Shadow price of working in the shadows: services industry evidence

ABSTRACT

In this paper, we use an exogenous policy variation in the labour market to determine the wage gap between formally and informally employed workers. For our purposes, ‘informal employment’ describes employees who are not officially registered with any social security scheme. We use self-reported employee registration status to identify such workers, but the choice of working unregistered is not exogenous. Nevertheless, through an amnesty that was extended to only some workers in the labour market, we reduce the endogeneity problem, enabling estimation of the wage gap between these two groups. Our two-stage least square estimates reveal that the hourly wage penalty of working in the shadows is as high as 59%, and the monthly salary penalty is around 66%. Moreover, the wage gap is higher (as high as 70%) for those working in the services sector, as unregistered workers in this sector tend to be low skilled and low educated, and the monitoring of this sector is more difficult. Our analysis contributes to the literature by using an instrumental variable to treat the endogeneity of workers’ registration status. In addition, it shows that people working informally in the services industry receive a higher average wage penalty than other informally employed workers.     

Participation in industrial training programs

Two questions suggested by the recent literature on the matching of workers and firms are examined. The first relates to differences in the proportion of workers that participate in industrial training programs in large and small firms. The second relates to the characteristics of workers who participate in such programs. The major finding of this study is that workers in large firms are more likely to participate in industrial training programs than similar workers in small firms; the large-small firm training program participation rate differential is less, however, among low productivity workers than among high productivity workers. Additionaly, workers with vocational training received outside of a work setting are just as likely to find employment in small firms as in large ones.This research was supported by the Office of Advocacy, U.S. Small Business Administration under SBA award number 8487-AER-84. The findings and conclusions are the sole responsibility of the author.     

Employee age and voluntary development activity

It is known that older workers undertake less formal training than younger ones, but little information is available about age-patterns in voluntary development activities undertaken in an employee’s own time. In a study of 1798 manufacturing workers, age and ten other factors were examined in relation to four types of activity: participation in a tuition refund scheme, learning in an employee development programme, attendance at an employee development centre, and use of a personal development record. Significant age- differences were found, and key influential factors were identified as older workers’ lower educational qualifications (representing both cognitive and affective differences) and their more limited learning motivation (linked to lower learning confidence and greater perceived time constraints). However, older individuals who had previously undertaken each form of development were as positive about that previous activity as were younger participants. Possible interventions to increase voluntary development at older ages include rewards for participation, enhancement of basic skills, pretraining in appropriate learning strategies, sequential exposure to graded learning demands, and steps to change organisational stereotypes of older staff.     

Ontological Security, Existential Anxiety and Workplace Privacy

The relationship of workers to management has traditionally been one of control. However, the introduction of increasingly sophisticated technology as a means of supervision in the modern workplace has dramatically altered the contours of this relationship, giving workers much less privacy and making workers much more visible than previously possible. The purpose of this paper is to examine the current state of technological control of workers and how it has altered the relationship of worker to organization, through the impact upon self as perceived by the worker.     

Supporting the Career Development of Older Employees: an HRD Study in a Dutch Company

Many organisations are confronted with an ageing workforce. Older employees are often seen as less flexible and open to HRD activities than their younger colleagues, yet rapid developments taking place within society and organisations require a flexible and responsive workforce. The necessary knowledge and skills demanded here can be taught through HRD activities. In 1995 a quantitative exploratory survey into the conditions considered important for the career development or mobility of older workers was carried out within a Dutch multinational chemical company. From a training and development viewpoint, these conditions are defined as demands made on corporate HRD policy, HRD activities and employees’ willingness to learn, as well as stimulating factors that promote the career development of older workers. Results show that while the company operated an age-awareness personnel policy, this still focused on younger employees so that participants in the career development process were insufficiently stimulated in their roles and traditional formal HRD activities had little effect on older workers’ careers. This article describes the survey, highlighting its major results, and offers recommendations.     

The Employer Size-Wage Differentials in Taiwan

This paper examines the factors affecting wage differentials for firms of different sizes, using Taiwans Manpower Utilization Survey data of 1996. The main findings of the paper are as follows: (a) People with years of education, working experience, degrees in Science, Engineering, and Medicine, as well as females and married people tend to have a greater preference for working in big firms. Workers in public utility companies and manufacturing industries also prefer to work in big firms. While professionals, technicians, and service and sales workers prefer to work in large firms, business executives and managers have a preference for small firms. (b) Small-scale (less than 100 workers) firms tend to have a negative selection, while large-scale (more than 500 workers) firms tend to have a positive selection. That is, under self-selection, more able workers choose to work at large firms and less able workers at small firms.     

Who Supports Free Trade in Latin America?

This paper examines individual trade policy preferences across 17 countries in Latin America. The focus is on whether skilled or unskilled workers are more likely to support liberalised trade and on whether country characteristics, such as factor endowments, alter the preferences of skilled and unskilled workers. Based on the standard Heckscher‐Ohlin model and the Stolper‐Samuelson theorem, wage inequality in developing countries will decrease under free trade and unskilled workers will benefit. We find that on average skilled workers are more likely than unskilled workers to support free trade in Latin American countries. Separate country regressions reveal that this pattern is only statistically significant in 8 out of 17 Latin American countries. However, there are no countries in our sample in which unskilled workers are statistically more likely to support free trade than skilled workers, not even in the lowest skill‐endowed country in the sample. We also find that people from Latin American countries with higher GDP, faster growth, more cropland and a longer period of time since reform were more likely on average to support free trade.     

透视“民工荒”——当前我国农村劳动力转移态势的人口经济学分析

改革开放以来沿海地区持续了二十多年的“民工潮”,近年来却悄然退去,演变成了令人震惊的“民工荒”。原因究竟何在?劳动力无限供给不等于有效供给,进城民工人力资本存量不足,在劳动力市场上缺乏就业竞争能力,“民工荒”表现为“数量荒”,实际上是“质量荒”,来源于民工的“教育荒”。从一定意义上说,“民工荒”反映的又是“权利荒”。善待民工,规范用工行为,切实维护民工的合法权益, 才能营造出一个留住民工的良好就业环境。     

从“五普”资料看经济技术开发区劳动参与特点

以大连经济技术开发区为例,分析了我国经济技术开发区的劳动参与特点,认为目前开发区劳动参与率较高,而从业人员文化素质较低,从业人员的产业和行业分布不均,失业人员状况也不尽如人意。     

The effect of education and experience on self-employment success

The impact of education on the business success of an entrepreneur has been the subject of much discussion and speculation in both the popular and academic press. The literature is full of folklore focusing on the high-school drop out who made it big in the business world armed with an education from the school of hard knocks. Until recently this was part of the myth surrounding entrepreneurship. The myth takes shape in three basic areas. The first looks at the entrepreneur's level of education relative to the general public. The second area addresses the effect of education on people becoming entrepreneurs on a macro level. Do people with higher levels of education start more businesses than people with less education, does it increase the probability of becoming an entrepreneur? The third area concerns the micro-economic effect on individual entrepreneurs. Does education help an entrepreneur succeed?Past research on education and entrepreneurship consists mostly of institutional studies at universities with established programs. These offer good support for the outcome of educational programs. However, these studies are poorly circulated and seldom published because of the limited sample sizes (McMullan (1988) summarized several such studies). In this study the literature is reviewed in three areas mentioned above and new information on the relationships between education, experience, and self-employment is provided.The empirical part of this study examines the effect of education and experience using U.S. census data. Self-employment is used as a surrogate for entrepreneurship and the analysis controlled for farmers and professionals (medical doctors, lawyers, accountants, etc.) so that it would more closely fit our conception of an entrepreneur. Earnings potential was used as a measure of success. We recognize that success is a subjective experience based on one's expectations and actual outcomes; however, we believe that earnings provided a global indicator of success that is quantifiable relative to the sample used. Four specific hypotheses were generated and tested using the data.The first hypothesis (Self-employed have more years of formal education than those who do not work for themselves.) was confirmed with the years of education for the self-employed being 14.57 years for all workers, 14.71 years for males, and 14.13 years for female workers. Wage and salaried workers came in nearly one full year lower with: 13.58 years for all worked, 13.73 for male workers, and 13.40 for female workers.Hypothesis two (The number of years of formal education will increase the probability of becoming self-employed.) was supported with the probability of becoming self employed increasing by 0.8% for each year of education providing a significant relationship (t = 32.11 for all workers, t = 21.95 for males, and t = 20.76 for females, p < .0001 for all three).Hypothesis three (The relationship between years of formal education and success of the self-employed, as well as the general population will be positive and significant.) was supported using the “Beta” coefficients in a “Probit” regression model, indicating that self-employment and wage and salaried earnings increase significantly for each year of education. Self-employment earnings increased $1207.63 a year for each year of education ($1212.76 for males and $414.81 for females). Wage and salaried workers earnings increased $825.99a year for each year of education ($1023.33 for males and $369.37 for females).Hypothesis four (The relationship between experience and self-employment success will be positive and significant, but weaker than the impact of education.) was supported. All self-employed workers, both male and female, had over two years more experience than their wage and salaried counterparts. There is a strong positive relationship between self-employment and both experience and earnings with the exception of self-employed females whose experience did not significantly impact their earnings.In conclusion, a general education has a strong positive influence on entrepreneurship in terms of becoming self-employed and success. Experience has a similar relationship although not as strong. Future studies need to examine the impact of specific types of education, such as business school or entrepreneurship classes, on the entrepreneurial outcomes in the studies.     

Does self-employment increase the economic well-being of low-skilled workers?

Low-skilled workers do not fare well in today’s skill intensive economy and their opportunities continue to diminish. Utilizing data from the survey of income and program participation, this paper provides an analysis of the economic returns to business ownership among low-skilled workers and addresses the essential question of whether self-employment is a good option for low-skilled individuals that policymakers might consider encouraging. The analysis reveals substantial differences in the role of self-employment among low-skilled workers across gender and nativity—women and immigrants are shown to be of particular importance from both the perspectives of trends and policy relevance. We find that, although the returns to low-skilled self-employment among men is higher than among women, the analysis shows that wage/salary employment is a more financially rewarding option for most low-skilled workers.     

Transplanting corporate culture across international borders: Foreign direct investment and female employment in Japan

This paper examines the effect of foreign ownership on gender‐related employment outcomes and work practices in Japan. The data indicate that the proportion of females among workers, managers, directors and board members is higher in foreign affiliates than in domestic firms of comparable size operating in the same industry. Foreign affiliates are also more likely to offer flexible working arrangements, telecommuting and childcare subsidies as well as employ foreign workers. These effects are visible almost exclusively in older affiliates. The analysis of foreign acquisitions combining propensity score matching with a difference in differences suggests that increase in the female labour share takes place a few years after the ownership change. All these patterns are in line with the view that it takes time to transplant corporate culture to an overseas affiliate.     

DUOPOLISTIC HIRING AND SALES COMPETITION—A THEORETICAL AND EXPERIMENTAL ANALYSIS

Two firms compete in selling as well as hiring, where sales levels depend on the hired workforce. There are two types of workers, mobile and immobile, differing in effort costs, and two workers of each type. The principals offer contracts to all workers, who then select an employer. Finally, the workers determine production levels and profits. Our experimental results show: vanishing cost differences between mobile and immobile workers induce monopolistic hiring but low profits. In contrast, large cost differences result in higher profits and allow for various hiring constellations such as one firm hiring only low‐cost workers.     

Automatic Enrollment and Its Relation to the Incidence and Distribution of DC Plan Contributions: Evidence from a National Survey of Older Workers

Automatic enrollment has been widely embraced for raising employee participation in 401(k) plans. However, the empirical evidence on the effect of automatic enrollment on plan contributions and retirement saving overall is still imperfect. Using nationally representative data from the Health and Retirement Study (HRS), we find that although automatic enrollment is associated with a higher proportion of workers participating in DC plans, automatically enrolled workers are less likely to contribute to their DC plans and contribute on average less than their voluntarily enrolled counterparts. In contrast, employers of auto‐enrolled workers on average contribute more to their employees' accounts than do the employers of voluntarily enrolled workers. Even so, the combined effect is that the total annual contribution rates of automatically enrolled older workers are 1.6 percentage points lower than those of voluntarily enrolled workers.     

Issues of employment portfolios in Japanese retail businesses

Abstract

The employment portfolio of Japanese retail businesses is composed of regular employees and part-time workers. Even though part-time workers are assigned to significant jobs, their wages tend to be lower than those of regular employees. However, the job satisfaction and motivation of part-time workers are not low. This article aims to consider why part-time workers have a positive attitude toward their jobs. Data were collected from part-time workers of retail businesses (n?=?1133). The specific focus is on two groups: part-time workers compared to regular employees and part-time workers compared to other part-time workers. Results showed that the group compared to part-time workers had more positive job attitude than others. From the point of view of social comparison, the job attitude of part-time workers may differ depending on the choice of who they compare themselves against. The implications of the findings and directions for future research are discussed.     

Wage convergence and trade

We examine differences in wage rates across countries for workers employed in the same industry, distinguishing workers in the low, medium and high‐skill groups. These differences are large and show persistence over time. We ask, nonetheless, whether there is evidence of convergence, much as is done in studies of convergence in per capita income across countries. With our focus on the micro level, we expect convergence to reflect, at least in part, the degree of integration of a country or industry into the world economy and examine particularly the role of market integration and trade. Our results show strong evidence of convergence in a diverse sample of 39 countries, which includes most large economies whether rich or poor. The estimated convergence rate over the period from 1995 to 2008 is about 4% per year for workers in all skill groups, higher in the more integrated economies of the EU than in other economies without such open borders and lower in industries supplying services rather than manufactures. Also, we find evidence that the rate of growth of domestic output impacts positively on the growth of wages in an industry, providing a source for ongoing deviations from the convergence prediction.     

Trends toward part-time employment: Ethical issues

This paper addresses the current trend of hiring part-time employees for United States businesses. This common practice is one that does not consider the best interests of the employee. I argue that, at the present time, many people, especially those who are poor, have no other choice than to accept these part-time positions. As a result, the quality of life of these workers and their family members suffers. Companies typically employ part-time workers in an effort to increase profits. I argue that this practice will only increase short-term profits, and hiring a large staff of part-time workers will actually decrease long-term profitability. Consequently, this unethical practice is also an unprofitable one.Julia J. Bartkowiak is an Assistant Professor of Philosophy at Clarion University of Pennsylvania. Recently, she presented a paper on part-time employment at Humboldt University, participated in an NEH Seminar on Human Rights, and presented a paper in Zurich, Switzerland.     

Why are establishments so heterogeneous?

Changes in the size of establishments — as opposed to the turnover of workers across a given set of jobs — account for a non-negligible component of gross workers flows. Based on a rich database of establishment-level employment records in western Germany, this paper analyses the magnitude and determinants of job turnover and its relation with labour turnover. Consistently with findings from other countries, it is shown that job turnover is mainly the byproduct of the dispersion of establishment-level outcomes within any industry rather than of job reallocation across different sectors. The role played by disturbances to consumer preferences over differentiated products is also assessed in an attempt to shed some light on the determinants of this tremendous heterogeneity of establishment-level employment changes within each industry.The views expressed herein are those of the author and do not necessarily reflect those of the OECD. The author would like to thank Boyan Jovanovic and an anonymous referee for useful comments on an initial draft.     

Entrepreneurship and Earnings among Young Adults from Disadvantaged Families

Academicians and policymakers have argued that entrepreneurship provides a route out of poverty and an alternative to unemployment or discrimination in the labor market. Existing research, however, provides little evidence from longitudinal data on the relationship between business ownership and economic advancement for disadvantaged groups. I use data from the National Longitudinal Survey of Youth (NLSY) to examine the earnings of young business owners from disadvantaged families and make comparisons to young wage/salary workers from disadvantaged families. For young men from disadvantaged families, I find some evidence that self-employed business owners earn more than wage/salary workers. In contrast, I find that for young women from disadvantaged families business owners earn less than wage/salary workers. The results from these earnings comparisons are somewhat sensitive to the use of different measures of income and econometric models.