Interindustry effects of productivity growth in Japan: 1960–2000

Combining conventional sectoral growth accounting and the static open input–output price model, we analyze the sources of growth of product prices in Japan during the period 1960–2000. Using the input–output framework, we take into account not only the effects of factor costs and productivity within a sector, but also their impacts outside of the sector. We find that Japan's deflation in the 1990s was characterized by low growth of wage rates, low productivity growth, and a low rate of return on capital. Until 1990, productivity improvements compensated for factor cost pressures on output price, especially the rapid growth of labor cost. In contrast, during the 1990s, decreasing rates of return on capital, not productivity improvements, canceled out the inflationary effect of wage growth. J. Japanese Int. Economies 19 (4) (2005) 568–585.     

Economic growth and the human capital intensity of government spending

The paper models an economy in which long-run growth is driven by human-capital-intensive, private sector research and development, and shows how government spending affects growth through its impact on relative wages. The more human-capital-intensive government spending is relative to private spending, the greater the derived demand for and relative wage of human capital and, hence, the more costly is research and development. The private sector thus devotes fewer resources to research and development and the rates of innovation and economic growth are lower. The paper argues that these effects are likely to be negative, and possibly substantial, in the U.S. The paper's results also offer a plausible explanation for the insignificance of government spending in cross-country growth regressions in recent empirical studies.     

Wage increases, wage convergence, and the Lewis turning point in China

We examine the wage trends of ordinary workers and the wage convergence between unskilled and skilled workers in China. First, we find that wages in all non-agricultural sectors, wages of migrant workers, and wages of hired workers in the agricultural sector have increased dramatically since 2003. Second, through comparing wage differentials between migrant and urban resident workers and between heterogeneous education groups within migrant workers, and by investigating the changes in the contribution of the returns to education to wage differentials, we find that the wages of unskilled and skilled workers have converged. Both the increasing wage trends and wage convergence are interpreted as evidence supporting the hypothesis that China has passed what can be called the Lewis turning point in the industrial sector. We conclude that the sustainability of economic growth in China requires an upgrading of labor market institutions to accommodate the merging of the rural and urban labor forces.     

The Balassa-Samuelson model with job separations

We incorporate sectoral job separation rates in a small open economy model to examine the Balassa-Samuelson (B-S) effect. Unequal separation rates give rise to compensating wage differentials. We simulate the model for Japan and replicate a feature of its economy that the nontradeables sector has higher wages and a higher separation rate compared to the tradeables sector. With productivity growth in the tradeables sector, labour moves from the tradeables sector to the nontradeables sector if tradeables and nontradeables are complements in consumption. The B-S effect is dampened. With a higher separation rate in the nontradeables sector, higher wages in the nontradeables sector amplifies this labour movement. Nevertheless, unemployment always falls due to a positive income effect. In contrast, the effect of productivity growth in the nontradeables sector is to lower the real exchange rate and raise unemployment.     

Technological adaptation, trade, and growth

Technological Adaptation, Trade, and Growth. — Based on Grossman and Helpman’s 1991 seminal work, the authors provide a simple model extension where innovations created in the high-tech sector may be assimilated or adapted by the lowtech sector, thus generating nondecreasing returns in the production function of the latter. When applying a Heckscher-Ohlin framework the authors find that the effects of technological diffusion allow a country relatively scarce in human capital to benefit from nondecreasing rates of growth through its low-tech sector. They test this idea by using a dynamic panel data approach in order to deal with simultaneity and country heterogeneity. Their results are consistent with the predictions of the model and robust to a broad range of definitions of technological intensity.     

Deflation in China

This article investigates the causes of deflation China has experienced since 1998. The analysis is based on a theoretical model which makes the distinction between tradable and non-tradable goods and on the estimation of a reduced equation of consumer price variations for the period 1986–2002. The empirical results corroborate the theoretical predictions. The main conclusion is that the slowing down of inflation and the fall of prices are chiefly explained by Chinese macroeconomic policy. Moreover and contrary to current opinion we find that deflation is partly due to the deceleration of productivity growth in the tradable sector.     

Do Wages Continue Increasing at Older Ages? Evidence on the Wage Cushion in the Netherlands

In this study, we investigate the anatomy of older workers’ wages. The central question is whether the wage cushion—i.e., the difference between actual wages and collectively agreed-upon (maximum) contractual wages—contributes to the fact that wages continue increasing at older ages. We follow the wages of individual workers in twenty-two sectors of industry in the Netherlands using administrative data for the period 2006–2010. In the public sector, we find no evidence of a wage cushion. Wage scale ceilings set in collective agreements are guiding for older workers’ wages, and workers earning a contractual wage equal to a wage scale ceiling are not compensated with higher additional wages. In the private sector, we do find evidence of a wage cushion. Wage scale ceilings are less restrictive and workers earning a contractual wage exceeding the highest wage scale ceiling experience higher contractual wage growth. The private sector wage cushion enhances wage differentiation and allows for wages that continue increasing at older ages.     

Government budget,public-sector wages and capital taxes in a small open economy: A Hong Kong case

This paper examines the welfare implications of adjustments in public-sector wages and capital tax rates for a small open economy in a general equilibrium setting. The individually and jointly optimal wage and tax policies are derived and interpreted. Facing reductions in land sales and falls in foreign interest rates, a cut in public workers' pay is needed to make their wage comparable to the private sector and a hike in capital taxes is recommended for a budgetary consideration. Using a computable general equilibrium model for Hong Kong, we numerically evaluate the various optimal policies which not only confirm the theoretical results but also provide quantitative estimates of the optimal policy variables.     

Exports, economic growth and the consolidation of peace in El Salvador

The pillars of inclusive growth in El Salvador have to be nontraditional export growth, investment, and government determination to reduce income inequality and poverty. This article analyzes the key obstacles to the development of a competitive and dynamic export sector: Dutch Disease driven by aid and remittances, a significant decline in real wages, and lack of productivity growth. Policies can and must focus on productivity growth rather than wage repression, in the pursuit of peace consolidation and long-term competitiveness.     

Inflation,wage bargaining,wage policy and production structure: Theory and empirical results for the Netherlands

Summary Starting from traditional neo-classical results, a theory is developed in which, in addition to prices, labour productivity and unemployment, the degree of unionization, the profit rate and the shifting-on of direct taxes and social security contributions influence nominal contract wages. A separate theoretical framework is constructed for wage drift.It is furthermore shown how the wage theory presented is related to Friedman-Phelps specifications. After a discussion of wage policy and its potential influence on wages, wage equations are estimated for the key bargaining sector as well as for wage followers. After their characteristics have been dealt with, as well as the effects of wage policy and the role of wage drift, the relationship between key bargaining, inflation and employment is analysed, showing that the model presented is able to explain stagflation.My thanks are due to Mr. H. von Eye for his help in carrying out the calculations and to Mr. A. de Reyger for providing me with the sectoral unionization rates and his general research assistance. Mr. A. J. van Geel kindly prepared the graphs.     

汇率变动对工资和就业结构影响的实证分析

本文由Frenkel两部门理论模型,采用IMF提供的人民币对美元实际汇率数据,通过实证分析发现,实际汇率升值会显著减少贸易部门就业,即人民币升值使贸易部门就业人数显著减少,非贸易部门第二产业工人就业人数会增加,对第三产业工人就业影响不大,但就业工人实际工资水平都会有所提高。所以本文的结论是,人民币升值能提升中低阶层福利水平,支持人民币升值。     

Domestic service,gender, and wages in rural England,c.1700–18601

Domestic service was a vital occupational sector in England in the eighteenth and nineteenth centuries—particularly for women. This article uses a new series of wage observations from across England, focusing on rural areas. Analysis of the dataset shows that wages paid to servants in rural England slightly increased over the period considered, but at uneven rates dependent on region and precise occupation of servant. The majority of servants, particularly maids, did not experience any significant increase in the wages they were paid. This article also shows a widening wage gap between male and female servants. When differences between regions were analysed, it was shown that the wages paid to servants did not match the model of the north becoming the high wage zone of England by the mid‐nineteenth century, although rates of growth there were the highest. For servants the south generally remained an area of higher wages even in the mid‐nineteenth century. Geography was probably not the key variable in determining wage levels. The type of household in which a servant was employed was more important than where it was located. The most important variables were the servants' gender, and their occupations in the household.     

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.     

Sectoral Wage Rigidities and Labour and Product Market Institutions in the Euro Area

We estimate wage Phillips curve relationships between sectoral wage growth, unemployment and productivity in a country-industry panel of euro area countries. We find that institutional rigidities – such as labour and product market institutions and regulations – limit the adjustment of euro area wages to unemployment, in both upturns and downturns, particularly in manufacturing and, to a lesser extent, in the construction and service sectors. In addition, there are further limitations in the response of wages to changes in unemployment during economic downturns which suggests that euro area wages are also characterised by significant downward wage rigidities, especially in the manufacturing sector. These results are robust to specifications that account for factors that may affect structural unemployment (such as duration-dependent unemployment effects), as well as changes in the skill composition of employment that may affect the evolution of aggregate wages. The results also hold for panels including or excluding the public sector (where wages may be determined differently to the private sector also due to the effects of fiscal consolidation on public sector wages during the crisis). From a policy perspective, reforms in product and labour markets which reduce wage rigidities can facilitate employment growth and enhance the rebalancing process in the euro area.     

Top wage incomes in Japan, 1951–2005

Using wage income tax statistics, we construct continuous series of upper wage income shares in Japan from 1951 to 2005 to document the evolution of top wage incomes and investigate their long-run determinants. We find that, while the middle wage income class gained enormously both in absolute and relative terms during the period of high economic growth, the upper wage income class faired comparatively better after 1975. In particular, the shares of total wage accruing to the top 1% wage earners and above have risen steadily since the late 1990s. A simple time-series regression analysis indicates that marginal income tax rates, corporate performance, female labor force participation, and labor disputes are important determinants of top wage income shares in post-WWII Japan. Although not conclusive, our results suggest that much of the recent gains in wage income shares at the top can be explained by the changes in these four factors, placing a less emphasis on a story of structural change.     

Minimum Wages,On-the-Job Training,and Wage Growth

Using data from the Employment Opportunities Pilot Project, we examine the relationships between minimum wages, wage growth, and on-the-job training. We find that minimum wage jobs exhibit less wage growth than other jobs, particularly for men. We find no evidence, however, of a unique minimum wage effect on training opportunities. We conclude that indirect methods of proxying training with wage growth can be misleading as they fail to distinguish whether the reduced wage growth of workers on minimum wage jobs results from their receiving less training than other workers or whether it is strictly a result of the wage determination process.     

Non‐compliance with the Minimum Wage Law when Completely New Minimum Wage Laws Are Established: The Case of South Africa

Abstract: Using the case of South Africa, we study compliance with the minimum wage law when completely new minimum wage levels are established. By even the best estimate, the compliance rate in South Africa would not exceed 40 per cent for the agricultural sector and 30 per cent for the domestic worker sector. The compliance rates by subpopulation groups reveal that the compliance rate is low where the cost to comply with the minimum wage law is high, implying that government inspections are not done where they are likely to have the highest payoff. However, if the government tries to enforce the policy more strictly, the poor/less skilled would be adversely affected.     

Public sector wage settlement and the threat of outsourcing

This paper investigates the impact of outsourcing on wage settlement in the public sector. The study characterizes the equilibrium wage offered by the public sector union to a government bureau competing against private sector firms. It is predicted that the union will offer a concession wage in an attempt to block outsourcing when its members' outside employment options are sufficiently unattractive and will offer a non-concession wage otherwise. The study contributes to the literature on outsourcing and wage determination in the public sector.     

Specific Factors and International Monetary Policy Coordination

The consequences of intersectoral factor immobility for optimal monetary policy are examined in a “New Open Economy Macroeconomics” framework. When labor cannot be reallocated between tradable and nontradable goods production, this rigidity generates a welfare loss, which increases as the sectors become more different. When prices are predetermined, the model becomes a monetary “specific factor” model. Intersectoral factor immobility complicates the optimal monetary policy problem by creating a tradeoff between stabilizing tradable and nontradable sector labor. When labor is mobile between sectors, policy coordination can significantly reduce labor volatility. When it is not mobile, coordination results in less volatility in tradable sector labor, but increased nontradable sector labor volatility.