Can U.S. Cities afford living wage programs? An examination of alternatives

Since 1994. so-called “living wage” ordinances have passed in 20 cities in the United States, and activists are advancing similar proposals throughout the country. These proposals are a response to the declining real wages of low-wage workers in the United States—what David Gordon termed “the wage squeeze” in Fat and Mean—and, in particular, to the 30 percent fall in the real value of the minimum wage from its peak in 1968. We consider here the main arguments advanced by opponents of living wage proposals: 1) they will place a heavy burden on municipal government budgets, forcing, among other things, cuts in vital city services that benefit low-income people; 2) they will encourage local businesses to relocate and discourage new businesses from investing within cities that have such ordinances; and 3) they will cause unemployment among low-wage workers. Examining these issues in the context of proposals that were either passed or considered in different cities, we find that none of the criticisms of living wage proposals stand up to careful scrutiny or evidence. Rather, living wage proposals are affordable and workable. They represent a small but significant step toward reversing the “wage squeeze” so carefully documented and analyzed in Fat and Mean.     

Brothers and Breadwinners: Legislating Living Wages in the Fair Labor Standards Act of 1938

Attention to the implicit and explicit wage theories articulated by economic actors and embedded in public policy reveals the underlying social norms and values in specific historical and industrial contexts. The Fair Labor Standards Act of 1938 (FLSA), the first federal minimum wage legislation in the United States, legitimated and institutionalized the idea that living standards and workers' needs matter in setting wages. They matter not simply in generating labor supply, but as the basis for government intervention in market mechanisms. Rather than viewing market mechanisms and government regulations dichotomously, economic actors debating the FLSA treated both market mechanisms and socially defined living standards as legitimate elements of wage-setting. Wage regulations also, by necessity, must grapple with issues of identity, that is, which workers (especially as defined by class, gender, and race?–?ethnicity) are deserving of particular living standards. Debates over the language in the FLSA reveal the contested nature of masculinity during the period of economic crisis in the 1930s. Advocates responded by defining a multiplicity of living wages corresponding with different living standards, as well as a multiplicity of strategies for achieving them.     

最低工资制度能提高民营企业劳动收入占比吗

本文以民营企业要素投入行为为切入点,探讨最低工资制度对民营企业劳动收入占比的影响。基于2005-2008年和2011-2013年中国工业企业数据库民营企业面板数据的研究发现：最低工资制度提高了劳动密集型和资本密集型行业民营企业的劳动收入占比,降低了技术密集型民营企业的劳动收入占比。通过分解影响机制发现,最低工资制度提高了劳动密集型和资本密集型民营企业的工资水平,带来正向的收入效应,但也导致资本替代劳动,产生负向的替代效应。整体而言,最低工资制度提高了民营企业的劳动收入占比。为发挥最低工资制度对民营企业劳动收入占比的正向作用,继续调整最低工资标准、贯彻相关法规实施、提高劳动者技能水平成为重要措施。     

The Living Wage,Economic Efficiency,and Socio-Economic Wellbeing in a Competitive Market Economy

Conventional economic wisdom views a Living Wage as costly in term of economic efficiency and competitiveness. I argue, based on x-efficiency theory, that higher wages need not cause any economic harm and can, on the contrary, generate higher levels of material wellbeing. Higher wages can be expected to induce x-efficiency and technological change cost offsets. In this context, an effective living wage, one that is above some subsistence minimum, can have a net efficiency effect on the economy. Therefore, a living wage greater than the wage rate generated by the free market cannot be predicted to generate economic harm. With the institutional parameters in place to realize a living wage, the economic pie can be expected to grow to accommodate the living wage.     

The Gender Wage Gap in Offered,Observed, and Reservation Wages for Spain

The literature on the gender wage gap and wage discrimination has exclusively analyzed observed wage differences, ignoring inactive or unemployed individuals. In order to obtain a more complete overview of gender wage differences, this paper analyzed inactive or unemployed individuals in terms of offered and reservation wages in Spain in the years 1994, 2000, and 2006. The results show that the observed wages give a more positive perspective of the gender wage gap than offered ones. Furthermore, the existence of an important gender wage gap for reservation wages has been noted, which is possibly because women take charge of household and family caregiving tasks to a greater degree than men. The results show that Spanish women had higher reservation wages and lower offered wages than men, which explains their lower participation in the labor market.     

中国城市劳动力市场的一体化进程

本文从区域劳动经济学的视角分析城市间劳动力市场的发育和融合。我们介绍了分析区域劳动力市场的理论框架与国际经验,并利用住户调查数据发现,1988—1995年间,随着工资和教育回报率的上升,它们在城市间的差异有所扩大;虽然区域间的工资收敛并不显著,但受教育程度较低的工人工资收敛速度快于受教育程度高的技术型工人。针对这些实证结论,我们提出了促进区域劳动力市场统一的配套改革措施,以及建立全国性的以身份证为核心的大学生就业市场的建议。     

Child labor and the minimum wage: Evidence from India

This study examines how changes in the minimum wage affect child labor in India. The analysis uses repeated cross sections of India's NSSO employment data from 1983 to 2008 merged with data on state-level minimum wage rates. Theoretically, the impact of the minimum wage on child work could go either way, so empirical evidence from a country with high rates of child labor and a myriad of minimum wage laws across states and industries helps to lessen the ambiguity. Results indicate that regardless of gender, in urban areas, a higher minimum wage reduces child labor in household work. In rural areas a similar result applies for girls while household labor does rise for boys. The minimum wage has virtually no impact on child work outside of the home across urban and rural areas.     

不同期限类型劳动合同的工资决定机制及差异——基于中国家庭住户收入调查数据的经验研究

文章利用2002年住户收入调查(CHIP)数据对我国不同期限类型劳动合同的工资决定机制及工资差异进行了经验研究。结果发现,长期劳动合同与短期劳动合同的工资差异符合补偿性工资差别理论,企业对没有签订劳动合同的员工存在工资歧视。排除特征因素和选择性因素,长期劳动合同工的工资比短期劳动合同工低42.84%,比无劳动合同员工高29.6%。文章研究表明:短期劳动合同没有对生产率表现出显著的负面影响,提升劳动合同签订率是比限制短期劳动合同使用更为合适的劳动政策。     

The labor supply of fixed-wage workers: Estimates from a real effort experiment

Fixed-wage workers comprise the bulk of the labor force and yet little is known about how they respond to changes in their wage. Given recent interest in theories of reciprocity and intrinsic motivation and their implications for effort provision, the neoclassical prediction seems less obvious today. To better understand the motivation of these workers, I estimate their labor supply using a real effort experiment. Two results stand out. First, no one theory seems to fit the pooled data. On average, people work considerably harder than the minimum but they do not respond to changes in the wage. Second, pooling the data is deceptive because there seem to be distinct types with differing responses to the wage. Most workers can be classified as reciprocal or intrinsically motivated and, indeed, these types respond as theory would predict: reciprocators return wage gifts with increased effort and extrinsic incentives crowd out motivation for intrinsic workers.     

The effect of minimum wage on firm markup: Evidence from China

Our paper examines the impact of minimum wage on firm markup in China. We find that minimum wage generates a positive effect on firm markup. More value-enhancing innovative activities, TFP improvement, and efficient labor resource allocation are the potential channels. Further, the positive influence of minimum wage is more pronounced for privately-owned firms, for firms with higher labor intensity and firms with less financial constraints. Besides, these findings are generally robust to different estimation methods. Our results provide new insights into understanding the channels through which labor regulation may cause the change of markup for the emerging markets countries.     

An Efficiency Enhancing Minimum Wage

We consider an economy with a tax on all labor earnings. We discover that a slightly binding minimum wage on one sector can enhance efficiency. The minimum wage attracts high‐reservation wage workers into the minimum‐wage sector. If the labor demand curve in the free sector is quite flat, the vast majority of workers displaced by the minimum wage find employment in the free sector, raising aggregate employment. This displacement of workers by the only slightly binding minimum wage has negligible effects on efficiency. So efficiency and tax revenue rise as the minimum wage pulls labor out of untaxed leisure, where too much of the labor force is lurking, into taxed work.     

The gender wage gap among China’s rural–urban migrants

In this study, we present new empirical evidence on gender wage differences among rural–urban migrants in China. We use a data set that includes migrants residing in urban communities and those living at their workplaces—the latter were not included in the previous studies. We find that the gender wage gap among migrants is 16%–18% and does not differ between migrants living at workplaces and those living in urban communities. However, gender differences in industry sorting play a more important role for migrants living at their workplaces, whereas differences in education and experience are of importance for those living in urban communities. Overall, differences in the returns to characteristics are the main driver of the gender wage gap, especially for migrants living in urban communities.     

垄断政府人员臃肿与工资刚性的经济学剖析

通过建立垄断政府工资成本最小化的最优规划模型发现，从政府官员总量角度看，政府机构不存在人员臃肿、人浮于事。但是，在官员资历工资制占主导地位的政府最优决策路径上，从政府官员构成角度看，政府机构存在人员冗余、工作低效率等情形，并且在政府最优决策路径上，资历工资制度将进一步强化官员工资刚性，扭曲垄断政府劳动力需求曲线；政府官员工资率与官员规模同步增长，从而，垄断政府机构中人员臃肿、人浮于事与高工资成本等现象并存。因此，资历工资是导致垄断政府各种弊病的根源，重建政府官员工资制度应成为垄断政府改革焦点与核心。     

Capital–Skill Complementarity: Does Capital Composition Matter?

We estimate the effect of capital composition on the size of capital–skill complementarity and the skill wage premium. Disaggregating the capital stock into different types according to technological content, we find that: capital is more of a q‐complement to skilled labor than to unskilled labor; the higher the technological component of capital, the larger the size of the relative q‐complementarity between capital and skilled labor; and replacing non‐technological with technological capital might increase the skill wage premium by about 9 percent. Our results highlight that changes in capital composition matter for understanding changes in the skill wage premium.     

Economics and the Supreme Court: The Case of the Minimum Wage

In the United States, laissez-faire has been the policy advocated in good times, while social legislation has been called for during crises. One instance of this dichotomy concerns the transformation of the American understanding of minimum wage laws during the early 20^th century. During this time, the view of minimum wage laws changed from one that viewed such laws as theft, to one that saw such laws as being required for distributional justness. We examine the legal-historical debate concerning whether the Supreme Court renounced its policy of laissez-faire individualism in its 1937 ruling finding the minimum wage law constitutional, arguing that it did not. We investigate the free market standard that the Court used to find minimum wage laws unconstitutional in 1923. We demonstrate how the economic conditions of the Depression, coupled with the development of economic theory, explain how the Court eventually found the minimum wage law constitutional.     

Bidding for Labor

We present a competing-auction theory of the labor market, where job candidates auction their labor services to employers. An equilibrium matching function emerges which has many of the features commonly assumed, including constant returns to scale in large economies. The auction mechanism also generates equilibrium wage dispersion among homogeneous workers and constrained-efficient entry of vacancies in large economies. In a dynamic version of the model, we generate implied numerical values for equilibrium unemployment and wage dispersion. The theory makes the novel prediction that wage dispersion is a decreasing function of the discount factor and labor market tightness. Journal of Economic Literature Classification Numbers: E24, J31, J41, J64, D44.     

Unintended Consequences of Lockdowns: Evidence from Domestic Helpers in Urban China

This paper addresses the reactions of domestic helpers to the Wuhan (Hubei Province) lockdown that began on January 23, 2020. We use a novel dataset containing the information of over 40,000 Chinese domestic helpers registered on a leading professional website from November 2019 to June 2020. The results indicate a declining pattern of short-term labor supply of domestic helpers across 11 major Chinese cities, which shows an increase in the expected monthly wage of domestic helpers in these cities. More importantly, using a difference-in-difference (DID) model, this paper provides some evidence on the existence of labor market discrimination against domestic helpers born in Hubei Province due to employers’ fear of infection.     

中国省会城市工资溢价研究——基于分位数回归的空间计量分析

文章利用2000-2006年中国营养与健康调查数据,从微观层面对中国省会与非省会城市之间的工资溢价效应进行研究.借助OLS基准模型发现,具有相似特征的工人,在省会城市工作获得的工资比在非省会城市平均高出14%.运用MundlakChamberlain随机效应模型,控制城市的生活成本,上述省会城市的工资溢价至少减少至7%,因此省会城市的工资溢价部分体现为对较高水平人力资本的回报.余下的工资溢价随着模型加入通勤时间而消失,这一结果和城市经济学空间均衡理论的预测相一致,并确定了省会城市聚集经济效应的存在.考虑到我国近年来工资收入差距的扩大,文章将研究扩展到工资分位数的研究,处于较高工资区间的工人明显享受到更多省会城市带来的优势.这些结果突出了城市劳动力市场微观层面研究的重要性.     

An evaluation of the relationship between minimum wage and unemployment: does the local cost-of-living matter?

This article examines the relationship between federal, state and municipal minimum wage laws, local cost-of-living (COL) and the unemployment rate. It finds a strong statistically significant positive relationship between minimum wages and unemployment once COL is taken into account. Our results suggest that federal minimum wage policy is likely to have more harmful effects in rural/low cost areas.     

Tracing the impact of large minimum wage changes on household welfare in Indonesia

Minimum wage legislation has been introduced and expanded in many developed and developing countries, in the hope that it would improve the living standards of the poor and reduce inequality. This study examines the impact of large minimum wage changes in Indonesia. The results indicate serious limitations of the minimum wage for improving living standards and reducing inequality.