Flexible Labour,Firm Performance and the Dutch Job Creation Miracle

Unlike internal (‘functional’) forms of flexibility of labour, external (‘numerical’) forms of flexibility (i.e. high shares of people on temporary contract or a high turnover of personnel) yield substantial savings on a firm’s wage bill. Savings on wage bills lead to higher job growth, but do not translate into higher sales growth. Externally flexible labour appears to be related to lower labour productivity growth, the effects being different for innovating vs non‐innovating firms. We discuss these findings from firm‐level and worker‐level data against the background of the Dutch job creation miracle during the 1980s and 1990s. Modest wage increases and flexibilization of labour markets may indeed create lots of jobs. However, this is likely to happen at the expense of labour productivity growth, raising serious doubts about the long‐run sustainability of a low‐productivity–high‐employment growth path.     

The problem of the uninsured

The problem of the uninsured cannot be fully understood without considering the role of non-market alternatives to ‘market insurance’ called ‘self-insurance’ and ‘self-protection’ (SISP), including the public ‘health care safety-net’ system. We tackle the problem by formulating a ‘full-insurance’ paradigm that accounts for all four interacting insurance measures. We apply two versions of the full-insurance model to estimate, via calibrated simulations, the impacts of SISP on the fraction of uninsured, health spending, and health levels, and to assess how the mandated Affordable Care Act might affect these outcomes in comparison with the CBO projections in 2010. The results indicate that policy analyses which overlook the role of the real price of market insurance relative to the shadow prices of SISP in determining the decision to insure can grossly distort the capacity of mandated reforms like the ACA to insure the uninsured, contain overall health care costs, and improve health and welfare outcomes.     

Employees and second-job holding in the Federal Republic of Yugoslavia

This paper explores the second‐job holding (or ‘moonlighting’) behaviour of a sample of employees using data from a unique survey conducted for the Federal Republic of Yugoslavia (FRY) in January 1998. Both participation in ‘moonlighting’ and the number of hours worked are examined. The participation model performs better in an econometric sense and provides the focus for our discussion. We note a strong regional dimension to ‘moonlighting’ in the FRY with employees in Central Serbia disproportionately represented in this activity. In addition, blue‐collar workers are found to be more likely to engage in ‘moonlighting’ than white‐collar workers. The set of labour supply variables implied by neo‐classical theory exerts a strong influence and explains a significant amount of the phenomenon of interest. Our calculations suggest that if main (or regular) job earnings are restored to levels that prevailed at the time of the ‘break‐up’ of the federation, employee second‐job holding in the FRY would only fall by about one‐seventh. JEL classification: J21, J22, P2, P3.     

Does health insurance reduce illness-related worker absenteeism?

The objective of this article is to examine whether having health insurance reduces illness-related absenteeism among older workers. A nationally representative sample of 1780 workers in the United States, aged 52–64, are drawn from the 2004–2006 Health and Retirement Study (HRS). Binary logistic regressions and censored Tobit models are estimated for workers’ likelihood of missing work days due to illness and the number of illness-related work days missed, respectively, while explicitly addressing the possibility of insurance-selection effects. The findings suggest that over a 12-month period, older workers without health insurance are as likely as insured workers to miss work days due to illness and there are no differences in the number of days missed between insured and uninsured workers. However, there is strong evidence that poor baseline health, onset of new diseases and longer hospitalization significantly increase an older worker's absenteeism at work. These results suggest that having health insurance does not affect illness-related absenteeism among older workers in the US. Future research examining other aspects of worker productivity, such as ‘presenteeism’, and the longer term effects of insurance on productivity can extend our understanding of the role of health insurance in the workplace.     

INSURANCE‐INDUCED MORAL HAZARD: A DYNAMIC MODEL OF WITHIN‐YEAR MEDICAL CARE DECISION MAKING UNDER UNCERTAINTY

This study quantifies the moral hazard effect of health insurance on medical expenditure by estimating a dynamic model of within‐year medical care consumption that allows for insurance selection, endogenous health transitions, and individual uncertainty about medical care prices in an environment where insurance has nonlinear cost‐sharing features. The results suggest that moral hazard accounts for 53.1%, on average, of total annual medical expenditure when insured. This estimate is significantly different, and generally larger, than that produced by an alternative model that is representative of the annual medical care decision‐making models commonly found in the literature.     

Labour market outliers: Lessons from Portugal and Spain

Spain has the highest unemployment rate (22.2%) of any European Union country, Portugal one of the lowest (7.3%). Superficially, these countries share many labour market features: the toughest job security rules in the OECD, an apparently similar architecture of wage bargaining, and comparable generosity of their unemployment insurance systems, at least since 1989. We address the puzzle by examining Portuguese and Spanish labour market institutions, in particular job security, unemployment benefits and the system of wage bargaining. We then conduct empirical analysis of Spanish and Portuguese unemployment outflows and wage distributions, using micro data. We find differences in unemployment benefits (non-existent in Portugal until 1985, and less generous nowadays), differences in wage flexibility (wage floors by category established by collective agreements are set at a lower relative level in Portugal), and, in practice, higher firing costs in Spain. A key explanation of the difference in Portuguese and Spanish unemployment rates is the wage adjustment process. Generous benefit levels may have been necessary for the path Spanish unions took, but this was not the sole explanation of different wage setting in Spain and Portugal.     

Comparing employment estimates using different minimum wage variables: the case of Brazil

Several minimum wage variables have been suggested in the literature to estimate the effect of the minimum wage on employment. The most common ones are the real minimum wage, the ‘Kaitz index’, the ‘fraction affected’, the ‘fraction at’ and the ‘fraction below’. This diversity of variables makes it difficult to compare the associated estimates across studies. One problem is that these estimates are not always calibrated to represent the employment effect of a 1% minimum wage increase. Another problem is that these estimates measure employment effects for different groups of workers. In this paper we critically compare employment effect estimates using these five minimum wage variables and data from a Brazilian monthly household survey panel from 1982 to 2000. Our principal finding is that the sign of this effect is robust across the different minimum wage variables, but that its magnitude and significance are sensitive to the minimum wage variable used.     

Human capital,reservation wages and job competition: Heckman's lambda re-interpreted

This study integrates insights from three theories into a single model explaining the simultaneous distribution of employment and wages. Human capital theory is taken as the general framework, whereas search theory and the more recent ‘crowding’ or ‘job competition’ hypothesis are used to explain selectivity in employment and the resulting bias in wage regressions. An empirical test on Belgian data, using a two-stage probit-OLS model, indicates that the crowding theory dominates the search hypothesis for men. For women, it seems to be outweighed by relatively higher reservation wages, probably due to women's different behaviour with respect to family responsibilities.     

A nonparametric analysis of insufficient wage incentives in the Chinese health industry

ABSTRACT

This study provides empirical results on the insufficient wage incentives in the Chinese health industry, which may result in the poor productivity of high-ability medical personnel. We first propose a signaling game by capturing the progressive wage incentive in this industry. Then, we show that the model primitives are nonparametrically identified and estimable using recently developed methodologies related to measurement errors. Adopting a dataset from the China Household Income Project, we provide empirical evidence of the negative influence of insufficient wage incentives on the productivity of high-ability workers, especially those in higher job positions. As the number of high-ability workers in higher job positions is high, it is important to improve wage incentives in the Chinese health industry, especially for workers in higher job positions, to promote the productivity of high-ability medical workers.     

Nonlinearities in the U.S. wage Phillips curve

We examine the relationship between wage inflation and the unemployment rate in the U.S. economy for the 1964–2014 period by means of a three-regime threshold regression model. The estimated threshold parameters suggest that this relationship changes when the unemployment rate transitions between regimes defined by 5.61% and 7.63%. During mild recessions and their subsequent recoveries, the time-varying estimates of the model indicate a negative relationship between both variables, consistent with the implications of a wage Phillips curve (WPC) derived from the standard New Keynesian model with staggered wage setting in Galí (2011). However, we find that this relationship breaks down during deep recessions and their recovery periods, which explains the difference between wage inflation predicted by standard New Keynesian models and the observed low wage growth in the aftermath of the ‘Great Recession’. This finding and the fact that statistical tests strongly favor our three-regime model suggest that linear and two-regime models are insufficient to account for all the variability in the relationship between wage inflation and unemployment.     

失业保险金与再就业行为

现有的失业理论及实证研究都认为失业保险金的提高会增加失业者的失业持续时间。在本文中,我们试图从失业者面临工作机会的工资分布结构出发,对失业保险金与失业者再就业工资分布的关系进行描述。通过对传统工作搜寻理论模型的扩展,我们证明失业保险金对失业持续时间的影响存在三种不同的传导路径,同时我们得到两个推论:失业保险金的增加一方面将提高失业者接受"高"工资工作机会的概率;但另一方面对失业者从事"低"工资工作机会的影响是不确定的。如果将正式工作视为"高"工资的工作机会,而将非正式工作视为"低"工资的工作机会;则基于微观层面的数据所进行的实证研究结果验证了我们的推论。     

The German generation internship and the minimum wage introduction: evidence from big data

The new German minimum wage applies a specific exemption clause for internships, where internships that last up to three months are exempted while internships that exceed three months are due to the minimum wage. Negative minimum wage effects on internships are heavily debated as internships are mostly non-productive. Difference-in-difference analyses that exploit establishment and regional variation in the bite of the minimum wage do not show a reduction in the number of internships. In addition, we pursue an innovative approach by using Google search data to analyse how the search intensity for internships changed in course of the minimum wage introduction. Difference-in-difference comparisons with other countries in Europe do not reveal an effect on the search for internship positions in general, but we observe a significant reduction in Google search for ‘generation internship’. This suggests that the underlying societal phenomenon of a generation entering internships without a perspective for regular jobs has lost in relevance.     

IS THERE A ‘SECESSION OF THE WEALTHY’? PRIVATE HEALTH INSURANCE UPTAKE AND NATIONAL HEALTH SYSTEM SUPPORT

The purchase of private health insurance (PHI) as a means to partially supplement the National Health System (NHS) coverage is often regarded as a potential signal for a declining support for the NHS. Exploiting the fact that PHI is typically purchased by the most affluent, in this paper we test the so called ‘secession of the wealthy’ hypothesis whereby the likelihood of expressing ‘lack of support for the NHS’ increases with having supplementary PHI. Using empirical data from Catalonia, we draw upon an empirical strategy that circumvents an obvious simultaneity problem by estimating both a recursive bivariate probit as well as an IV probit. After controlling for insurance premium, household income and other socio‐demographic determinants, we find that the purchase of PHI reduces the propensity of individuals to support the NHS. We also find evidence that PHI is a luxury good and sensitive to fiscal incentives.     

The impact of wages on job search in a transition economy - evidence with data from Eastern Germany

This study is concerned with the impact of wages on job search decisions in Eastern Germany immediately after reunification and in later periods. Several concepts measuring wage effects are used. The results of bivariate probit estimates with incomplete classification for a global and local job search show that the wage level had stronger effects on the former than on the latter job search decision directly after the collapse of the Berlin Wall. The degree of satisfaction with current income and the earnings capacities were irrelevant for the search decision. Low-paid East German workers had a higher propensity to search for a new job in the old Länder than others. This is contrary to the misleading result of isolated estimates about the job search in Western Germany. In the subsequent periods the situation has changed. The difference of earnings capacities between Eastern and Western Germany, specific East German wage premiums and intraregional wage inequality affect the decision to search for a new job in the west.For helpful comments I thank Michael Burda, Knut Gerlach, Robert A. Hart, Stefan Niermann, Liz Regan and two referees.     

Gender wage gaps and economic crisis in Greece

ABSTRACT

We examine gender wage gap (GWG) in Greece for 2013, by using a survey data set. Our findings show first, that the unadjusted GWG is 15.3%, while European Commission reports a value of 15%. Secondly, we derive the ‘adjusted’ GWG, using the Oaxaca and Ransom (OR) and the Juhn, Murphy and Pierce (JMP) methods to be ranging from 10% to 13.6%. Thirdly, looking into the behaviour of the full population, we find a decreasing trend for the discrimination effects, an increasing trend for the residuals effects and a ‘random’ endowments effects while moving to higher deciles. These three effects are associated to the economic crisis 2008–2015. Fourthly, our findings do not show evidence of either a ‘glass ceiling’ effect or a ‘sticky floor’ effect. Finally, that there is strong evidence that investing in higher education reduces the wage discrimination between sexes.     

Job mismatches and career mobility

Does over-education assist or hinder occupational advancement? Career mobility theory hypothesizes that over-education leads to a higher level of occupational advancement and wage growth over time, with mixed international empirical evidence. This paper re-tests career mobility theory directly using a rich Australian longitudinal data set. A dynamic random effects probit model is employed to examine upward occupational mobility, considering two-digit occupational rank advancement and wage growth over three-year intervals. The ‘Household, Income and Labour Dynamics in Australia’ data across nine years are employed, and a Mundlak correction model is adopted to adjust for unobserved heterogeneity effects and potential endogeneity, both of which are important to over-education analysis. Contrary to career theory, the results point to job mismatch as an economic concern rather than a passing phase, regardless of whether or not workers are skill-matched. Results further show the importance of adjusting for endogeneity.     

Influence Factors on Gender Wage Gap: Evidences from Chinese Household Income Project Survey

By constructing a gender wage gap evolution model, this paper examines the source and evolutionary process of gender wage inequality from a theoretical perspective. The purpose of this study is thoroughly investigating the factors affecting the gender wage inequality from the perspective of gender discrimination and variations in non-gender endowments. Based on the Chinese Household Income Project Survey Data, this study indicates that: (1) since companies continue to re-evaluate the gender endowment value of gender, the gender wage inequality exhibits an endogenous sustainability and self-reinforcing effect. (2) The gender wage gap of urban residents is derived mainly from the top tier of wages, while the gender wage gap of the migrant people is mainly determined from the bottom rung of wages. (3) Female age has a ‘U-curve’ impact on gender wage inequality from the standpoint of non-gender endowment differences, and the female age has an ‘inverted U-curve’ impact on gender wage inequality as a result of discrimination. (4) Female appearance and actual work hours are insufficient to affect the changing trend of gender wage inequality; however, h-register location and marital status are still considered to be very important.     

Wage posting: evidence from job ads

Abstract Recent studies of search theory examine how employers use a wage‐setting mechanism – either by bargaining or through the posting of a non‐negotiable wage offer in a job ad – to facilitate search. We contribute to this literature by examining wage posting in job ads in the US, the UK, and Slovenia. Despite considerable differences in the incidence of wage posting, employers in all three markets are less likely to post a wage offer when searching for skilled workers. The decision on whether or not to post a wage offer is only weakly related to the outcomes of employers’ search.     

Compensating wage differentials for job stress

Recent medical studies have demonstrated a strong relationship between mental stress and cardiac events such as myocardial infarction and stroke. In the workplace, stress once accounted for less than 5% of all occupational disease claims, but it now accounts for over 15%. Although research on the effects of mental stress is increasing, few studies offer an economic perspective. In this paper, we examine the effects of job stress on weekly wages and explore the possibility that stress commands a compensating wage differential. Our findings suggest that, ceteris paribus, a wage differential does exist between workers experiencing mental stress and their ‘non-stressed’ cohorts. After controlling for other demographic and occupational factors, we found a statistically significant wage premium ranging from 3 to 10% attributable to mental stress. In addition, the magnitude of the differential varies by gender.     

RESERVATION WAGES AND THE UNION JOB QUEUE: A SAMPLE SELECTION APPROACH

This paper uses a unique data set of unemployed semi-skilled workers to examine the relationship between reservation wages and the decision to queue for a union sector job. Estimation of selected reservation wage equations indicates that the failure of all previous estimates to model the queuing decision results in biased coefficients. Those workers who queue for a union job are subject to a distinct reservation wage formation process which differs from those not queuing. Moreover, a structural estimate of the queuing decision demonstrates that workers with the greatest differences between estimated reservation wages in the union and non-union sector are the most likely to queue. This estimate of the queuing decision stands as one of the few which focus on unemployed workers. Among other results, women and minorities are more likely to queue for union jobs, all else equal.