Evaluating innovation and labour market relationships: the case of Italy

In this paper the link between labour market flexibility andinnovation is analysed paying particular attention to the differenttechnological regimes of economic activities and the differentgeographical areas of the Italian economy. A dynamic panel dataspecification is used to assess the endogenous relationshipbetween patents, included as a proxy for innovation, and jobturnover and wages, which represent labour market indicators.Our results show that higher job turnover only has a significantand negative impact on patent activities in regional sectorsof Northern Italy, while blue and white collar wages have beengenerally found to have a positive and significant impact oninnovation.     

A trivariate model of participation,fertility and wages: the Italian case

Italy has unusually low fertility by OECD standards, accompaniedby unusually low female participation in paid work. This paperaddresses the issue of the empirical relationship between fertility,female participation in the labour market and wages with theseItalian 'peculiarities' as a backcloth. A trivariate model ofparticipation, fertility and wages has been constructed andestimated using three pooled cross-sections of Italian microdata, allowing for the identification of cohort effects. Thismodel follows a 'purist' approach: the participation and fertilitydecisions, as well as the wage equation, are modelled as completelyjoint. The cohort effects turn out to be significant: the pointestimates do not appear to confirm actual trends, which arenegative for fertility and positive for participation. The femalewage is the most important variable influencing the propensityto have children and the propensity to participate in the labourmarket, casting doubt on suggestions that observed trends arethe products of shifts in women's 'tastes'.     

The effect of fertility on labour force participation: The Spanish evidence

Abstract. The aim of this paper is to estimate the effect of fertility on the decision of labour force participation of married females in Spain, allowing for the existence of unobserved characteristics that affect both fertility and participation. We use a pooling of five waves of the European Household Panel for Spain (1994–1998). Results indicate that not taking into account the unobserved characteristics that affect both variables imposes on average a strong downward bias on the true effect of fertility on participation. This bias is especially strong for highly educated females. We are grateful to Raquel Carrasco and an anonymous referee for helpful comments. Financial support from Gobierno Vasco (PI-1999-160)), Ministry of Education and Science (BE2000-1394), Instituto de la Mujer and Universidad del País Vasco (UPV 00035.321-13511/2001) is gratefully acknowledged.     

Dynamics of female labour force participation in France

This article formulates and estimates a structural intertemporal model of labour force participation. Relying on theoretical characterizations derived from an economic model of lifetime behaviour, we estimate a dynamic probit model with correlated random effects using longitudinal data to allow for a dynamic structure. The model is applied to a panel of married women drawn from the 1997–2002 French Labour Force surveys in order to represent their participation behaviour. It is estimated by maximum simulated likelihood. Our results show that women’s decisions to go out to work are characterized by significant state dependence, unobserved heterogeneity and negative serial correlation in the transitory error component. In addition, we find that the presence of young children in a woman’s household reduces her labour participation, but unequally according to their age and number. As expected, educational level has a positive impact on women’s participation. Last, a rise in the husband’s wage is found to raise female participation initially and to lower it subsequently. This empirical finding suggests that leisure may not systematically be a normal good, contrary to what is frequently assumed in the literature.     

The effect of shocks to labour market flows on unemployment and participation rates

This article presents an analysis of labour market dynamics, in particular of flows in the labour market and how they interact and affect the evolution of unemployment rates and participation rates, the two main indicators of labour market performance. Our analysis has two special features. First, apart from the two labour market states – employment and unemployment – we consider a third state – out of the labour force. Second, we study net rather than gross flows, where net refers to the balance of flows between any two labour market states. Distinguishing a third state is important because the labour market flows to and from that state are quantitatively important. Focusing on net flows simplifies the complexity of interactions between the flows and allows us to perform a dynamic analysis in a structural vector-autoregression framework. We find that a shock to the net flow from unemployment to employment drives the unemployment rate and the participation rate in opposite directions while a shock to the net flow from not in the labour force to unemployment drives the rates in the same direction.     

Heterogeneity and participation in informal employment among non-cultivator workers in India

Labour informality is one of the most serious challenges facing a developing economy like India with large-scale poverty and decent work deficits. This study has inspected possible heterogeneity within informal employment among the non-cultivator workers. Multinomial Logit was applied to find out the determinants of participation in different components of informal employment. Significant heterogeneity within the informal employment on poverty, age, gender, socio-religious communities, educational attainment and industrial classification was observed. There is coexistence of voluntary and involuntary informal employment. Given the diversity of employment, one-size-fits-all policy design may adversely affect sustainable and inclusive growth in India.     

Human capital accumulation in an open labour market: Ireland in the 1990s

Large-scale investment in education in Ireland began in 1967 and has led to a dramatic increase in the relative supply of skilled labour over the past four decades. Furthermore the supply of labour in Ireland is traditionally highly elastic through migration, which in the 1990s was predominantly high-skilled. This combination of rising education levels and an open labour market meant that employment and incomes rose rapidly in the 1990s, while Ireland still maintained a strong competitive position in terms of relative labour costs.In this paper we develop a new macro-economic framework to formally analyse these mechanisms. We estimate a small structural model of the Irish labour market, separately identifying high-skilled and low-skilled labour. We find that this model captures key characteristics of the Irish labour market in the 1990s.     

Value added,wages and labour market flows at the establishment level

In this article, we analyse the connection between value added, wages and labour market flows at the establishment level. We develop a simple model to illustrate the expected comovement of these variables. For the empirical analysis, we link the new German Administrative Wage and Labor Market Flow Panel data set to the IAB Establishment Panel. We show that establishments’ hires rates have a positive and separations rates a negative comovement with establishment-specific value added, whereby hires react by more than separations. In addition, we provide evidence that establishments’ partial equilibrium reaction is an important driver for aggregate labour market dynamics.     

Measuring the cyclicality of labour market flows using individual transitions

We investigate whether the choice of a business cycle measure affects estimates of the cyclicality of labour market flows. We exploit precise administrative data on individual labour market transitions and study the association of alternative business cycle measures with individual transitions between employment and unemployment. We find indeed substantial heterogeneities across business cycle indicators that may have affected the results of prior studies on labour market transitions.     

Labour participation of Arab women: estimates of the fertility to labour supply link

The standard theoretical framework for analysing households’ intertemporal decisions is the life-cycle/permanent income model. Among its implications, testing the model allows to analyse the response of consumption to fiscal policy. However, the empirical literature with microdata has yielded mixed results. This article examines the sensitivity of the results to the assumption of separability among goods and of homogeneity across households. For that purpose, we test a rational expectations permanent income model with household data drawn from the Spanish Family Expenditure Survey. This survey contains detailed information on total expenditure and the income presents large, exogenous quarterly changes due to an institutional feature. The article shows that assuming separability among commodities biases the test against the model. When separability is not imposed, we show that the rejection of the model depends on heterogeneity across households in terms of their members being unemployed or not. For those households permanently employed, the model cannot be rejected whatever their income status.     

Economic liberalization and wage inequality in the presence of labour market imperfection

This paper is purported to analyze the consequences of liberalized economic policies on the skilled–unskilled wage inequality in the developing countries using a three sector general equilibrium model reasonable for at least a few developing economies. The analysis of the paper has found that the wage inequality rises unambiguously due to a reduction of import tariff from the low-skill manufacturing sector. However, an inflow of foreign capital produces a favourable effect on the wage inequality under a reasonable factor intensity condition. Interestingly, contrary to the common wisdom, a policy of labour market reform may raise the competitive unskilled wage and improve wage inequality under reasonable condition.     

On the relationship between female labour force participation and fertility in G7 countries: evidence from panel cointegration and Granger causality

This article examines the relationship between the female labour force participation rate and total fertility rate for the G7 countries from 1960 to 2006 using panel unit root, panel cointegration, Granger causality and long-run structural estimation. The article’s main findings are that the female labour force participation rate and total fertility rate are cointegrated for the panel of G7 countries; that long-run Granger causality runs from the total fertility rate to the female labour force participation rate and that a 1% increase in the total fertility rate results in a 0.4% decrease in the female labour force participation rate for the G7 countries.     

New Labour at work: long-term unemployment and the geography of opportunity

New Labour has placed great faith in active labour market policiesto address problems of long-term unemployment and poverty. Thispaper considers the effectiveness of welfare-to-work programmesin light of persistent regional employment disparities withinthe UK. It is argued that the government has proceeded froma flawed analysis of the causes and magnitude of long-term unemployment,framing the issue in terms of ‘worklessness’ andneglecting demand-side concerns of job availability and jobquality.     

For better or for worse: the long-term effects of postwar mobilization on family formation

This article estimates the long-term legacies of female labour force mobilization on women’s family formation outcomes such as marriage, age at first marriage and divorce. We identify the long-term marriage effects of female labour force mobilization by exploring postwar mandatory employment in Germany. Using difference-in-differences analysis, we find that participation in postwar reconstruction efforts increased women’s probability of being currently married, ever married and marrying at younger ages. We also find that postwar employment had no differential effect on divorce rates of the affected cohorts of women. These results persist after accounting for the potential changes in the composition of the population, demand for female labour, war relief payments and postwar state-specific policies.     

Capital account openness and the labour share of income

This paper investigates the relationship between capital accountopenness and the share of labour in national income. Employinga new index of financial openness and a cross-country panelof labour shares available from the United Nations System ofNational Accounts, the author shows a robust negative correlationbetween the degree of openness and the labour share. Althoughthis effect is not present for low income countries, the directnegative relationship holds for all other subsamples and inthe presence of a variety of controls. A plausible explanationis that openness alters the conditions of bargaining betweenlabour and capital. By increasing the bargaining strength ofcapital vis-a-vis labour, increased capital mobility raisesrents accruing to capital. Thus, capital account openness mayreduce labour's share of income in the firm, and thereby, atan economy-wide level, its share of national output.     

Financial development and instability: The role of the labour share

This paper examines the role of the labour share in creating instability in a small open economy. We assume that financial markets are imperfect so that entrepreneurs are credit constrained, and that this constraint is tighter for low levels of financial development. Aghion, Bacchetta and Banerjee [Aghion, P., Bacchetta, P., Banerjee, A., 2004. Financial development and the instability of open economies. Journal of Monetary Economics 51, 1077–1106] have shown that as the degree of financial development increases, output rises but instability appears for intermediate levels of financial development. Crucially, they assume that labour is paid before production takes place, and hence crises are solely due to the increased cost of debt repayment as firms accumulate capital. We show that under the more reasonable assumption that wages are paid at the end of the period, changes in the labour share also play a role in eroding profitability. Our analysis also predicts that financial crises are associated with substantial movements in the sharing of value added between capital and labour.     

In sorrow to bring forth children: fertility amidst the plague of HIV

The HIV epidemic is lowering fertility in sub-Saharan Africa. This decline in fertility appears to reflect a fall in the demand for children, and not any adverse physiological consequences of the disease, as it is matched by changes in the expressed preference for children and the use of contraception, and is not significantly correlated with biological markers of sub-fecundity. A fall in fertility lowers dependency ratios and, for a given savings rate, increases future capital per person. These two effects more than offset the loss of prime working age adults and reduced human capital of orphaned children brought by the epidemic, allowing 27 of the nations of sub-Saharan Africa to cumulatively spend US$ 650 billion, or $5100 per dying adult AIDS victim, on patient care without harming the welfare of future generations. In sum, the behavioral response to the HIV epidemic creates the material resources to fight it.

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Electronic supplementary material The online version of this article (doi:) contains supplementary material, which is available to authorized users. In memory of Ho Hon and Nechama, terribly missed by us all.     

Marx on division of labour,mechanization and technical progress

The paper reconstructs Marx's analysis of the development of the forces of production in terms of the interaction among division of labour in particular processes of production, social division of labour and technical progress. It also brings out Marx's conception of technical progress and establishes his view of the essential interdependence among the development of the forces of production, the process of capital accumulation and the expansion of markets; it further brings out the role of competition as a fundamental driving force in the interrelated processes of accumulation and of development of the social productivity of labour.     

Wages and productivity: the role of labour market institutions in OECD countries

In the context of a monetary union, to keep a territorial equilibrium in terms of economic activity and employment, the relationship between real wages and productivity is crucial. In this paper, empirical evidence about the response of wages to productivity is obtained for 20 OECD countries and the role of labour market institutions to explain differences in this response is analysed.     

A materialist development of some recent contributions to the labour theory of value

The paper offers a novel interpretation and affirmation of theopening arguments of Capital, answering the fundamental butneglected question of why labour is the substance of value.Marx's arguments require that two philosophical threads, oftenseparated in the literature on value, be woven together. Theargument that value is the intrinsic ‘content’ makingcommodities exchangeable employs the thread of realism. Theargument that abstract labour is the emergent ‘socialsubstance’ of value employs the thread of dialectics.This interpretation develops the materialist and dialecticalphilosophy of E.V. Ilyenkov and deepens the approach to valuetheory initiated by Ben Fine.