The Part-Time Wage Gap: a Career Perspective

Summary  Because promotions are an important source of wage growth, we argue that the low incidence of promotions among part-time workers will contribute to the emergence of the part-time wage gap. We test this claim using Dutch employer–employee matched data. We find that the part-time wage gap is absent among young school leavers, but that it is well established among more mature workers. Moreover, we find that promotions account for a wage growth of about eight log points. Finally, workers in part-time jobs experience a lower rate of promotion relative to workers in full-time jobs. We are grateful to the Dutch Ministry of Social Affairs and Employment for granting access to the data. The paper greatly benefited from comments by Daniel Hamermesh, Jonathan Wadsworth, and seminar participants at ZEW in Mannheim, at WPEG conference at York University and Tilburg University. We are also indebted to two anonymous referees for helpful suggestions that substantially improved the quality of the paper. The usual disclaimer applies.     

Unemployment Insurance and the Business Cycle: What Adjustments are Needed?

During the 2007–2011 economic downturn, the duration that one could collect unemployment insurance (UI) in the United States increased to an unprecedented 99 weeks, and the UI benefit amount increased by $25. This article explores the policy of increasing the generosity of UI during recessions using a model that accounts for the insurance and moral hazard implications of UI as well as the program's impact on job creation. When limited to adjusting the duration of benefits, a more generous UI system is optimal. However, due to UI's negative impact on job creation and the increased cost of providing benefits when unemployment is high, the optimal extension is just 1.3 months. When the government adjusts both the benefit amount and its duration, the optimal policy during downturns is a reduction in the replacement rate. This mitigates the decline in job creation and funds a UI extension of 4.3 months.     

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.     

A cross-country comparison of the demand for labour in Europe

A Cross-Country Comparison of the Demand for Labour in Europe.-This paper investigates structural differences in the demand for labour in France, Germany, and the UK. It finds substantial differences in the sensitivity of the demand for labour to international product demand and factor prices in all three countries. In particular, it reacts to domestic factor prices in Germany but international cost competitiveness in France and the UK; it depends upon European-wide product demand in France and Germany and a wider measure of product demand in the UK. The authors attribute these differences to product market conditions and institutional factors rather than to differences in the production technology.     

Real wage rigidities, accommodative demand policies, and the functioning of EMU

Real Wage Rigidities, Accommodative Demand Policies, and the Functioning of EMU. — The paper shows that the primacy of politics over economics in the decision to start EMU with eleven countries on January 1, 1999 could have serious consequences concerning the functioning and stability of EMU, in particular during the transition phase. The paper demonstrates empirically that real wages in EMU member countries are highly rigid by international comparison and that demand policies played a considerable role in absorbing adverse shocks in the past. Considering that real wages are unlikely to become much more flexible soon, and taking also into account that the use of demand policies in EMU is severely curtailed, it becomes clear that EMU will face a severe crisis if large asymmetric shocks do in fact occur.     

INFORMALIZATION OF INDUSTRIAL LABOR IN INDIA: EFFECTS OF LABOR MARKET RIGIDITIES AND IMPORT COMPETITION

Since the 1980s, industrial labor in India has been increasingly informalized, manifested in a rising share of unorganized sector employment and the growing use of temporary and contract workers, and subcontracting in organized manufacturing. Using unit‐level data from the National Sample Survey employment–unemployment survey for 2004–5, the paper investigates econometrically whether labor market rigidities and import competition have been responsible for the informalization of industrial labor in India. The results of econometric models show that labor market reforms tend to increase the creation of regular jobs, while import competition tends to raise casual employment among workers with education levels above primary.     

REVISITING SOUTH AFRICAN EMPLOYMENT TRENDS IN THE 1990S

This article revisits South African employment trends recorded since 1995. In particular, it investigates whether the job losses and gains recorded by the October Household Survey jobs in the mid-1990s reflect the reality. This is done by comparing the different official data sets, and by exploring alternative sources of information for three sectors that substantially influenced this trend, namely formal agriculture, mining, and community, social and personal services. Potential inconsistencies within the October Household data are assessed, particularly in relation to the distribution of employees across formal and informal sectors and the categorisation of unpaid family workers. The implications of possible changes to the employment trend from 1995-2006 are considered. This article finds that the evidence is strong enough to call into question published employment trends. According to the October Household Survey, formal employment fell by 1.4 million between 1995 and 1997. The OHS and Labour Force Survey shows that formal employment then grew by 1.9 million between 1997 and 2006. According to the revised figures presented in this paper, 73,000 to 530,000 formal jobs were lost between 1995 and 1997 and 1.4 million net new jobs were created between 1997 and 2006. It is therefore possible that the plummeting and recovery of employment in the 1990s were both considerably less dramatic than that reflected in the official statistics. Further research and investigation would be required to validate these trends.     

The French Great Depression: A business cycle accounting analysis

Using the business cycle accounting framework [Chari V., P. Kehoe and E. McGrattan 2007. Business cycle accounting. Econometrica 75, 781–836.], this paper sheds new light on the French Great Depression. Frictions that reduce the efficiency with which factor inputs are used (efficiency wedge) were the primary factor in the economic downturn. The decline in consumption can be attributed to distortions in the Euler equation (investment wedge). In addition, frictions creating a gap between the marginal rate of substitution and the marginal product of labor (labor wedge) contributed to the slowdown of the economy after 1936. This drop in the efficiency wedge might have resulted from financial frictions, whereas the investment wedge might have been caused by financial frictions due to agency costs. Institutional changes in the labor market could serve as a potential explanation for the decline of the labor wedge after 1936.     

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.     

WOULD CHEAPER CAPITAL REPLACE LABOUR?

Left‐leaning members of the ruling alliance should be careful what they wish for. By estimating elasticities of substitution and factor demand between capital and four labour types, we find microeconomic evidence that cheaper capital would reduce demand for labour. While capital and all occupations are substitutes, many but not all occupations are themselves complements. These results allow for endogenous changes in output and apply to the vast majority of firms in our sample.     

PROSPECTS FOR ‘CLOSING THE GAP’ IN SOCIOECONOMIC OUTCOMES FOR INDIGENOUS AUSTRALIANS?

Practical reconciliation' and more recently 'closing the gap' have been put forward as frameworks on which to base and evaluate policies to address Indigenous disadvantage. This paper analyses national-level census-based data to examine trends in Indigenous wellbeing since 1971. There has been steady improvement in most socioeconomic outcomes in the last 35 years; a finding at odds with the current discourse of failure. Evidence of convergence between Indigenous and non-Indigenous outcomes, however, is not consistent. For some outcomes, relatively rapid convergence is predicted (within 25 years), but for the majority of outcomes, convergence is unlikely to occur within a generation, if at all.     

EXCHANGE RATES AND EMPLOYMENT

The analysis of exchange rates and employment has received scant attention in development economics. This is surprising, since there appears to be a number of well-defined transmission channels through which exchange rates impact on employment. In South Africa this is particularly important given the rand's higher volatility relative to other emerging economies. The main focus of this paper is to give an overview of the transmission channels through which exchange rates affect employment and to discuss the standard methodological approach to conceptualising the impact of exchange rates on employment. Given the sector-specific impact of exchange rates which are conditioned by industry characteristics, such as the degree of external orientation, there will always be winners and losers in the face of a currency shock. This means the full impact of exchange rates on employment can only be dealt with in an economy-wide framework. Results from a computable general equilibrium (CGE) model are presented to demonstrate that even in a country with unreliable employment data such as South Africa, one can still analyse exchange rate and employment issues.