Unemployment with trade and firm heterogeneity

By specifying the setting of the footloose capital model with firm heterogeneity, this paper examines the effects of trade liberalization on unemployment through two different mechanisms: firstly, we embed search frictions into the labor market; and secondly, we consider fair wages as the source of unemployment. In the model with search frictions, we find that both the expected wage and employment rate could be higher for a small country with better search technology. In the fair wage setting, the results show that an increase in trade freeness increases the unemployment rate of the large (small) country when the trade freeness is sufficiently high (low). Finally, we try to compare the welfare levels under different scenarios and discover that unemployment may lead to a deterioration in the welfare gains from trade.     

The Wage and Employment Dynamics of Minimum Wage Workers

This study uses panel data to examine the wage and employment dynamics of minimum wage workers. Compared with workers earning above the minimum, minimum wage workers are much more likely to be new entrants or to exit the labor market. Changes in industry, occupation, and access to job training are particularly important to improving the wages of minimum wage workers. Many minimum wage workers earn less than their potential wage temporarily because of nonwork circumstances that make higher-paying jobs less attractive.     

最低工资制度对劳动力市场影响的实证分析

本文对最低工资理论模型进行了拓展分析,并以深圳为案例分析了最低工资制度对区域就业的影响。在跨区域劳动力流动的情况下,区域劳动力市场均衡工资趋近最低工资标准,并且不会导致区域就业量的下降。     

The Response of Hours of Work to Increases in the Minimum Wage

This paper examines the effect of minimum wage increases on the hours of work of teenagers (ages 16 to 19) using monthly data from the Current Population Survey. Our findings are consistent with the prediction from neoclassical theory that minimum wage increases have a negative effect on labor demand. However, the estimates we provide here for the elasticity of hours of teen labor demanded with respect to the minimum wage suggest that alternative estimates based on aggregate employment consistently understate the total impact of minimum wage increases on teenage labor utilization.     

Central Bank Independence,Wage Bargaining,and Labor Market Performance: New Evidence

Using data on 20 industrial countries over the period 1982 to 2003, this article finds central bank independence to favorably affect both unemployment and employment rates. The size of these effects appears to be substantial, particularly in the long term. In contrast to some of the previous literature, the article finds that the favorable effects of central bank independence do not depend on the degree of wage bargaining centralization or coordination. Furthermore, it finds that higher centralization as well as higher coordination of wage bargaining may also have favorable direct effects on labor market performance.     

Minimum wage,trade and unemployment in general equilibrium

The path‐breaking work of Card and Krueger, showing that a higher minimum wage can increase employment, turned the age‐old conventional wisdom on its head. This paper demonstrates that this apparently paradoxical result is perfectly plausible in a competitive general equilibrium production structure of a small open economy with a non‐traded good, without recourse to monopsony, spatial heterogeneity, heterogeneity of consumers and so on, the usual theoretical drivers behind the result. Following Jones and Marjit, we build a simple general equilibrium model with production complementarity and we show that a higher minimum wage can raise aggregate employment. Expansion in the non‐traded sector following a wage hike may be consistent with the overall expansion of the export sector in a multi‐good framework, an unlikely outcome in a conventional two‐good model which cannot accommodate with production complementarity.     

Cross‐Country Evidence on Labor Market Institutions and Young Adult Employment through the Financial Crisis

I develop and analyze a set of cross‐country facts regarding employment and wage setting institutions over the decade surrounding the 2008 financial crisis. Among long‐industrialized countries, young adult employment declined more than prime age employment over this time period. I show that differences in countries' wage setting institutions strongly predict variations in the magnitude of declines in young adult employment. Both unconditionally and conditional on changes in macroeconomic conditions, young adult employment declined 5 percentage points less in countries where wage setting is driven by collective bargaining arrangements than in countries with statutory wage floors. Evidence on the evolution of legislated minimum wage rates and of an asymmetry in the relationship between growth and young adult employment suggest an important role for a standard “wage rigidity” mechanism.     

Minimum Wages and Poverty: Will a $9.50 Federal Minimum Wage Really Help the Working Poor?

Using data drawn from the March Current Population Survey, we find that state and federal minimum wage increases between 2003 and 2007 had no effect on state poverty rates. When we then simulate the effects of a proposed federal minimum wage increase from $7.25 to $9.50 per hour, we find that such an increase will be even more poorly targeted to the working poor than was the last federal increase from $5.15 to $7.25 per hour. Assuming no negative employment effects, only 11.3% of workers who will gain live in poor households, compared to 15.8% from the last increase. When we allow for negative employment effects, we find that the working poor face a disproportionate share of the job losses. Our results suggest that raising the federal minimum wage continues to be an inadequate way to help the working poor.     

Minimum wage and employment in the fast food industry

Recent empirical studies on the impact of minimum wage legislation generate results that are inconsistent with conventional economic theory. Employing a methodology that compares affected with unaffected areas, these investigations indicate that employment levels are not adversely affected by the imposition of a minimum wage. Two studies in particular focus on the fast food industry. Although one study has come under attack for improperly measuring employment, an interesting theoretical question remains. This paper derives the demand for labor function of a fast food outlet facing price and profit margin constraints dictated by the company. The results of a minimum wage constraint are consistent with current empirical literature.     

Effect of Korean trade union on wage discrimination between regular and irregular workers

Whether the dual labor market structure implied by employment type and unionization causes wage discrimination is an intriguing and relevant policy question in the context of South Korea. This study examines the effect of trade unions on wage discrimination against irregular workers by extracting and comparing the ratios of the discriminatory wage gap by employment type between unionized and non-unionized workplaces. As per the analysis, all generalized decomposition frameworks show that the presence of trade unions expands discrimination regardless of the employment type. In addition, the effects of unionization on the degree of discrimination differ by factors characterized by the dual labor market. The effects are statistically significantly greater for women, youth, service industries, and white-collar jobs.     

Legal Minimum Wages and Employment Duration

We estimate the effect of minimum wages on employment duration using event history data from the 1988-1994 rounds of the National Longitudinal Survey of Youth. Existing literature takes two alternative tracks: Some studies predict reduced turnover due to rents created by minimum wages, others focus on the expected increase in turnover due to reduced job amenities and imperfect information. We find that for men, the net effect of a minimum wage depends on its magnitude relative to the typical wage in the local labor market. We find some evidence that where the minimum wage is low, separation rates for men hired at the minimum wage are reduced. We also find that as the relative value of the minimum wage rises, separation hazards increase. We interpret these findings as evidence that rents may accrue to minimum wage workers, but that the job matching process is undermined when the minimum wage binds.     

Labor Market Distortions in Côte d'Ivoire: Analyses of Employer‐Employee Data from the Manufacturing Sector*

Abstract: This paper investigates the extent and nature of distortions in the labor market in the Republic of Côte d'Ivoire by using quantile regression analysis on employer‐employee data from the manufacturing sector. We found that the labor markets in Côte d'Ivoire do not seem to be much distorted. Unions may influence employment through tenure but do not seem to influence wages directly except for vulnerable minorities that seem protected by unions. Establishment‐size wage effects are pronounced and highest for white‐collar workers. This may be explained by the efficiency wage theory, so that, even in the absence of unions, segmentation and inefficiencies will still be present as long as firms seek to retain their employees by paying wages above the market clearing level. The inefficiency arising from establishment‐size wage effects can be mitigated by education. Furthermore, the premium to education is found highly significantly positive only for higher education, and not for basic education, indicating that educational policies should also focus on higher education.     

Employment,Wages, and Alcohol Consumption in Russia

This article investigates the association between alcohol consumption and labor market outcomes in Russia, using data from the Russian Longitudinal Monitoring Survey (RLMS). It estimates cross-sectional and fixed effects models of the impacts of alcohol consumption on employment and wages for males and females using three different measures of drinking. The cross-sectional findings indicate that alcohol consumption has an inverse U-shaped impact on employment and wages for females. The impact on males appears to be positive but the inverse-U shape is less pronounced. Once the unobserved individual heterogeneity is accounted for using fixed effects, alcohol consumption is found to have no significant effect on employment for either males or females. The fixed effect wage models indicate that alcohol consumption has a small, positive, but linear impact on the wage rate for both males and females. Models including fixed effects generate estimates that are smaller in magnitude compared with those of cross-sectional models. The findings are robust to several diagnostic checks.     

Wage Consequences of Rapid Tertiary Education Expansion in a Developing Economy: The Case of Thailand

In recent years, Thailand has experienced the emergence of “overeducated” workers as the supply of university graduates in Thailand has outpaced growth in high‐skilled employment opportunities. Using the 2007 to 2009 Thai Labor Force Survey, this paper quantifies the incidence of overeducation and estimates overeducation wage penalties among male university graduates. The results show that the incidence of overeducation is greatest among younger cohorts. Quantile wage regression results suggest that overeducation wage penalties for older workers capture the impact of unobserved low ability on wages. In contrast, persistent wage penalties of 11–26% across the wage/ability distributions for younger workers are consistent with structural imbalances in the Thai labor market. These imbalances make it difficult for university graduates to find jobs commensurate with their level of formal education and to achieve their full earning power. The wage penalties are especially large for new entrants into the labor market.     

最低工资对广东省的就业影响研究

本文采用广东省1996～2007年的时间序列数据,运用协整定理以及脉冲响应函数,对最低工资的就业效应进行实证分析。结果表明,最低工资的提高会对就业产生正影响。因此,广东省应结合当地的实际情况适时调整最低工资,使其真正成为低收入阶层的有利保障。     

The minimum wage,exports, and firm performance: Evidence from Indonesia

This paper examines the interrelationship between changes in the provincial minimum wage, firms’ export behavior, and firms’ performance in Indonesia. In this regard, we apply a two-stage least squares regression analysis to detailed firm-level data of manufacturing enterprises during 2002–2014. We find that an increase in the minimum wage is associated with a decrease in a firm’s employment and productivity, but increase in its probability of exporting and markup. We also use the 2012 minimum wage reform in Indonesia to conduct a difference-in-difference analysis to further mitigate the potential endogeneity of minimum wage regulation. Our findings are generally robust to alternative estimation methods. Moreover, quantile regression results indicate that the average wage, firm size, and the education level of workers also affect the predictions. Above all, this study suggests that Indonesian exports and the country’s comparative advantage in international markets are not negligibly affected by higher labor costs caused by the growth in the minimum wage.     

Fiscal stimulus and labor market dynamics in Japan

The paper studies the effects of fiscal expansion on the Japanese labor market. First, using a structural VAR model, we find that the unemployment rate falls and employment rises following an increase in government spending. We also find that fiscal expansion affects flows in and out of unemployment. While an increase in government spending increases the job-finding rate, it reduces the separation rate. We then incorporate search and matching frictions into a standard dynamic general equilibrium model, and study whether the model can explain what we observed in data. While the model fails to predict the exact size of the impact of government spending shocks on the Japanese labor market variables, it can consistently capture the empirical pattern of responses of labor market variables to shocks.     

The Effect of the Tipped Minimum Wage on Employees in the U.S. Restaurant Industry

According to federal law in 2013, employers can take a credit of up to $5.12 for tips received by workers in satisfying the minimum‐wage requirement of $7.25. This article uses interstate variation in laws regarding tip credits and minimum wages to identify the effects of reducing or eliminating the tip credit on employment, hours, and earnings in the U.S. restaurant industry. Using data from the Quarterly Census of Employment and Wages and the Current Population Survey, we find that a reduction in the tip credit increases weekly earnings but reduces employment in the full‐service restaurant industry and for tipped workers. The results are robust to controls for spatial heterogeneity in employment trends and are supported by a series of falsification tests.     

Real Interest Rate and Labor Market Performance around the World

This article studies the effects of the real interest rate on labor market performance. Using a much larger sample of countries and more indicators of labor market performance than have been used in previous articles, it finds that a rise in the real interest rate increases the unemployment rate, raises the share of long‐term unemployed, and reduces the employment rate. The magnitude of these effects is very small in the short run but much more pronounced—though still fairly small—in the long run. Young people are disproportionately affected. The results are robust to variations in specification.     

THE DETERMINANTS OF EMPLOYMENT: A SECTORAL ANALYSIS FOR TURKEY

This paper analyzes the effects of wages, openness, and demand on employment in the private manufacturing industry in Turkey based on panel data for the period of 1973–2001. The wage elasticity of employment increases after trade liberalization. Nevertheless, output elasticity of labor demand is higher than wage elasticity in the total manufacturing sector for the whole estimation period, and in the high- and medium-skilled sectors in the post-1980 period. Trade effects, after controlling for output, seem to have a low economic significance. The positive effects of exports on the labor intensity of production are low or are offset by labor saving effects of foreign trade, particularly in the high- and medium-skilled sectors. On the other hand, there is some evidence of a negative import effect in the low-skilled sectors, whereas in the high- and medium-skilled group a complementary relation between domestic labor and imported inputs dominates the effects.