Offshoring and the Skill Structure of Labour Demand in Belgium

A major concern regarding the consequences of offshoring is the worsening of the labour market position of low-skilled workers. This paper addresses this issue by providing evidence on the impact of offshoring on the skill structure of manufacturing employment in Belgium between 1995 and 2007. Offshoring is found to significantly lower the employment share of low-skilled workers. Its contribution to the fall in the employment share of low-skilled workers amounts to 35 %. This is mainly driven by offshoring to Central and Eastern European countries. While most of the previous papers on this subject focus on materials offshoring, we show that offshoring of business services also contributes significantly to the fall in the low-skilled employment share. As a complement to the existing literature, we compare the widely used current price measure of offshoring with a constant price measure that is based on a deflation with separate price indices for domestic output and imports. This reveals that the former underestimate the extent of offshoring and its impact on low-skilled employment. Finally, we also find that the impact of offshoring on low-skilled employment is significantly smaller in industries with a higher ICT capital intensity.     

Economic and Social Security: The Role of the EU

This lecture addresses the issue of growing inequality of labour incomes in the EU. In this lecture, it is observed that through higher unemployment at downward rigid wages, the market position of low-skilled workers has deteriorated over the past quarter-century in Western Europe and that European countries have failed to develop an efficient instrument of income insurance on behalf of low-skilled workers. Wage subsidies are such an instrument. Furthermore, it is argued that labour market integration in an economic union like the EU entails externalities, resulting in underprovision of insurance and that coordination or matching grants could overcome this second inefficiency. On these empirical and theoretical grounds, this article proposes the organisation at EU level of a scheme of matching grants for low-skilled labour, whereby a share of national wage subsidies to low-skilled labour would be financed by the EU under suitable funding.     

Unskilled wage gaps within the Japanese Empire

This study calculates the cost of subsistence and respectability consumption baskets to derive ‘welfare ratios’ for 11 cities in the Japanese Empire as defined by Allen and his colleagues. Nominal wages tended to be higher where higher prices prevailed, and vice versa. Prices and nominal wages remained highest in Japan and lowest in Manchuria, with Korea and Taiwan being placed in between. Welfare ratios remained roughly comparable in the 1910s in the imperial cities outside Manchuria, where unskilled workers enjoyed substantially higher living standards. Interwar decades saw real wages rise in Tokyo, but fall in Dalian, which caused convergence in workers' income levels. Wage divergence occurred within Manchuria, as workers in Shenyang and Changchun enjoyed an improving welfare ratio. Real wages rose more slowly in Korean and Taiwanese than in Japanese cities. Replacing a subsistence lifestyle with a ‘respectable’ lifestyle yields a significantly different picture of the evolution of the real wage gap within the empire, which contradicts findings reported by existing studies in important respects.     

Endogenous Comparative Advantages in Developing Economies

This paper focusses on endogenous comparative advantages in developing countries, in particular on labour reallocation from low-productivity informal sectors into high-productivity formal sectors. This mechanism is important for two reasons. First, it contributes to the growth potential of developing countries and the absorption capacity for further capital accumulation. Second, labour reallocation will keep developing economies specialized in low-skilled intensive products in the coming decades and it will keep the wages of low-skilled workers low. We analyse this mechanism by simulating an increase in the skill intensity of developing countries the coming decades. These simulations are carried out with WorldScan, a dynamic AGE model of the world economy. An increasing skill intensity in LDCs will stimulate the global supply of high-skilled intensive products more than the supply of low-skilled intensive products, but to a much lesser extent than one would expect in static analyses or in absence of informal sectors.     

The impact of foreign direct investment in China on employment adjustments in Taiwan: Evidence from matched employer–employee data

Using a unique matched employer–employee dataset on Taiwanese manufacturing, we examine the impact of foreign direct investment in China on domestic employment adjustments controlling for firm and worker heterogeneity as well as for potential endogeneity of firms’ expansion in China. Our findings suggest that workers employed at firms with higher levels of investment in China are more likely to leave the firm, compared with workers at firms with zero or lower levels of investment in China. We provide evidence that foreign expansion in China decreases worker employment security at parent companies, particularly for low-skilled workers. Employment adjustments through employer-to-employer transitions are found to be highly associated with wage losses, with the strongest wage effects for low-skilled workers who shift employment between industries. Moreover, we find no evidence that FDI in China contributes to skill upgrading at parent companies.     

How does economic integration influence employment and wages in border regions? The case of the EU enlargement 2004 and Germany’s eastern border

This paper considers the (short-run) employment and wage effects of the 2004 EU enlargement on firms located close to Germany’s eastern border. We use a 50% sample of Germans plants and apply difference-in-differences estimators combined with a matching approach. We evaluate changes in total employment, the employment shares of low-skilled and East European workers and the wages for low-skilled, skilled and high-skilled workers in various sectors. Our results suggest basically no short-run employment effects of the EU enlargement except for firms active in wholesale and retail trade, hotels and restaurants. We also find some evidence for a stronger employment of East European workers in almost all border firms, although the effects are quantitatively small. Negative wage effects are only found for skilled workers in consulting, research and related activities.     

Growth led by human capital in big cities: Exploring complementarities and spatial agglomeration of the workforce with various skills

In cities, complementarity between a low-skilled and a high-skilled workforce can promote each other to improve labor productivity. In this study, we used earlier census data and 1% population survey data to examine the distribution of the skilled workforce in cities in the People's Republic of China (PRC) along with its changes, and drew the following three conclusions. First, a highly skilled workforce is the engine of urban development, increasing urban wages and population. Second, big cities can promote complementarity between skill sets so that there are greater numbers of high-skilled and low-skilled workers in those cities. This explains why both low-skilled and high-skilled workforces agglomerate in big cities. Last, complementarity between the low-skilled and high-skilled workforce is inhibited in the PRC's cities because of the biased household registration system (HRS) toward the high-skilled workforce, resulting in limited supply of low-skilled labor. This policy is not conducive to enhance labor productivity in big cities and to carry out its leading role of economic growth.     

Education and Earnings in Transition: The Case of Lao*

This paper is a study on the returns to education in Lao, a country that has been largely neglected by the published literature. The authors found that the private rates of returns to education have risen significantly with economic transition. In particular, returns for young workers are considerably higher than for older workers. Although large earnings premiums are generally received by workers with high levels of education, the most profitable investment in education for a large number of paid employees is still the primary level. Moreover, there are the significant public–private sector wage differentials. The research findings have important implications for public sector salaries and the financing of education in Lao.     

Who suffers from the COVID-19 shocks? Labor market heterogeneity and welfare consequences in Japan

Effects of the COVID-19 shocks in the Japanese labor market vary across workers of different age groups, genders, employment types, education levels, occupations, and industries. We document heterogeneous changes in employment and earnings in response to the COVID-19 shocks, observed in various data sources during the initial months after the onset of the pandemic in Japan. We then feed these shocks into a life-cycle model of heterogeneous agents to quantify welfare consequences of the COVID-19 shocks. In each dimension of the heterogeneity, the shocks are amplified for those who earned less prior to the crisis. Contingent workers are hit harder than regular workers, younger workers than older workers, females than males, and workers engaged in social and non-flexible jobs than those in ordinary and flexible jobs. The most severely hurt by the COVID-19 shocks has been a group of female, contingent, low-skilled workers, engaged in social and non-flexible jobs and without a spouse of a different group.     

Effect of intra-industry trade on skill premium in manufacturing in China

In making use of the panel data in 27 manufacturing industries, this paper examines the recent increase in skill premium in China's manufacturing. The paper argues that the recent increase in skill premium in Chinese manufacturing can be partly attributed to the decline in intra-industry trade. A reasonable explanation on this is that the decline in intra-industry trade occurred in the period studied is associated with a decrease in output. This led to a reduction in relative demand of low-skilled workers, which supports the hypothesis of the output-skill substitutability, and finally an increase in skill premium. Further, this paper finds that the negative effect of intra-industry trade on skill premium is larger for high-skilled manufacturing than low-skilled manufacturing. One more result in this paper is that the increase in capital input reduced the skill premium in Chinese manufacturing. The empirical evidence is consistent with a modified model of intra-industry trade with differentiated products and three factor inputs: high-skilled labor, low-skilled labor and capital.     

Differentiation in Economic Costs and Returns from Living with Wildlife in Namibian Community Conservancies

There is substantial differentiation across Namibian community conservancies in the costs and returns from living with wildlife. Real returns rose between 1998 and 2017, albeit unevenly. Those bordering national parks, and with higher game counts, earned more. Large livestock predators (lion, leopard, hyaena, cheetah, wild dog) had the greatest impact on human–wildlife conflict costs across all regions. As of 2017, more than a fifth of conservancies had higher estimated costs than economic returns from hunting and tourism. More resources are required to support Namibian conservancies if this is to be a sustainable model, especially as coronavirus limits international travel.     

Living standards and mortality since the middle ages

Existing studies find little connection between living standards and mortality in England, but go back only to the sixteenth century. Using new data on inheritances, we extend estimates of mortality back to the mid‐thirteenth century and find, by contrast, that deaths from unfree tenants to the nobility were strongly affected by living standards. Looking at a large sample of parishes after 1540, we find that the positive check had weakened considerably by 1650 even though living standards were static at best, but persisted in London for another century despite its higher wages. In both cases the disappearance of the positive check coincided with the introduction of systematic poor relief, suggesting that government action may have played a role in breaking the link between harvest failure and mass mortality.     

Migrants and urban wage: Evidence from China's internal migration

Using China's 2005 1% population survey, this paper examines the wage impact on urban workers of rural to urban migration. We find that, on average, migrants increase the wages of urban workers, with the effect being magnified for more skilled urban workers. This suggests that migrants with skills similar to those of urban workers may complement them. We explore the possible channels of these effects. From the supply perspective, we find that migration inflows accelerate the occupational upgrading of urban workers, especially for low- and medium-skilled workers. From a demand perspective, as the share of migrants in the urban labor force increases, the number and output of industrial firms also increase, and firms become more reliant on low-skilled workers. The more migrants in a city, the greater the available employees for industrial firms, particularly for low-skilled employees. However, the effects on high-skilled firms are much smaller or insignificant. In addition, we find that migrants have little impact on firms' capital-labor and capital-output ratios. This suggests that firms can expand through capital adjustments to absorb inexpensive migrants, which alleviates the possible negative impact of migrants on the urban labor market.     

Product market competition, unemployment and income disparities

Product Market Competition, Unemployment and Income Disparities. — We discuss how promoting competition in product markets affects unemployment and wage differentials. We examine a general equilibrium model with real wage rigidities in labor markets and market power in product markets. We illustrate how more intense competition reduces unemployment. A decrease of markups would induce an increase of real wages if real wages were flexible. This enables the employment of more low-skilled people above a real reservation wage. More intensive competition, however, widens wage and income differences between low-skilled and high-skilled workers. Differences of income distributions across countries could also be caused by differences in the intensity of product market competition.     

Wage dispersion in Germany and the US: is there compression from below?

Wage compression from below is a common diagnosis for Germany compared to the U.S. We develop alternative hypotheses in order to identify the so-called accordion effect, i.e. reduced inter-quantile distances below the median especially for low skilled and other ill-paid groups. Our results are partly at odds with wide-spread beliefs. Using large micro data sources we find evidence of an accordion effect at the low end of the distribution for the U.S. The results for Germany, however, are contrary to what one would have expected in case of marked wage compression from below. For low-skilled workers of both genders and for female workers in general we find higher inter-quantile distances below rather than above the median. By contrast, there is strong evidence for the accordion effect if skilled male workers are considered.     

Spatial patterns of development and the British housing market

The government wants 3m houses built by 2020. Economic theorytells us their locations matter for living standards. Economicscannot tell us the optimal locations, but does show that housesare usually socially more valuable in high land-price areas,because additional workers are more productive in such places.Land-price data and evidence on urban agglomeration economiespoint to a significant rise in the optimal sizes of some UKcities and that optimal locations have moved from industrial-revolutioncities towards the South-east. As a result, significantly expandingLondon, its commuter satellites, and other high-skill placesin the UK, but particularly in the South-east, is likely togenerate substantial rises in wages and living standards. Inthese places the planning system dramatically constrains theeconomy from responding with nineteenth-century dynamism, whennew economic opportunities led some towns to grow dramatically.     

Structural Changes in the Demand for Labor

This paper investigates why labor demand has shifted away from low-skilled toward high-skilled labor in The Netherlands. We focus on the role of changes in relative wages and technological progress. A flexible functional form, proposed by Diewert and Wales, the Symmetric Generalized McFadden cost function, is estimated for the exposed and sheltered sectors. The estimates are based on time-series data for the period 1972–1993, which recently became available. Labor-saving technological change explains most of the displacement of low-skilled workers. The computed elasticities suggest that substitution between labor as a whole and capital is small. However, substitution plays a modest role in the shift from low-skilled toward high-skilled labor, especially in the sheltered sector. Skill-capital complementarity seems relevant in both sectors.     

Immigration and the Health of U.S. Natives

Immigration may put a strain on the health care system, adversely impacting the health of the native population. At the same time, recent studies have documented the role of immigration in nudging native workers from risk-intensive, physically demanding jobs toward occupations that require more communication and interactive ability, potentially improving their health. In this article, I examine the relationship between immigration and the health of the native population in the United States. The results of the analysis fail to show that immigration adversely affects the health of U.S. natives. Instead, the findings suggest that the presence of low-skilled immigrants may improve the health of low-skilled U.S.-born individuals.     

Russian real wages before and after 1917

The paper measures real wages in St Petersburg, Moscow, and Kursk over 1853-1937. Workers in construction and large scale industry are studied. For the imperial period and the NEP, new series of prices are collected from archival and printed sources, and these radically revise previous measures of inflation. Russian living standards grew little between 1853 and 1913, but doubled between 1913 and 1928 due to the exchange rate, price, and employment policies followed by the regime. Real wages dropped to their pre-War level between 1928 and 1937, as the social surplus was mobilized for the industrialization drive.     

企业员工薪金问题的公平性研究

薪金作为企业与员工之间的一种公平性交易,员工关心其薪金是否受到公平待遇,而这种公平性是员工通过内部一致性与外部竞争性来察觉的,但目前我国大部分企业薪金措施缺乏内部一致性与外部竞争性。本文建立企业员工薪金制度的回归模型,以确定具体的企业员工薪金标准,从而实现企业员工薪金公平性。