The Beveridge curve and labour market dynamics in Turkey

This article investigates the dynamics of unemployment and vacancy rates in Turkey during the period 1951 to 2008 by means of a Beveridge Curve (BC). The time-series analysis of unemployment and vacancies as well as two other relevant labour market variables, real wages and real labour productivity, strongly suggests inefficiency in the Turkish labour market. A stable long-run relationship between unemployment rate and vacancy rate is found for Turkey, that is, the existence of a negatively sloped BC is verified. The estimated Turkish BC reflects the structural problems and lack of flexibility in the labour market. The modified BC with real wages and labour productivity reveals that labour productivity has no significant effect on unemployment rate whereas wages have positive and significant effects on the same variable.     

FEATURES OF THE HIDDEN ECONOMY IN THE NETHERLANDS

This paper presents survey results on the size and structure of the hidden labour market in The Netherlands. According to the results total income from hidden work is at least 1 percent of national income. The hidden income is shared by more than one million participants (nearly 12 percent of the corresponding population). This result is lower than various other estimates of the magnitude of the hidden economy. Some definitional and methodological issues are discussed in order to explain the difference from the other estimates.
The most notable results of the survey refer to the structure of the hidden labour market. At one end of this market are people with a high wage rate, working relatively few hours. They have the characteristics which given them a favourable position in the formal labour market. At the other end are people with low hidden wages, who work more hours. They have difficulty in finding a formal job. The income from hidden labour is distributed in very much the same way as income from formal activities. There is no evidence that the hidden labour market compensates those who are worse off in the formal economy.     

The minimum wage and the Lithuanian labour market

This paper presents a comprehensive and non‐standard labour market analysis based on univariate and multivariate models for wages. The novelty of this paper lies in the use of non‐normalized cointegrating vectors for labour market analysis. Wages are the basis of labour market models, as well as the key factor for employees and employers; therefore, the central analytical axis is a classical wage bargaining process, where one side requires and the other side proposes a certain level of wages. Analysis is divided into two parts: foremost, a careful analysis of Lithuanian wages is conducted and a univariate model for the investigation of interactions between the minimum wage and the rest of the wages is proposed; only after the minimum wage model is drafted can the multivarate model for the whole economy be built up. Briefly, the methodology used in this article can be annotated as a synthesis of sequential theoretical and empirical considerations that combine the results of theoretical macroeconomics with data‐generating patterns and stylized facts. The model is considered as the final one only if macro‐theory preconditions, statistical prerequisites, and stylized real‐world requirements are met and fulfilled. In addition, this article gives an example and a quantitatively, as well as qualitatively, motivated suggestion as to how to incorporate minimum wages into econometric models and puts forward an explanation for why it is necessary to include minimum wage dynamics into labour market analysis. The article is nothing but an empirical case study that demonstrates how many minor details have to be taken into account until a realistic labour market model is built up. Although the paper deals with the labour market, the suitable application of time series methods is the main subject of the analysis.     

Labour market rigidity and expansionary austerity

This study provides new evidence on how labour market rigidities affect the transmission of fiscal consolidations using a sample of 17 OECD countries. Owing to a novel empirical approach, the outcomes of consolidations are modelled as a function of employment and wage rigidities. The evidence confirms that tax-based consolidations are distortionary, while expenditure-based consolidations have wealth effects. These effects are then magnified by flexible employment and rigid wages, while they are moderated by rigid employment and flexible wages. This indicates that labour market conditions influence how fiscal consolidation is propagated in the economy by affecting both the magnitude and the transmission channels of consolidation plans. This result has crucial policy implications and suggests that the design of consolidation plans should account for the labour market structure.     

FEMALE DUAL LABOUR MARKETS AND EMPLOYEE BENEFITS

The American workforce and the role of employee benefits have changed dramatically since the 1980s when economists seriously considered dual labour market models to describe pay and employment patterns. Then, dual labour market models described men's labour markets, but not women's and the tests applied to wages and salaries, not total compensation including employee benefits. Applying a switching regression technique using the 2000 Current Population Survey and including women workers and employee benefits, we find that the dual labour market hypothesis is consistent with both female and male labour market structures, especially when total compensation is considered.     

The disintegrating Canadian labour market? The extent of the market then and now

Abstract.  Analysis of real wages for three occupations in 13 Canadian cities for 1901–50 suggests Canada had a national labour market at least until 1950. However, analysis of real wages for 10 Canadian cities for 1971–2000 yields little evidence favouring integration of Canada's regional labour markets. The apparent lack of labour market integration reflects a weakness of an approach that assumes markets are in equilibrium. Unemployment rates after 1970 suggest that some regional markets may be characterized by excess labour supply. Analysis of relative provincial unemployment rates yields evidence consistent with local labour force adjustment to changing labour market conditions. JEL classification: E24, J61     

Marriage, BMI, and wages: a double selection approach

Obesity rates have been rising over the past decade. As more people become obese, the social stigma of obesity may be reduced. Marriage has typically been used as a positive signal to employers. If obese individuals possess other characteristics that are valued in the labour market they may no longer face a wage penalty for their physical appearance. This paper investigates the relationship between marital status, body mass index (BMI), and wages by estimating a double selection model that controls for selection into the labour and marriage markets using waves 14 and 16 (2004 and 2006) of the British Household Panel Survey. Results suggest that unobserved characteristics related to marriage and labour market participation are causing an upward bias on the BMI coefficients. The BMI coefficient is positive and significant for married men only in the double selection model. The findings provide evidence that unobserved characteristics related to success in the marriage and labour market may influence the relationship between BMI and wages.     

The market for labour in Israel

Using annual observations for 1960–89, a complete economic model of the Israel labour market is estimated in which the demand for labour varies inversely with real wages, participation varies directly with the real wages and real wages are explained by a phillips curve in which the natural rate of unemployment is a variable. The model suggests that while wages are far from flexible, unemployment shocks die away fairly rapidly. we were unable to model the behaviour of public sector pay and employment.     

Detecting policy effects with wage rigidity and instability – evidence on the Taiwan labour market

With stagnant wages and growing productivity, a widening gap is becoming prevalent in global labour markets. The relationship between wages and productivity has become indeterminate, especially after the 2008 financial crisis. This article presents the phenomenon for why salary rarely follows up with productivity after an economy recovers. By using the GMM method, this study shows the interaction among wage, productivity and tightness, in which we illustrate the Taiwan labour market as an example to show how hiring system changes press wages away from an efficient allocation, causing instability and market failure. Surveying 35 labour markets for different industries, we reveal that the situation in the labour markets has drastically changed since 2008. We find that this resulted in a severe problem when the Taiwan firms got used to policies like ‘22K’, ‘fix-term contract’ and ‘unpaid leave’ programmes. These plans negatively impacted the economy and raised market failure with instability.     

Employment and wage dynamics in Estonia, 1989-951

This study monitors the effects of economic transition on wages and employment in a former Soviet Republic. Estonia's case is of particular interest because of its early adoption of relatively free labour market policies. Relative wages for the highest educated groups rose for all age groups. There were also rapid increases in returns to job experience, particularly at young ages. Increasing wage dispersion across human capital groups was accompanied by narrowing wage dispersion within human capital groups. Relative wages rose in sectors which gained relative employment, while they fell in shrinking sectors. In addition, there were large flows of labour between shrinking and growing sectors, suggesting that labour market equilibrating mechanisms developed very rapidly in Estonia.     

Segmentation of Rural Labour Contracts: Some Further Evidence

The paper offers an explanation of labour tying commonly observed in seasonally agricultural economies. Employers may either hire regular labourers in the slack season to satisfy all or most of the labour demand in the high season but have underutilised labour in the low–demand season or rely on casual labourers only. Thus farmers hiring regular labour may also hire some casual labour as and when needed to minimise the hoarding costs of regular labour. Secondly, daily regular wages are usually lower than daily casual wages, but regular labourers usually get some wage–advance as well. Thus asset–poor workers have incentives to choose regular labour with interest–free wage advance because they face high marginal costs of credit in the segmented credit markets. The optimum hoarding costs decrease with increase in farm size, but increase with increase in spot market wages. However with improved availability of alternative employment opportunities and/or cheaper credit facilities to the asset–poor labourers, the supply of regular labour is likely to decline. Empirical evidence from the ICRISAT villages in south India seems to be consistent with the primary propositions of the model.     

The productivity-wage and productivity-employment nexus: a panel data analysis of Indian manufacturing

This article investigates the long-run relationship between labour productivity and employment, and between labour productivity and real wages in the case of the Indian manufacturing sector. The panel data set consists of 17 two-digit manufacturing industries for the period 1973–1974 to 1999–2001. We find that productivity-wages and productivity-employment are panel cointegrated for all industries. We find that both employment and real wages exert a positive effect on labour productivity. We argue that flexible labour market has a significant influence on manufacturing productivity, employment and real wages in the case of Indian manufacturing.     

What are the determinants of hiring? The importance of product market demand and search frictions

In this article, we study the importance of product market demand and search frictions for hiring. We use a search-matching model with imperfect competition in the product market to derive an equation for total hiring in a local labour market, and estimate it on Swedish panel data. If product markets are imperfectly competitive, product demand shocks should have a direct effect on employment for given levels of prices and wages. Our main finding is that product demand has such a direct effect on hiring. This highlights the importance of taking imperfect competition in the product market into account in studies of employment dynamics and hiring. We also find that, for given levels of prices, wages, and product demand, the number of unemployed workers in a local labour market has a positive effect on hiring, suggesting that search frictions matter. Quantitatively, product demand shocks seem to be more important for understanding the variation in hiring than shocks to the number of unemployed workers.     

Implicit amenity prices and the location of retirees in England and Wales

General equilibrium models in which compensation for local amenities occurs in both housing and labour markets have been widely used to generate implicit amenity prices and regional quality of life indices. An implication and prospective test of such models is that individuals who are outside the labour market have an incentive to locate in regions where amenities are capitalized into wages. In this article we construct a measure of the extent of amenity capitalization into wages for each county in England and Wales. We then test the multimarket amenity model by applying this measure to county-level data on the location of retirees. Our results provide strong support for the model.     

Do Immigrants Affect Firm‐Specific Wages?*

We propose and test a novel effect of immigration on wages. Existing studies have focused on the wage effects that result from changes in the aggregate labour supply in a competitive labour market. We argue that if labour markets are not fully competitive, immigrants might also affect wage formation at the most disaggregate level – the workplace. Using linked employer?employee data, we find that an increased use of low‐skilled immigrant workers has a significantly negative effect on the wages of native workers at the workplace – also when controlling for potential endogeneity of the immigrant share using both fixed effects and instrumental variables.     

Short term labour market consequences of teenage pregnancy

Pregnancies by unwed teenagers leading to either a birth or an abortion lead to fewer years of completed education. Less education translates to lower wages and a corresponding decrease in labour supplied to the market. The empirical results for young women who give birth are similar to the findings of other studies. The results for young women who have abortions are original. This research indicates that young women who become pregnant as teenagers have poorer short-term labour market outcomes than other young women who do not become pregnant.     

Wage Adjustments and Labour Market Systems: A Cross-Country Analysis*

Evidence is presented on how well alternative systems of wage determination facilitate disaggregate labour market adjustment. Tests of statistical causality are used to relate labour market pressure to relative wage changes. The conclusion is that rates of change of relative wages are determined independently of the microeconomic market balance. This result holds irrespective of the institutional form of the wage-fixing system.     

Female labour force participation in an era of organizational and technological change

Abstract The supply of skilled female labour increased significantly at the beginning of the twentieth century as women assumed positions in the newly created clerical workforce. Evidence suggests that despite this increase in labour supply, the wage paid to female clerical workers increased over the period and that the ratio of female clerical wages to male manufacturing wages was roughly constant. These labour market facts can be accounted for in a dynamic general equilibrium model in which an exogenous increase in human capital induces an increase in demand for skilled clerical workers. While induced technological change that favours skilled workers may account for the observed increase in female real wages, explaining the stagnate relative weekly wages paid to female clerical workers requires a framework that includes organizational change.     

Real wage determination in Bangladesh agriculture: An econometric investigation

Thsi paper develops and estimates a real wage model for the agricultural sector in Bangladesh for the period 1973:2–1985:4. The model is developed within the framework of the market theory of labour demand and labour supply. The empirical results are supportive of the market theory of wages.     

A microfoundation for increasing returns in human capital accumulation and the under-participation trap

This paper considers educational investment, wages and hours of market work in an imperfectly competitive labour market with heterogeneous workers and home production. It investigates the degree to which there might be both underemployment in the labour market and underinvestment in education. A central insight is that the ex post participation decision of workers endogeneously generates increasing marginal returns to education. Although equilibrium implies underinvestment in education, optimal policy is not to subsidise education. Instead it is to subsidise labour market participation which we argue might be efficiently targeted as state-provided childcare support.