Minimum Wages in a Segmented Labor Market: Evidence from South Africa

The segmented labor market model describes the impacts of minimum wages on covered and uncovered sectors. This paper examines the impacts of an industry-specific minimum wage in South Africa, a state characterized by high unemployment, a robust union movement, and the presence of a large informal sector. Under the industry-specific wage law, formal agricultural and household workers are covered, while workers in other sectors are not. The unique aspect of this paper lies in the ability to compare the impacts of minimum wage legislation on formal covered, informal covered, formal uncovered, and informal uncovered workers. This natural experiment allows us to test whether industry-specific minimum wage legislation leads to higher wages, whether wage increases are restricted solely to covered formal sectors or if there are spillover effects, and whether such legislation manifests in disemployment effects. We find evidence of higher wages yet disemployment among black workers in formal markets. In informal markets we find no employment effects, but higher wages in formal markets appear to have spilled over into informal markets in covered sectors.     

Pay and productivity in “corporatist” Germany

Conventional theory predicts that productivity gains lead to pay hikes. Pay increases, however, can influence labor productivity. But what about the case of a corporatist economy, in which wage setting is highly coordinated? With cor-poratist cooperation between unions and management, is pay de-coupled from productivity? Using an innovative technique, this study disentangles the rela-tionship between pay and productivity in Germany. Citing high unemployment and increasingly global competition, critics have argued that Germany's brand of corporatist labor relations cannot survive. Our findings show that links between productivity and pay were different in the 1990s than in earlier years, suggesting that the collective bargaining process now works differently.     

Regional mobility of economists: An extension

We extend Davis and Patterson’s analysis of the incidence and determinants of regional mobility of Ph.D. economists. By exploiting previously collected data, we identify the patterns of regional mobility not only at the point of entry into the labor market for economists who received their doctoral degree in 1968 but also the net mobility of these economists over a 25-year period. The net effects of regional mobility decisions made between graduation in 1968 and year-25 employment in 1993, and between initial professional employment in 1969 and year-25 employment in 1993, are analyzed. Our results suggest that many economists demonstrate a propensity to“nest“ in their degree and first-job regions of employment and that those employed in government service and those with a greater diversity of work experience are more likely to migrate across regions during their careers.     

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.