Overlapping labour markets

Overlapping labour markets arise when some types of workers do not meet employers with some types of jobs. For example, skilled workers could seek high-skill or low-skill jobs, but low skill workers could be limited to low-skill jobs. The paper derives conditions for equilibrium and efficiency, distinguishes reducible from irreducible overlapping labour markets, and describes distributional impacts of proportional demand shifts and technological change. Many labour models incorporate the structure of overlapping labour markets, so that the results have widespread applicability.     

Wages,employment, labour turnover and the accessibility of local labour markets

In this paper, we extend a dynamic efficiency wage model to the case of multiple local labour markets that interact through migration. Firms are concerned about turnover costs. The quitting behaviour of workers is a function of local labour market conditions, non-wage income and the costs and benefits of migration to other local labour markets. A synthetic micro sample of 20,302 observations from the 1986, 1991 and 1996 New Zealand Censuses of Population and Dwellings provides evidence supporting the theory. Across subgroups, the wages of workers with relatively inelastic local labour supply and/or lower geographical mobility are relatively more responsive to changes in the local employment rate. The evidence is consistent with the notion that local employers engage in monopsonistic competition with respect to the employment of such workers.     

An approach to researching managerial labour markets

Recently there has been a revival of interest in the nature of the employment relationship. The employment relationship in a market economy has been traditionally understood as a dynamic equilibrium between the contending forces of conflict and cooperation. However, some contemporary accounts purport to detect a fundamental change in the nature of the employment relationship. These arguments are flawed because they appear to mistake changes in employment arrangements for changes in the core features of the employment relationship. As the contemporary employment relationship remains rooted in market economies, where labour is bought and sold, its core characteristics persist. In testing this claim, we examine whether new working arrangements are associated with changes in attitudes and behaviour. This is based on a survey of white-collar union members in Ireland. We find little support for the assumption that new working arrangements such as increased job autonomy and involvement in decision-making are eradicating the old conflictual attitudes associated with the traditional employment relationship and psychological contract.     

Optimal tax progressivity in imperfect labour markets

All modern labour market theories capable of explaining involuntary unemployment as an equilibrium phenomenon imply that increased income tax progressivity reduces unemployment, but they also imply that higher progressivity tends to reduce work effort and labour productivity. This suggests that there may be an optimal degree of tax progressivity where the marginal welfare gain from reduced involuntary unemployment is just offset by the marginal welfare loss from lower productivity. This paper sets up four different models of an imperfect labour market in order to identify the degree of tax progressivity which would maximise the welfare of the representative wage earner. Simulations with these models suggest that the optimal degree of tax progressivity could be quite large, although the results are sensitive to the generosity of unemployment benefits and to the after-tax wage elasticity of work effort.     

The economics of defence g labour markets

This article considers recent trends in the size of the Armed Forces and reviews the economics of military manpower. The transition from military to civilian employment and the employment experience of redundant defence workers are considered.     

Reproducing low‐wage labour: capital accumulation,labour markets and young workers

Drawing on evidence from Greater Manchester, this article examines how structural changes in capital accumulation have created particular labour market outcomes, which have led to young people becoming a source of cheap labour for the growing low‐wage service economy. Greater Manchester has been selected as a case study because of the sectoral composition of its labour market and because levels of low pay for young workers are above the national low‐pay average of 40 per cent. The research reveals that it is necessary to move beyond sociological explanations that concentrate on the ‘essential youthfulness’ of young people and instead draw on analytical categories from political economy in order to understand the structural causes of young people's material circumstances.     

Tighter labour markets to finally lift global wages

• Wage growth has been relatively slow since 2007 in advanced economies, but an upturn may be in sight. Slow productivity growth remains an issue but tighter labour markets make a positive response by wages to rising inflation more likely and there are signs that compositional and crisis‐related effects that dragged wage growth down are fading – though Japan may be an exception.
• Overall, our forecasts are for a moderate improvement in wage growth in the major economies in 2017–18, with the pace of growth rising by 0.5–1% per year relative to its 2016 level by 2018 – enough to keep consumer spending reasonably solid.
• Few countries have maintained their pre‐crisis pace of wage growth since 2007. In part this reflects a mixture of low inflation and weak productivity growth, but other factors have also been in play: in the US and Japan wage growth has run as much as 0.5–1% per year lower than conventional models would suggest.
• The link with productivity seems to have weakened since 2007 and Phillips curves – which relate wages to unemployment – have become flatter. A notable exception is Germany, where the labour market has behaved in a much more ‘normal’ fashion over recent years with wage growth responding to diminishing slack.
• ‘Compositional’ factors related to shifts in the structure of the workforce may have had an important influence in holding down wage growth, cutting it by as much as 2% per year in the US and 1% per year in the UK. There are some signs that the impact of these effects in the UK and US are fading, but not in Japan.
• The forecast rise in inflation over the next year as energy price base effects turn positive is a potential risk to real wages. But the decline in measures of labour market slack in the US, UK and Germany suggests wages are more likely to move up with inflation than was the case in 2010–11 when oil prices spiked and real wages fell.

     

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Transnational labour markets and national wage setting systems in the EU

The article analyses the impact of European regulations of posting on different national wage systems. The article shows that the impact varied across the countries and has been filtered by the national institutions regulating the labour market. In the voluntarist wage setting systems of Germany and even Sweden, they have been a major factor bringing wages back into competition. The ability of national actors to act has been considerably curtailed by the European Court of Justice (EUJ), which has placed free competition above the basic rights of autonomous collective bargaining. Because of the divergent interests of Member States, this weakening of national actors cannot be compensated for by transnational agreements. This ‘negative integration’ brings with it a serious risk that the inclusiveness of European wage systems will be eroded by a series of cumulative effects.     

Firm heterogeneity and wages in unionised labour markets: Theory and evidence

In many countries wages are set in two stages, where industry-level collective bargaining is followed by firm-specific arrangements determining actual paid wages as a mark-up on the industry wage floor. What explains the wage set in each of these stages? In this paper we show that both the industry wage floor and the average wage cushion are systematically associated with the degree of firm heterogeneity in the industry: The former (latter) is negatively (positively) associated with the productivity spread. Furthermore, since the response of the wage floor dominates that of the wage cushion, workers in more heterogeneous industries tend to get lower actual paid wages. These conclusions are reached in a model of Cournot oligopoly with firm productivity heterogeneity and a two-tiered wage setting system. They are then confirmed by administrative data covering virtually all workers, firms and collective bargaining agreements of the Portuguese private sector for the period 1991–2000.     

The impact of equity markets and corporate governance on labour market flexibility

Drawing from various literatures, this article explores links between equity markets and labour market flexibility. Various data sources are used to test relationships for a set of OECD countries, controlling for other likely influences on flexibility such as government and industrial relations institutions. The results are generally supportive as regards employment flexibility: equity market trading activity is associated with shorter job tenure, higher activity rates, and greater employment change over the cycle. However, the relationship between equity markets and pay flexibility is less statistically robust to the addition of controls.     

Globalization,labour markets and human resources in Asia-Pacific economies: an overview

Abstract This article argues that the impact of globalization on labour markets and human resources on the Asia-Pacific economies may be recognizable but is as yet relatively limited. The sheer variation of geography, population, economies, labour markets, IR and HRM systems there, as well as of values and the like, makes it difficult to talk of 'hard convergence'. We thus emphasize the notion of 'soft convergence'. The article develops a number of empirical propositions regarding the uneven impact of globalization on economies in the region. It concludes that any generalization on this theme should be greatly qualified.     

An application of search theory to the analysis of regional labour markets

This paper argues that the theoretical framework conventionally used by regional economists when analysing labour markets does not allow the spatial dimension of these markets to be discussed in a wholly satisfactory way. Search theory, which has been little used in regional economics, offers a means of overcoming this limitation. A search theory of labour markets is developed which includes as an exogenous variable the cost of travelling between home and work. The theory is shown to imply an inverse relationship between ‘accessibility to jobs’ and ‘duration of unemployment’.     

Investment performance of high income stocks over up and down markets

This paper presents empirical tests of the hypothesis that high-dividend-yield stocks offer investors significantly lower systematic risk in down markets. While high-yield stocks have lower levels of systematic risk overall, there is no evidence in this study that lower systematic risk is achieved in down markets for stocks with high-yield components in their total rates of return. This finding is robust over a variety of test procedures and provides additional support for dividend irrelevance propositions.     

Holdup in oligopsonistic labour markets - a new role for the minimum wage

We consider a labour market model of oligopsonistic wage competition and show that there is a holdup problem although workers do not have any bargaining power. When a firm invests more, it pays a higher wage in order to attract workers from competitors. Because workers participate in the returns on investment while only firms bear the costs, investment is inefficiently low. A binding minimum wage can achieve the first-best level of investment, both in the short run for a given number of firms and in the long run when the number of firms is endogenous.     

Masculine identities and low‐paid work: young men in urban labour markets

This article brings together debates about labour market change, work‐based identities, growing concerns about the problem of working‐class, low‐achieving boys and the identification of a contemporary crisis of masculinity. It draws on a longitudinal study of young men in Sheffield and Cambridge — contrasting local labour markets in England — examining the initial workplace experiences of white working‐class male school‐leavers. Two individual cases are explored in depth, looking at initial working pathways in order to assess the attitudes and actions of young school leavers and their responses to the structural changes in the labour market that have transformed their opportunities compared with both their fathers' generation and their female peers. The implications for theoretical debates about working lives and the trasformation of gender divisions are assessed.     

US foreign direct investment,macro markets and labour relations: the case of enlarged Europe

The rise of macro markets such as the European Single market recalibrates the relationship between foreign direct investment (FDI) and national locations. Previous research has ignored the impact of macro markets theoretically and empirically. The article therefore challenges conventional wisdom on the impact of national properties on FDI.