Unions and the Great Compression of wage inequality in the US at mid‐century: evidence from local labour markets

This article tests whether places with higher exposure to unionization during the 1940s, due to their pre‐existing industrial composition, tended to have larger declines in wage inequality, conditional on local economic and demographic observables and regional trends. We find a strong negative correlation between exposure to unionization and changes in local inequality from 1940–50 and 1940–60. This does not appear to be underpinned by skill‐specific sorting of workers or by firms leaving places with high exposure to unionization. We also find that the correlation between exposure to unionization in the 1940s and the change in inequality after 1940 persists in long‐difference regressions to the end of the twentieth century.     

Off‐farm wage returns to education: Evidence from Lesotho

This article presents estimates of off‐farm wage returns to education in rural areas of Lesotho. Results from a sample survey conducted in the northern Lowlands and Foothills of Lesotho indicate that returns to education are relatively higher for people wage‐employed in Lesotho than those wage‐employed as migrants in South Africa. For people working within Lesotho, education appears to have a significant and positive effect on off‐farm wages. Most people working within Lesotho are employed as teachers, nurses and civil servants and these job categories require an educated labour force. For people wage‐employed in South Africa, education appears not to have a significant effect on off‐farm wages. Most men working in South Africa are employed as labourers in mines while women working in South Africa are employed as domestic servants.     

Increasing returns and economic growth: some evidence for manufacturing from the European Union regions: a correction

There was an error in the specification of the regression equation(23) (p.100) in the original paper of Fingleton and McCombie(1998), although it does not greatly alter any of the estimatedcoefficients of interest.     

Increasing returns to scale from variable capacity utilization

We propose a unique model in which the firm varies capacity utilization by a variable number of shifts when facing demand fluctuations. In the long run, the firm optimally chooses a capacity level based on expected demand conditions. In the short run, when facing excess demand, the firm can increase variable inputs and the number of shifts to intensify the use of existing capacity. By endogenizing cost, demand and variability of capacity utilization, we show that variable capacity utilization can lead to increasing returns to scale. Hence, we predict increasing returns to scale when an economy expands in a business cycle.     

Seasonality and stock returns: some evidence from Japan

This paper examines the seasonal properties of Japanese stock prices using time series data from 1971 through 1997. Of interest are the influences of particular months of the year, which this study measures for the Tokyo stock price index (TOPIX), and indices that represent companies with large, medium, and small numbers of listed shares. The monthly effects in the various stock indices are confirmed for the total sample period. In contrast, such effects are not found for the latter half of the sample, and seasonal unit roots are rejected for all indices. That is, the seasonality of Japanese stock price indices is found to be deterministic but not stochastic.     

Off‐farm wage returns to education: A study in KwaZulu

Off‐farm wage returns to school education are estimated using sample survey data gathered in rural KwaZulu. The results show that returns to school education are relatively high for both men and women. Conclusions are drawn regarding structural changes and appropriate policy in rural KwaZulu.     

Parenthood penalty and gender wage gap: Recent evidence from Thailand

This study first examines the evolution of gender wage gap in Thailand, using cross-sectional data from the Labor Force Survey (LFS) for 1985–2017. We find that education, occupation, and industry significantly contribute to gender wage gap convergence in Thailand. Furthermore, for females, the wage gap between mothers and non-mothers has increased over time, while for males, the changes are relatively small. Thereafter, we examine the gender wage gap associated with marriage and parental status, using panel data from the Socio-Economic Survey (SES) for 2005–2012, and find wage penalty for both motherhood and fatherhood in Thailand.     

Capital controls and distribution of income: Empirical evidence for Great Britain Japan and Australia

Zusammenfassung Kapitalverkehrskontrollen und Einkommensverteilung. Empirische Befunde für Gro?britannien, Japan und Australien. - Der Verfasser geht davon aus, da? die Einführung von Kapitalverkehrskontrollen die nationale Einkommensverteilung beeinflu?t; insbesondere zeigt er, da? Ma?nahmen zur Verhinderung von Kapitalabflüssen die Einkommensverteilung zugunsten der Lohnempf?nger verschiebt. Nachdem er die Wirksamkeit von Kontrollen mit Hilfe der Unterschiede zwischen in- und ausl?ndischen Zinss?tzen gemessen und die Erfahrungen dreier L?nder (Gro?britannien, Japan und Australien) berücksichtigt hat, pr?sentiert er einige Korrelationsindizes und Kausalit?tstests, um zu untersuchen, ob m?glicherweise Beziehungen zur Verteilung des Volkseinkommens bestehen. Danach entwickelt und sch?tzt er ein Strukturmodell. Der Autor zeigt, da? das Ausma? der finanziellen Protektion die (optimale) Wahl von Besch?ftigung und Lohn durch heimische Firmen und Gewerkschaften tendenziell beeinflu?t hat.

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Résumé Les contr?les de capitaux et la distribution du revenu: La preuve empirique pour La Grande Bretagne, le Japon et l’Australie. - Dans cette étude l’auteur soutient l’opinion que l’adoption des contr?les de capitaux se répercutent sur la distribution du revenue national; et plus spécifiquement elle montre qu’en empêchant l’exportation des capitaux, la distribution du revenu change en faveur des salariés. Après avoir mesuré l’efficacité des contr?les à l’aide de l’écart entre les taux d'intérêt nationaux et les taux off-shore et après avoir reconsidéré les expériences de trois pays (Grande Bretagne, Japon, Australie) on présente quelques indices de corrélation et des tests de causalité pour étudier s’il y a des rapports avec la distribution du revenu national. Puis on propose un modèle structurel. Les estimations montrent que le degré de protection financière pourrait avoir influencé la sélection optimale de l’emploi et du salaire par les entreprises nationales et les syndicats.

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Resumen Controles de capital y distributión del ingreso: evidencia empírica para el Reino Unido, el Japón y Australia. - En este trabajo se argumenta que la adoptión des controles de capital afecta a la distributión del ingreso national. Más específicamente, se demuestra que al impedirse las exportaciones de capital se modifica la distributión del ingreso en favor de los asalariados. Después de medir la efectividad de los controles con el diferencial entre las tasas nacionales y las tasas offshore, y de pasar revista a la experiencia de tres países (el Reino Unido, el Japón y Australia), se presentan algunos índices de correlatión y tests de causalidad, con el fin de investigar la existencia de una relatión potential con la distributión del ingreso national. Finalmente, se propone y estima un modelo estructural que muestra que el grado de proteción financiera podría haber afectado la decisión sobre el empleo y el salario (óptimos) por parte de empresas y sindicatos nationales.

     

Book Reviews: Great Britain and Ireland

Books reviewed: Malcolm Gaskill, Crime and mentalities in early modern England Nancy Cox, The complete tradesman: a study of retailing, 1550–1820 Rosalind Mitchison, The old poor law in Scotland: the experience of poverty, 1574–1845 Sarah Bendall, Christopher Brooke, and Patrick Collinson, A history of Emmanuel College, Cambridge Michael Roberts and Simone Clarke, eds., Women and gender in early modern Wales Lena Cowen Orlin, ed., Material London, ca. 1600 Martin Daunton and Rick Halpern, eds., Empire and others: British encounters with indigenous peoples, 1600–1850 Andrea Finkelstein, Harmony and the balance: an intellectual history of seventeenth‐century English economic thought Jeremy Gregory, Restoration, reformation and reform, 1660–1828: archbishops of Canterbury and their diocese Ron Harris, Industrializing English law: entrepreneurship and business organization, 1720–1844 Charles More, Understanding the industrial revolution Andy Bielenberg, ed., The Irish diaspora Simon Gunn, The public culture of the Victorian middle class: ritual and authority in the English industrial city, 1840–1914 J. Matthew Gallman, Receiving Erin's children: Philadelphia, Liverpool and the Irish Famine migration, 1845–1855 Keir Waddington, Charity and the London hospitals, 1850–1898 Katrina Honeyman, Well suited: a history of the Leeds clothing industry, 1850–1990 Gillian Cookson and George Ingle, eds., John Hodgson's ‘Textile manufacture and other industries in Keighley’ David W. Howell and Kenneth O. Morgan, eds., Crime, protest and police in modern British society: essays in memory of David J. V. Jones Michael French and Jim Phillips, Cheated not poisoned? Food regulation in the United Kingdom, 1875–1938 Brian Callanan, Ireland's Shannon story: leaders, visions and networks—a case study of local and regional development Graham Ingham, Managing change: a guide to British economic policy Philip de Souza, Piracy in the Graeco‐Roman world Edwin S. Hunt and James M. Murray, A history of business in medieval Europe, 1200–1550 Liliane Hilaire‐Pérez, L'invention technique au siècle des Lumières William Doyle, La vénalité Marco H. D. van Leeuwen, trans. A. J. Pomerans, The logic of charity: Amsterdam, 1800–1850 Herman Van der Wee, ed., The Generale Bank, 1822–1997 Thomas Max Safley, Matheus Miller's memoir: a merchant's life in the seventeenth century Gabriel Tortella, trans. Valerie Herr, The development of modern Spain: an economic history of the nineteenth and twentieth centuries Panikos Panayi, Outsiders: a history of European minorities Lennart Samuelson, Plans for Stalin's war machine: Tukhachevskii and military‐economic planning, 1925–1941 Christopher Fyfe, ed., Anna Maria Falconbridge, ‘Narrative of two voyages to the River Sierra Leone during the years 1791–1792–1793’, and the journal of Isaac Dubois, with Alexander Falconbridge, ‘An account of the slave trade on the coast of Africa’ Andrew Jackson O'Shaughnessy, An empire divided: the American Revolution and the British Caribbean Steven N. Kaplan, ed., Mergers and productivity Shawn W. Miller, Fruitless trees: Portuguese conservation and Brazil's colonial timber Maria Misra, Business, race and politics in British India, c. 1850–1960 Sherman Cochran, Encountering Chinese networks: western, Japanese, and Chinese corporations in China, 1880–1937 Xin Zhang, Social transformation in modern China: the state and local elites in Henan 1900–1937 Ian Inkster and Fumihiko Satofuka, eds., Culture and technology in modern Japan David Turley, Slavery M. L. Bush, Servitude in modern times Mary A. Yeager, ed., Women in business Jonathan Zeitlin and Gary Herrigel, eds., Americanization and its limits: reworking US technology and management in post‐war Europe and Japan Sebastian Edwards, ed., Capital flows and the emerging economies: theory, evidence and controversies Phillip D. Curtin, The world and the West: the European challenge and the overseas response in the age of empire Christine Rider and Michéal Thompson, eds., The industrial revolution in comparative perspective Michalis Psalidopoulos, ed., The canon in the history of economics: critical essays     

Minimum wage rates and unemployment in The Netherlands

Summary A static limited dependent variable model is formulated to analyse the Dutch labour market from an individual's viewpoint. Results suggest that high minimum labour costs are an important source of unemployment. Secondly, the reduced-form participation equation is replaced by a neoclassical labour supply equation. Thus, also the effect of high minimum wage rates on employment through labour supply is taken into account. Supply appears to be forward bending and participation is insensitive with respect to unemployment benefits. Simulations suggest that the effect of lowering the productivity threshold by reducing before-tax minimum wages dominates supply effects.The author wishes to thank Geert Joosten, Arie Kapteyn, Peter Kooreman, Bertrand Melenberg, Viji Narendranathan and Theo Nijman for helpful comments and the Netherlands Central Bureau of Statistics for providing the data. The views expressed in this paper do not necessarily reflect the policies of the CBS.     

The employment and wage effects of export VAT rebates: evidence from China

Review of World Economics - This paper studies the employment and wage effects of VAT rebates to exporters with comprehensive firm-product-level data of China. It is found that the adjustments in...     

The Great Divergence: Why Britain Industrialised First

What drove the precocious industrialisation in Britain was not demand for machines but rather (as Joel Mokyr and his co-authors have argued) the supply of useful knowledge and the skills needed to put it into practice. They were the force behind early innovation. But they did not act alone. They were reinforced by British institutions, which gave the British economy a century's head start over the rest of Europe and likely too over the rich parts of Asia. The institutions included a uniform fiscal and legal system; an effective means of training apprentices, who had escaped from local guild control; and a parliament that could raise taxes and exercise eminent domain but was at the same time a credible protector of private property. Among other things, these institutions facilitated the transportation of goods such as coal and they were backed up by policies that worked in favour of manufacturing. Together, the institutions and policies generated agglomeration effects that encouraged innovation. The agglomeration effects were more pronounced in western Europe than anywhere else in Eurasia and more developed in Britain than anywhere else.     

Tracking wage inequality trends with prices and different trade models: evidence from Mexico

Mexican wage inequality rose following Mexico’s accession to the General Agreement on Tariffs and Trade/World Trade Organization in 1986. Since the mid-1990s, however, wage inequality has been falling. Since most trade models suggest that output prices can affect factor prices, this paper explores the relationship between output prices and wage inequality. A Salter–Swan trade model with firm heterogeneity driven by variations in the relative price of tradable relative to non-tradable goods can explain the decline in wage inequality. The paper compares this model’s predictions with Mexican inequality statistics using data on output prices, census data, and quarterly household survey data. In spite of the model’s simplicity, the model’s predictions match Mexican variables reasonably well during the years when wage inequality fell.     

Increasing wage,mechanization, and agriculture production in China

As the population bonus disappeared, the wage rate has increased significantly since the early 2000s in China. Increasing wages have significantly affected export-oriented industries as well as agriculture. Mechanization is another factor affecting China's agriculture. This study shows the increasing wage and the mechanization have a negative impact on land area devoted to labor-intensive crops but a positive impact on land area devoted to labor-extensive crops. Based on nationally representative data, the empirical results conform well to the theoretical predictions.     

Modelling a poisson process: Strike frequency in Great Britain

Conclusions There are several noteworthy aspects of the work presented here. It is noted that previous parametric models of the bargaining process may be solved for the time-to-settlement of a wage dispute. It is then argued that such a specification is a model of time-to-failure of the bargaining process, or, considering frequencies of strikes in a fixed interval, a Poisson process. This is a very intuitive conclusion that reinforces the inappropriateness of OLS models of strike frequency.¹⁰ An estimation method based on regression planes is used to estimate the model parameters of bivariate Poisson models of strike frequency in coal mining, construction, and manufacturing. The empirical results confirm the author's prior expectations about the determinants of strike frequency. [See for example Buck, 1982; Pencavel, 1970; and Sapsford, 1975.] More specifically, as the labor market gets tighter, as measured by industry and overall unemployment rates, the expected number of strikes increases. Increasing profits relative to the wage bill causes strikes to decline in construction and manufacturing and increase in coal mining. Increases in the rate of change of overall real wages causes the expected number of strikes to decline in coal mining and increase in construction and manufacturing. The rate of change of industry real wages has a negative impact in construction, positive in mining, and mixed in coal mining.     

Financial risk exposure of returns to education: Panel evidence from Korea*

The present study examined financial market risk exposure of human capital returns, which are represented by the returns to education, using panel data for Korea. Overall, financial market shocks seem to be irrelevant to returns to education. However, when we divide a financial market shock into cash flow news and discount rate news leading to a negative risk premium, returns to education increase after positive news about future cash flows and unexpected increases in discount rates Therefore, the risk exposure to cash flow shocks is offset by the exposure to discount rate shocks. The returns to education of low‐income workers were significantly exposed to the cash flow risk as compared to those with a high income, but they were offset by the positive correlation to discount rate shocks. In contrast, considering the gap between generations, the old generation was not only less exposed to the cash flow risk compared to the young generation regarding returns to education but also positively correlated with the discount rate shock, resulting in less exposure to financial market risks.     

Housing price and household savings rates: evidence from China

This article investigates the effect of house prices on household savings rates in urban China employing the 2002 and 2007 data of the Chinese Households Income Project (CHIP). We find that the rapid appreciation of house prices cannot explain high Chinese households’ savings rates and the rising of Chinese savings rates. On the contrary, we find a negative relationship between house prices and household savings rates for home renters and homeowners. We do not find any evidence of ‘savings for housing purchase’ for young home renters when house prices increase. Their savings rates declined during housing market booms in recent 10?years. Savings rates of homeowners possessing multiple housing have decreased more because of ‘the pure housing wealth effects.’     

Do excessive wage increases raise imports?: Theory and evidence

This paper uses a model of trade in vertically differentiated products to examine the effects of “excessive wage” increases (i.e. above productivity) on the volume of commodity imports. The model predicts that if the domestic country has comparative advantage in producing high quality varieties of some products, then “excessive wage” increases may result in a decrease in the volume of imports for these products. The empirical validity of the model's predictions is demonstrated with the use of disaggregated Japanese import data for the period 1967–1995. We also find that the aggregate volume of Japanese imports is not responsive to “excessive wage” changes.