International Factor Mobility,Wages and Prices

This paper analyzes the joint influence of migration inflows and outward foreign direct investment (FDI) on wage bargaining. Labor migration and offshoring supported by FDI affect wage deals by changing the outside options of workers and firms. Unemployed workers may find alternative jobs either in the legal or in the illegal labor markets. Wages in this latter case are highly affected by migrants crowding this segment more than any other market. Firms may have the option of moving production partly or entirely to foreign low‐cost countries. A wage curve is designed theoretically, reflecting cross‐border labor and capital mobility, and estimated on panel data for 13 European countries over the period 1995–2013. The theoretical predictions of a joint negative effect on wages of FDI outflows and labor migration inflows are confirmed with some novel results.     

Intermediate good sourcing,wages and inequality: From theory to evidence

This paper examines the consequences of offshoring and outsourcing on domestic wages and wage inequality. I highlight the role of labor market frictions in impacting firms’ outsourcing and offshoring decisions; specifically, how differential costs of matching with workers affect the location of production (onshore or offshore) and how differential costs of assessing worker quality affect the ownership of intermediate production (intra‐firm or inter‐firm). I demonstrate how firm sourcing decisions can depend crucially on the industry skill intensity, which reflects the importance of worker–firm match quality, and as a result, the effect of offshoring on domestic labor depends on occupation and industry characteristics, as well as the ownership regime of trade. Bringing the theory to the data I rely on plausibly exogenous variation in the cost of inter‐ and intra‐firm offshoring to identify the effects of a change in each type of offshoring on domestic wages. I find strong evidence that the effect of offshoring on domestic wages—both on the average and on the wage distribution—is governed by the type of offshoring (inter‐ vs. intra‐firm), the skill intensity of the industry, and the offshorability of the occupation.     

The effects of offshoring to low-wage countries on domestic wages: a worldwide industrial analysis

This paper extends the literature on the implications of offshoring for labour markets by investigating its effect on the wages of different skill groups in a broad global context. The analysis draws on input–output data from the WIOD project, and in the panel analysed (13 manufacturing industries, 40 countries, 1995–2009) we account for up to 96 % of the international trade in manufacturing inputs. Being particularly interested in the wage effects of offshoring to low-wage countries (LWC), we use precise LWC classifications (varying across industries and time) to decompose overall offshoring by source country. We use a decomposition of the conventional offshoring measure in order to capture its pure international component, which is further instrumented using a gravity-based strategy. According to the estimation results, the negative impact of offshoring on wages mainly concerns low and medium skilled workers. However, in terms of magnitude, the downward pressure on domestic wages exhibited by offshoring to LWC is relatively small.     

The Return to Caring Skills: Gender,Class, and Occupational Wages in the US

Feminist economics has contributed to the understanding of the economic importance of care work. Most studies find a wage penalty associated with caring occupations. This study extends the feminist research on care work beyond caring occupations by identifying specific caring skills and activities derived from the 2014 O*NET job-evaluation data. Four caring skills – (1) Assisting and Caring for Others, (2) Establishing and Maintaining Interpersonal Relationships, (3) Service Orientation, and (4) Social Perceptiveness – were used in ordinary least-squares and quantile wage regressions for 623 occupations in the United States. Findings indicate that the return to caring and assisting skills results in a wage penalty for low-wage workers but a wage premium for workers in high-wage and male occupations. By identifying the impact of gender and class on the economic return to particular caring skills, the study broadens the understanding of care work, especially in relation to US wage inequality.     

Occupational attainment and stratification in China: The interactive effects of social networks and the hukou system

This paper examines the effects of social networks and hukou status on worker’s occupational attainment in China. To identify the potential ranking of different occupations, we consider the use of the stereotype ordered regression model to estimate individual occupational choice. Our results show that social networks play different roles in shaping occupational outcomes for urban and rural workers. In particular, friendship ties significantly improve urban workers’ opportunities in obtaining higher‐ranked occupations; in contrast, kinship ties appear to be more influential for rural migrants, but the effects are limited to the attainment of lower‐ranked occupations. While social contacts from government organizations or state‐owned sectors facilitate urban workers’ attainment of higher‐ranked occupations, similar patterns are not observed among rural workers. We further find that the beneficial effects of social networks or urban hukou identity are stronger for workers who are from less‐developed regions, who work in state‐owned enterprises, or who have a college degree. Decomposition of the wage gap between urban and rural workers suggests that differences in social networks and occupation types, together with hukou discrimination, account for the majority of the current wage inequality.     

Are low-skill public sector workers really overpaid? A quasi-differenced panel data analysis

Public–private sectoral wage differentials have been studied extensively using quantile regression techniques. These typically find large public sector premiums at the bottom of the wage distribution. This may imply that low skill workers are ‘overpaid’, prompting concerns over efficiency. We note several other potential explanations for this result and explicitly test whether the premium varies with skill, using Australian data. We use a quasi-differenced Generalized Method of Moments (GMM) panel data model which has not been previously applied to this topic, internationally. Unlike other available methods, this technique identifies sectoral differences in returns to unobserved skill. It also facilitates a decomposition of the wage gap into components explained by differences in returns to all (observed and unobserved) skills and by differences in their stock. We find no evidence to suggest that the premium varies with skill. One interpretation is that the compressed wage profile of the public sector induces the best workers (on unobserved skills) to join the public sector in low wage occupations, vice versa in high wage occupations. We also estimate the average public sector premium to be 6% for women and statistically insignificant (4%) for men.     

Offshoring,wages, and employment: Theory and evidence

This paper investigates the wage and employment effects of offshoring. I use firm-level data and two events in Mexico as a natural experiment to identify the effects of a fall in the marginal cost of offshoring to Mexico. I find that domestic wages actually rise at US firms likely to take advantage of this new offshoring opportunity. At the same time, domestic wages fall at US firms unlikely to take advantage of this opportunity. Furthermore, I find no evidence of greater domestic job loss at the former compared to the latter firms. These findings are consistent with productivity effects from offshoring. To explain the mechanism, I develop a theoretical framework that combines heterogeneous firms with imperfect labor markets and rent-sharing. Firms likely to take advantage of new offshoring opportunities increase their productivity and profitability at the expense of their competitors. Through rent-sharing, this channel leads to higher domestic wages at the former firms relative to the latter. Further, there is no empirical evidence of greater domestic job loss at the firms likely to expand their offshoring compared to their competitors that are unlikely to increase their offshoring.     

Sexual orientation and labour relations: new evidence from Athens,Greece

We use data from the 2008–2009 Athens Area Study (AAS) to provide the first evidence on the relationship between men's sexual orientation and wages in the Greek capital, Athens. Gay and bisexual men are found to receive significantly lower monthly wages than heterosexual male workers after accounting for demographic and occupational characteristics. The estimations reveal that educated gay and bisexual workers face lower wage differentials than less-educated gay and bisexual workers, which is consistent with the statistical theory of discrimination. However, wage gaps are significant at all educational attainment levels, suggesting that these workers face strong prejudices in the Athenian labour market. The same pattern holds also across all occupations and sectors. Furthermore, to better understand the determinants of the wage gaps, we compare gay/bisexual men with both married and unmarried heterosexual men. By making these comparisons, we are able to disentangle the penalty associated with being unmarried from other human-capital explanations for the wage gap.     

The Effect of Foreign Affiliate Employment on Wages,Employment, and the Wage Share in Austria

This paper estimates the effects of outward Foreign Direct Investment (employment in affiliates abroad) on employment, wages and the wage share in Austria using panel data for the period 1996–2005. There is evidence of significant negative effects of FDI on both employment and wages, and consequently on the wage share. The results are not limited to workers in low-skilled sectors. The negative employment effect is mainly due to the rise in employment in the foreign affiliates in Eastern Europe. The negative wage effects originate from affiliate employment in both Eastern Europe and the developed countries in the industrial sector, but FDI in Eastern Europe has positive wage effects in the services sector due to possible scope effects.     

Gender segregation and earnings differences in the Spanish labour market

This article analyses the effects of different types of gender segregation on the gender wage differential for the Spanish labour market. Matched employer–employee data from a sample of 226,535 workers are used. These workers are employed in 61 occupations within 26,492 establishments in 51 different industries. Workers belonging to the same industry, establishment or job share common factors which cannot be observed and these factors affect wages. If these unobservable variables are correlated with the explanatory variables, their estimated effects will be biased. For this reason, we estimate the effects of each type of gender segregation on the wage gap using a robust specification to these possible correlations. We obtain that industrial segregation by gender explains a lower part of the wage gap between men and women than previous researches found using standard regressions, while the contributions of establishment segregation and occupational segregation within each establishment are greater.     

Offshoring, labour market institutions and the elasticity of labour demand

This paper analyses the evolution of the elasticity of labour demand and the possible role of offshoring therein using industry-level data for a large number of OECD countries. The first main finding is that the wage elasticity of labour demand has increased substantially since 1980, although some of this increase may reflect a trend increase in the speed of adjustment rather than an increase in the long-run wage elasticity. The evidence on the potential contribution of offshoring to raising labour demand elasticity is mixed. No association is found between increases in offshoring and demand elasticity during the second half of the 1990s, but there is a significant cross-sectional association between higher average offshoring intensity during this period and higher demand elasticity. We also find some evidence that strict employment protection legislation weakens the cross-sectional association between offshoring and higher labour demand elasticity, suggesting that the relationship between offshoring and the labour demand elasticity may depend on the national institutional environment.     

Changes in Occupational Tasks and Their Association with Individual Wages and Occupational Mobility

This study provides novel evidence on the relevance of task content changes between and within occupations to wage dynamics of occupational changers and stayers. I use individual‐level, cross‐sectional data featuring tasks performed on the job to compute a measure of proximity of job contents. Then, I merge this measure to a large‐scale panel survey to show that occupational changers experience a wage growth that is declining when the accompanying alterations in task contents are big. For occupational stayers, alterations in task contents generate a positive wage component, beyond tenure effect. However, the results are not robust with respect to the choice of proximity measure and over time.     

Peripheral Tasks Are Offshored

I build a model in which an offshoring firm has a core task and a peripheral task. This study demonstrates that in a world composed of the North and the South, the peripheral task is offshored but the core task is not. The study also demonstrates that offshoring does not occur if the skill level of the southern workers is too low.     

Unobserved Heterogeneity,Job Training and the Employer Size–Wage Effect in Australia

This study attempts to clarify the nature of the employer size–wage effect in Australia by determining the extent to which it can be explained by observed and unobserved quality differences of workers. Our empirical results show that, for men, quality‐adjusted employer size–wage effects are quite small and are mostly driven by lower wages for workers in the smallest firms (fewer than 20 workers). For women, size–wage effects disappear when unobserved quality differences are accounted for. We also find that accounting for differences in the incidence of job training has no effect on the structure of wage differences by employer size.     

A model of wage and employment effects of service offshoring

This paper develops a two‐sector model of trade in goods and intermediate tasks that differ in tradability and skill intensity. A skill‐abundant country with high productivity is shown to offshore more unskilled tasks than skilled tasks, without relying on a particular correlation structure between tradability and skill intensity. With putty‐clay technology that allows retraining in the long run, transition from the non‐offshoring to the offshoring equilibrium generates wage and employment effects that switch from negative to positive as tradability declines, with the switches occurring at a higher degree of tradability for skilled tasks. This is consistent with the empirical literature.     

Explaining personality pay gaps in the UK

Using the British Household Panel Survey we estimate the effect on pay of each of the Big Five personality traits for employed men living in the UK. We add to the existing literature by estimating the role of factors such as education and occupation in explaining personality pay gaps, by allowing the personality traits to affect wage differently across occupations, education levels and other workers characteristics, and by investigating personality pay gaps for high- and low-paid workers. We find that openness to experience is the most relevant personality trait in explaining wages, followed by neuroticism, agreeableness, extroversion and conscientiousness. Openness and extroversion are rewarded while agreeableness and neuroticism are penalized, but the openness pay gap is totally explained by differences in worker characteristics, particularly education and occupation.     

Reworking the Wage Curve: Exploring the consistency of the model across time,space and demographic group

This paper extends Blanchflower & Oswald's (1994) work on the wage curve to the 50 largest metropolitan areas in the United States. The wage curve is more elastic in US metropolitan areas than prior research shows for the nation as a whole, and the wage curve varies over the business cycle, becoming more elastic in periods of higher unemployment. The most striking finding is that black workers have a more elastic wage curve than do white workers. Estimating the wage curve with the non-employment rate, a measure of underemployment, shows elasticities that are substantially higher than for wage curves estimated with the unemployment rate. This trend further increases the negative effects on pay for blacks, who are more likely than white workers to be underemployed.     

IDENTITY MANAGEMENT: WORKER INDEPENDENCE AND DISCRIMINATION AGAINST GAY MEN

I build on a growing literature documenting wage differentials for gay men by showing that the wage differential gay men experience varies significantly across occupations with different levels of worker independence. The penalty is smallest in management and professional occupations, which involve a high level of worker independence. It is largest in service occupations, which include a lower level of independence. This distribution of earnings penalties is consistent with discrimination being the source of the gay wage penalty. The results support the conjecture that higher levels of independence allow gay men to more successfully manage the disclosure of sexual orientation and mediate the negative effects of discrimination. (JEL J3, J7, J15)     

Service outsourcing: The home,the host and the provider

Although offshoring service providers have grown meteorically in the last two decades, the phenomenon is still primarily analyzed through the lens of a home country and its firms. This paper presents a framework for explaining some of the stylized facts of the offshore service provider industry. The model characterizes the service choice of offshore service providers under alternative skill distribution and also explains why complex service providers employ more skilled workers, pay higher wages, and have a lower scale of provision. Finally, it sheds light on the relationship between partnering country sizes and wage inequality.     

Can domestic unions gain from offshoring?

This paper considers a unionised monopolistic firm producing a final good with isoelastic demand by using two intermediate commodities, one of which can be either imported from a low-wage country or bought from domestic subcontractors. The paper shows that, notwithstanding wage moderation, the union is better off when the firm chooses offshoring rather than domestic sourcing. The firm is the less likely to choose offshoring the more wage-oriented is the union and the higher is the union bargaining power in the wage negotiation.