THE SHADOW ECONOMY: ILLICIT WORK AND HOUSEHOLD PRODUCTION: A MICROANALYSIS OF WEST GERMANY

This microanalysis of the shadow economy is on informal family income achieving strategies. In particular we analyze both sexes' paid illicit work as well as unpaid work in household production based on the representative West German Sfb3–Secondary Occupation Survey 1984. We estimate the influence of various socioeconomic variables including a legal occupation. As a result, illicit work and household production "Do-It-Yourself" activities are important informal family income achieving strategies. The respective regional state of the formal economy or one's own activities in social networks is of greater importance for informal economic activities than an individual income from formal economic activities.     

Traditional vs. modern production systems: Price and nonmarket considerations of cacao producers in Northern Ecuador

Many factors besides profit maximization, such as nonmarket ecological and social benefits, influence smallholder households to adopt a specific agricultural production system or sell in a particular market. Thus, different analytical techniques are needed that take into consideration more than monetary income to fully capture these additional benefits to better understand the production decisions of smallholder farmers. We build on previous work on the household model and shadow wage estimation to develop a shadow wage for Ecuadorian cacao producers that includes these nonmarket benefits. We found that the shadow wage correctly indicated that, on average, these households would prefer to use an agroforestry production system instead of the more profitable modern system because of the nonmarket benefits received from the former system.     

Child participation,nature of work,and fertility demand: a theoretical analysis

A model of utility maximization with home production of children and standard of living is used to analyze the fertility behavior of a subsistence farming household in an agricultural lesser developed country. Assuming children as both consumer and producer goods, and assuming a prestige cost of their participation in labor force, the author derived alternative levels of fertility demand. The following different conditions of child participation were identified depending upon the size of the prestige cost and the resultant net gain from child work: (1) participation in wage-labor, if marginal child income from the family farm is less than marginal wage income; (2) participation in family farm works only, if the larger wage income is neutralized by a higher prestige cost, implying a lower child contribution; (3) participation in family farm works only, if its marginal child income is greater than wage income, thus providing the largest child contribution; and (4) no participation in labor force at all, implied by a very high prestige cost and resulting in no child contribution. The household demands a larger number of children under conditions (1) and (3) than under conditions (2) and (4). The results are then used to draw inferences regarding fertility behavior across different landholding households. It appears that landholding reduces fertility initially, increases it at the intermediate levels, and then decreases it when the household becomes a non-cultivating rental income earner. The nonmonotonic landholding-fertility relationship explains the contradictory empirical evidence which exists in the literature while also suggesting important implications for fertility regulation policy.     

HOUSEHOLD INEQUALITY AND THE LABOR MARKET IN SOUTH AFRICA

There has been very little detailed exploration of the relationship between wage income and household inequality in South Africa despite the relevance of this issue for many contemporary growth and development policy debates. This article is directed at such an analysis. It uses a decomposition of household income inequality by income components to highlight the dominance of wage income in driving overall income inequality. This is followed by a detailed discussion of the distribution of the unemployed across different wage-earning household categories. Many of the unemployed are seen to depend on wage earners within their households, but a significant percentage of the unemployed, especially in rural areas, have no direct link to labor market earners. In such cases, the creation of employment is essential. The conclusion explores policy implications by linking our empirical findings to South African debates over the quality versus the quantity of employment.     

DISTRIBUTION OF ECONOMIC RESOURCES: IMPLICATIONS OF INCLUDING HOUSEHOLD PRODUCTION

The value of household production is estimated to 40–50 percent of GNP in most western countries, and because the distribution of this income-in-kind is different from ordinary income distribution, the concept of economic well-being may include household production. The monetary value of household production is evaluated by a market alternative principle and an opportunity-cost principle. In the last case a reservation wage is estimated, and integrated in a modified opportunity principle, which means that household work of non-working women is evaluated by the reservation wage, and household work of working women and men by their wage-rate. The conclusions are among others, that the inclusion of household production reduces the inequality, and that the women's contributions—money income and household production—functions as income equalizers.     

The North Will Rise Again: Pensions,Politics and Power in the 1980’s

I aim at contributing to the academic debate about the relationship between functional income distribution and economic growth in regard to the large and open economy of Turkey in the period from 1987 to 2006. To this end, I propose a simple post-Keynesian model, so as to test whether the Turkish economy is wage or profit-led. I find evidence that, while a rising wage has a positive effect on investment, it does not affect consumption in Turkey. Hence the combined effect of a rising wage share on domestic demand (investment plus consumption) is positive. However, since exports and imports are so sensitive to labor costs, as they are in the case of Turkey, the regime becomes profit-led.     

Is the household demand for in-home services sensitive to tax reductions? The French case

Our paper examines the impact of tax reductions on the demand for services in the home. For that purpose, we estimate a structural model of demand for such services by using household individual data collected by INSEE (Paris) in 1996. In this model, the net hourly wage paid to the domestic employee, the household preferences for consumption of in-home services and the decision to take advantage of the tax reduction are considered as endogenous variables. Estimation of the econometric model uses the fact that some households are observed to consume domestic services and to take advantage of the tax reduction, while others either consume such services but do not take advantage of the tax reduction, or do not consume these services at all. Its identification relies on an exclusion restriction resulting from the tax credit schedule. Results show that the probability of consuming in-home services increases with age and income. A 10% increase in the tax reduction would increase from 45.9 to 50.8% the proportion of households benefiting from the tax reduction among those who consume paid in-home services. Moreover, 13.5% of households who do not actually consume such services would do so after the 10% increase in the tax reduction. These simulated variations would mainly concern high-income households.     

How large are wage differentials in Austria?

The OECD has repeatedly recommended that wage bargaining in Austria be decentralised to allow wage diferentials to widen. But the status quo itself is in question. While studies of aggregate industry data indicate a high degree of wage dispersion, research based on data from household surveys seems suggest that income inequality in Austria is as small as in the Scandinavian countries. This paper seeks to reconcile these opposing views. It shows that data from the household surveys underestimate the size of inter-industry wage differentials. An analysis of the structure of contractual wage rates supports the view that wage inequality is very pronounced in Austria and that a narrowing of the wage gap would lead both to an increase in productive efficiency and an increase in income equality.     

Price and nominal wage Phillips curves and the dynamics of distribution in Japan†

This study estimates two types of Phillips curves – the price Phillips curve and nominal wage Phillips curve – for the Japanese economy and analyses the institutional structure of the dynamics of effective demand and income distribution in each period from 1977 to 2007. The estimated results allow us to make the following three findings. First, the Japanese economy was a profit-led regime and a counter-cyclical wage share regime. The combination of regimes can make the dynamics of effective demand and income distribution unstable. Second, the dynamics of price and nominal wage do not reflect each other in Japan by labour–management cooperation. Finally, after 1997, the distributive regime in Japan switched from a counter-cyclical wage share to a pro-cyclical wage share regime because Japanese firms quickened their speeds of employment adjustment. As a result, the dynamics of effective demand and income distribution were stabilised.     

Average cost pricing versus marginal cost pricing under moral hazard

This paper presents a general framework for analyzing shadow wages in LDCs. We focus on (i) the differences between the domestic and international prices, (ii) the equilibrating mechanisms in the economy, (iii) the endogeneity of earnings in industry and agriculture, (iv) the consequences of industrial employment creation on agriculture, and (v) the nature of migration and unemployment.We identify those reduced form relationships which are central in determining the shadow wage, and use them to obtain general formulae for the shadow wage. These formulae can be specialized to alternative technological, behavioral, and institutional settings. This yields many new results concerning the relationship between the shadow wage and the market wage. Also, earlier results on shadow wages are derived as special cases of our formulae.     

Financial liberalization,urban unemployment and welfare: some implications of the artificial low interest rate and the high wage rate policies in LDCs

This paper investigates how the low interest rate policy in the commercial banking sector affects the urban unemployment in a small open Harris-Todaro model. The rate of urban unemployment unambiguously declines. The volume of it shrinks if the rural-to-urban employment rate and the urban unemployment rate are sufficiently high relative to the wage elasticity of agricultural labor demand. The national income increases if agriculture is dominant in the domestic production. In such an economy, the “financial liberalization” advocated by the Mckinnon-Shaw school may aggravate the welfare even if it eliminates the “financial repression”.     

零工经济如何改变性别工资差距*——基于家庭与市场的双重视角

中国企业生产与性别收入分配的格局正在发生深刻变化。零工就业意味着雇佣的非正式化与收入的不稳定化，女性被大量吸纳进入零工经济的同时，参与劳动力市场和家庭的方式也发生转变，性别工资差距可能随之变化。理论分析表明，在市场领域，非正式雇佣加深了劳动后备军对工资的挤压效应，女性作为劳动力“蓄水池”，收入下降效应更为明显；在家庭领域，不稳定收入加深了劳动者的自我规训，家务劳动时间分配不均使收入差距进一步扩张。在上述两种效应下，零工经济中的性别工资差距将大于非零工经济。基于微观调查数据的经验研究结果验证了上述理论推演。劳动者“灵活性”和“安全性”的综合指标表明，只有建立灵活安全的劳动力市场机制，重视弱势群体的就业保护，才能真正推动零工经济成为“稳就业、保增长”的中坚力量。     

林业主产区农户影子工资对家庭劳动供给影响的实证分析

本文利用1990—2001年我国四川省沐川县、安徽省金寨县480户农户的数据,采用Translog函数和C-D生产函数对样本林业主产区农户在林业、种植业、畜牧业和非农业的影子工资进行估算,并利用Heckman两阶段模型分析了影子工资、影子收入、户主年龄、户主受教育程度、家庭负担等因素对农户劳动供给的影响。研究结果表明:样本林业主产区农户的影子工资与劳动供给时间存在负向关系,闲暇对于农户家庭中男性和女性来说是劣质品;农户家庭劳动供给的联合决策特征非常明显;农户家庭劳动力存在主次之分,该结论对于说明农户家庭内劳动分工以及劳动力流动有一定的指导意义。     

HIGH-SKILLED MIGRATION AND THE EXERTION OF EFFORT BY THE LOCAL POPULATION

The optimal design of immigration policy is a topical issue, both in the policy debate and the economic literature. In this paper, we present empirical evidence from a firm level dataset collected in 2000 on the demand for high-skilled workers, including foreign workers, in Europe and its determinants. Our major findings are that the fraction of high-skilled workers recruited from the international labour market is very small, and that foreign and domestic workers are very similar in terms of their formal education (measured by specialization subject) and their job characteristics. We suggest an efficiency wage model to explain why firms recruit foreign workers in small numbers, and why they are willing to pay immigrants the same wage as local workers, whilst at the same time also paying for their moving costs, despite the similar human capital profile of immigrants to domestic workers.     

Comparative effects of migrants’ remittances on composition of recipient household income in two small,island economies

We use unique household survey data from Fiji and Tonga to estimate and compare the combined impact of migration and remittances on the composition of household income. A two-step methodology is followed employing a migration prediction model followed by the estimation of a Three Stage Least Squares (3SLS) remittances and income equation system. We find that remittances contribute to growth in productive capital and entrepreneurial activity in the longer-established migrant economy, but have yet to impact on business activity in the more recently remittances-oriented economy, despite it having a more developed, market economy. In the latter case, remittances seem more linked to supporting consumption through supplementing low wage income. These findings suggest that the duration and intensity of remittance-driven migration, and the structure of economic activity within a community are important in understanding the influences of migration and remittances on household resource allocation and production decisions.     

Long-run costs of piecemeal reform: Wage inequality and returns to education in Vietnam

In this paper, we examine changes in wage structure and wage premia during Vietnam’s transition from command to market economy. Relative to other work in this literature, our paper is unique in that we identify the policies that lead to such changes. By examining skill premium trends along the two dimensions of particular importance to the transition—state or non-state firms, and traded or non-traded industries—we are able to separate the contribution of external liberalization to wage growth and rising skill premia from that of domestic labor market reforms, and to examine potential interactions between the two types of reform. The results point to the high cost of incomplete reform in Vietnam. Capital market segmentation creates a two-track market for skills, in which state sector workers earn high salaries while non-state workers face lower demand and lower compensation. Growth is reduced directly by diminished allocative efficiency and reduced incentives to acquire education, and indirectly by higher wage inequality and rents for workers with access to state jobs.     

扩大内需背景下的国民收入分配格局调整

面对世界金融危机,扩大内需已经成为拉动我国经济增长的重要助推器,但自1990年以来,我国居民消费率从整体上看呈现下降趋势,过低的消费率导致了国内消费需求不足.制约我国消费需求提高的关键是国民收入分配格局失衡,如何调整国民收入分配格局是扩大内需背景下我国经济发展面临的重大课题.     

From internal imbalances to global imbalances: a survey on the causes of China’s export-led growth

There is a broad consensus that China’s export- and investment-led growth model is unsustainable and therefore needs to become more balanced. In the public debate, Chinese exchange rate interventions are mostly made (solely) responsible for this. But it is unclear whether and how much the Renminbi is undervalued, and if an exchange rate appreciation helps to reduce China’s current account surplus significantly. This survey reviews the international literature on China’s export-oriented growth model. Internal structural imbalances in the Chinese economy, resulting in an extremely low consumption-to-GDP share by historical and international standards, play hereby a central role. Related to this are: 1) the drop in household and wage income as a share of GDP and low employment growth, and its impact on consumption demand; 2) the increase in income uncertainty and inequality, and its impact on household savings; and 3) the role of government spending, i.e., high and increasing public surpluses. The central policy challenge is therefore to increase household incomes, and to reduce income inequality and uncertainty.     

The trade-off between real wages and employment in an open economy (Belgium)

The purpose of this paper is twofold. First, we discuss the nature and quantitative order of magnitude of the trade-off between real wages and employment in the small open economy Belgium. Second, we draw policy conclusions from our positive analysis, and compare income policies with alternative approaches to employment stimulation (including shorter working hours and currency depreciation).To study the trade-off between real wages and employment, we treat external balance as a binding constraint on demand management. An exogenous increase in real wages, affecting adversely the competitiveness of domestic producers on the export and import markets, impairs external balance. The impact of the wage increase on output and employment is evaluated through the reduction in domestic demand required to restore external balance.At the empirical level, we endeavour to evaluate separately the influence on exports and imports of domestic costs at unchanged capacity levels, and of capacity levels themselves. And we endeavour to evaluate the influence of real wages on capacity levels through scrapping and investment. All evaluations rely on the foreign trade equations of econometric models of the Belgian economy.The conclusions from our empirical investigation are first that estimates of the trade-off between real wages and employment in Belgium are subject to considerable imprecision; second that the short-run elasticity of employment with respect to real wages keeping capacity constant is probably quite small (like -0.2), and definitely less than unity in absolute value; third that the corresponding medium-run elasticity taking into account capacity adjustments is probably sizeable (like -2), and definitely larger than unity in absolute value; and fourth that exchange rate adjustments might not make too much difference, in either the short run or the medium run.Turning to a discussion of policy, we shall argue that these conclusions give support to a policy of constant real labour incomes, of comprehensive efforts to redistribute work through shorter working hours or related schemes, and of selective efforts to slow down capacity scrapping.     

全球化时代的中国经济及其世界性影响

全球化进程决定了中国经济的高度开放,造就了双重资本积累模式,即内资主导的工业化城市化积累和外资主导的全球低端制造平台积累.这一模式加速了中国经济增长,同时削弱了经济自主.反过来,中国对世界经济造成了多方面影响,包括改变劳资利益格局,推动各国产业重组,改变金融市场结构,加强中美金融依赖等,这些影响随着中国的经济增长和结构升级将日趋显著.因此,中国必须立足内需实现可持续增长,并依靠技术创新来控制资源和环境成本.