influences labor productivity and vice versa. For the 1975–1997 sample period, we used an innovative statistical technique developed by Geweke to disentangle the linear association between pay and productivity growth. Efficiency wage behavior has not been the norm in Japan. Nevertheless, efficiency wage setting cannot be ruled out for some key areas of manufacturing.     

Intra-household arrangements: How important are they in terms of male-female subjective well-being?

This paper aims to analyze the impact of different intra-household arrangements, defined in terms of income pooling and decision-making responsibilities, on individual subjective well-being in a number of European countries. Using the EU-SILC 2010 module on intra-household sharing of resources and self-assessed health, as a dimension of subjective well-being, we find that the relationship between self-reported health and family arrangements differs by gender and area of decision. The results provide interesting insights on the potential determinants of individual self-assessed health that go beyond the standard ones. In particular, we identify higher levels of males’ and females’ self-assessed health connected to them controlling or sharing financial decisions. Moreover, males’ self-assessed health is positively linked to female making domestic decisions, and negatively if decisions are of financial type; whereas females’ self-assessed health is positively associated to them taking domestic decisions only in households where incomes are not fully pooled. Thus, our findings might be of help for politicians to design the most effective policies intended to improve individual standards of living and to reduce social inequalities.