Against the Wind: Bargaining Recentralisation and Wage Inequality in Norway 1987–91

In the late 1980s, Norway's labour market experienced similar supply and demand shifts for skills to other countries', but unlike other OECD nations, Norway's wage setting system became more centralised. The pay distribution in Norway became more compressed at the bottom from 1987 to 1991, while low wage workers in other countries lost ground relatively. Using Norwegian microdata for 1987 and 1991, I found that changing labour market prices helped cause this wage compression. Further, the less educated had declining relative overall employment but increasing relative public sector employment, both possible labour market responses to the wage compression     

How Women Are Faring in the Australian Labour Market

The Economic and Social Outlook Conference that was held in 2011 carried a separate session on the role of women in the Australian labour market for the first time. Women now make up some 45 per cent of the workforce—in the late 1970s, the proportion stood at one‐third. While women play an increasingly more important role in the labour market, the gap between male and female earnings has shown stubborn persistence, at around 15 per cent. Various explanations include productivity‐related characteristics and the changing age profile of the female workforce. For low‐paid workers, these explanations are convincing; for high‐paid workers, both in the public and private sector, the pay gap remains unexplained.     

The Gender Wage Gap in Paid- and Self-Employment in Australia

This paper presents an analysis of the gender wage gap in the highly regulated Australian labour market. It compares wage outcomes in the wage and salary sector with those for the self-employed. Comparisons with the United States are provided. The large gender pay gap in self-employment suggests that the aggregate gender wage differential will not be eliminated solely through wage determination for wage and salary earners. The greater gender wage gap in the self-employed sector may reflect liquidity constraints that are more difficult for self-employed women to overcome relative to self-employed men. The comparisons with the United States suggest that women will experience deterioration in relative earnings as the Australian labour market is deregulated.     

Rural labour market policies in Croatia,FYR of Macedonia and Turkey

Considerable differences are found among countries regarding the importance of the agricultural labour force, between rural and urban labour, and in poverty and living conditions in rural areas. Declines in the agricultural labour force and rural population are foreseen for each of the countries, but with significant variations between them. Showing different patterns over time, labour market developments in the sector and in rural areas have been shaped by the overall labour market institutions, conditions and factors in each country, such as the legal basis, educational attainment and migration flows, and the presence of non-agricultural activities in rural areas.     

The East German wage structure after transition1

Abstract We extend the literature on transition economies’ wage structures by investigating the returns to tenure and experience. This study applies recent panel data and estimation approaches that control for hitherto neglected biases. We compare the life‐cycle structure of East and West German wages for fulltime employed men in the private sector. The patterns in the returns to seniority are similar for the two regional labour markets. The returns to experience lag behind in the East German labour market, even almost 20 years after unification, with significant differences particularly for high‐skill workers. The results are robust when only individuals who started their labour market career in the market economy are considered. We expect that the different returns are related to the heterogeneity of work experience gathered in East as compared with West Germany.     

Labour market institutions,crisis and gender earnings gap in Eastern Europe

We study gender pay inequality in ten Central and Eastern EU countries before (2007) and during the economic crisis (2009) using quantile regression methods. The analysis reveals remarkable cross‐country diversity in levels and patterns of the gender gap along the earnings distribution; for the majority of the countries the crisis is associated with declining male/female disparities. We address the role played by labour market institutions in shaping the observed gender pay gap levels and patterns. Labour market deregulation increases gender inequality at the middle and at the top of the pay distribution, but reduces disparities at the bottom. Higher union density and wage coordination reduce the pay gap, with stronger equalizing effects on better‐paid jobs. The crisis seems to weaken the already poor role of institutions in the low‐pay sector.     

The market for labour in Israel

Using annual observations for 1960–89, a complete economic model of the Israel labour market is estimated in which the demand for labour varies inversely with real wages, participation varies directly with the real wages and real wages are explained by a phillips curve in which the natural rate of unemployment is a variable. The model suggests that while wages are far from flexible, unemployment shocks die away fairly rapidly. we were unable to model the behaviour of public sector pay and employment.     

Local employer competition and training of workers

The new training literature suggests that in a monopsonistic market employers will not only pay for firm-specific training but also pay for general training if the risk of poaching is limited. This implies that training should decrease with more competition for employees among firms. Using worker-level data for Germany on training participation and on training duration, the authors find empirical support for this hypothesis. Specifically, the authors find that employees are significantly less likely to participate in training if the local density of firms in a sector is high and they have shorter training durations when the local sector concentration is low.     

A microeconomic analysis of wage determination in the Canadian public sector

Using cross-section, micro wage rate data for the period 1967–1975, this paper analyses the extent to which price expectations, price ‘catch-up’, and labour market conditions affect the rate of change of base wage rates in the Canadian public sector. The results indicate that both price movements and labour market conditions do influence base wage rates in a manner that is not radically different from that in the private sector. The paper also explores the importance and significance of these factors when the data are disaggregated according to jurisdiction and method of contract settlement. The final section of the paper is devoted to an exploration of wage spillovers within the public sector and between the public and private sectors.     

Mandatory Retirement and Older Worker Employment Decisions: Evidence from a Matched Difference‐in‐Differences Estimator

In 2008, the minimum age at which private‐sector workers in Taiwan could be forced by their employers to retire from their jobs was raised from 60 to 65 years. In this study, we evaluate the effects of the increase in the mandatory retirement age on the labour supply trend among the elderly using a nationally‐representative Taiwanese panel data set. Based upon the application of a combination of matching and difference‐in‐differences approaches, we find that postponing mandatory retirement has a significant effect, in terms of slowing down the withdrawal of the elderly from the labour force. Among elderly workers affected by the 2008 amendment, particularly those retiring from the public sector, the likelihood of re‐entering the labour market is found to be 3 to 4% higher than that for their counterparts who were not subject to such a constraint, a finding that clearly suggests that an increase in the mandatory retirement age helps to alleviate the problems associated with an aging population in countries where long‐term labour contracts are prevalent.     

Statistical tests for the universality of youth employment mechanisms in segmented labour markets

Patterns of youth employment among manual workers by sex in 47 industrial sectors in the six leading EEC economies in three years (1966, 1972 and 1978) are analysed statistically with a model which relates youth employment share to two aspects of national pay structures: the degree of labour market segmentation (indicated by pay dispersion for adult employees of the same sex) and the importance of wage for age rules (indicated by youth relative pay). Each pay variable proves influential, with the partial exception of female relative pay. Tests for similarity of pay coefficients across countries and time lead to the rejection of both a universal relationship and the national dichotomy in the relative pay relationship which was suggested by earlier results. At the same time, as the economic importance of differences in pay coefficients by country is secondary, major differences between countries in outcomes in the youth labour market arise more from the attributes of national payment systems than from the parameters of employment share functions.     

THE PUBLIC SECTOR PAY GAP IN FRANCE, GREAT BRITAIN AND ITALY

We investigate public–private pay determination using French, British and Italian microdata. While traditional methods focus on parametric methods to estimate the public sector pay gap, in this paper, we use both non-parametric (kernel) and quantile regression methods to analyze the distribution of wages across sectors. We show that the public–private (hourly) wage differential is sensitive to the choice of quantile and that the pattern of premia varies with both gender and skill. In all countries the public sector is found to pay more to low skilled workers with respect to the private sector, whilst the reverse is true for high skilled workers. When comparing results across countries, we find that where pay formation is more regulated (i.e. as in France and Italy) the public sector pay gap is smaller; whilst where market factors play a larger role in pay determination (i.e. as in Great Britain) the public sector pay gap is larger—particularly in the lower part of the wage distribution—and females are much better off in the public sector as compared to the private sector.     

On the Determinants of Labour Market Institutions: Rent Seeking vs. Social Insurance

What determines the structure of labour market institutions? I argue that common explanations based on rent seeking are incomplete. Unions, job protection and egalitarian pay structures may have as much to do with social insurance of otherwise uninsurable risks as with rent seeking. In support of this more benign complementary hypothesis the paper presents a range of historical, theoretical and cross‐country evidence. The social insurance perspective changes substantially the positive analysis of the future of European labour market institutions. It is not clear that globalization and the ‘new economy’ will force countries to make their labour markets more flexible. These phenomena will probably increase the efficiency costs of existing institutions, but they may also make voters more willing to pay a high premium to preserve institutions that provide insurance.     

Undereducation and Overeducation in the Australian Labour Market*

This paper uses data from the 1996 Census of Population and Housing Household Sample File (HSF) to study the incidence of mismatch between workers' educational attainments and the requirements of their jobs, and the earnings consequences of this mismatch. It also examines whether mismatch contributes to the explanation of the gender wage differential in the Australian labour market. It is found that approximately 15.8 per cent of men and 13.6 per cent of women are overeducated, whereas approximately 18.5 per cent of women and 13.7 per cent of men are undereducated. Substantial earnings consequences are found to be associated with this mismatch, with surplus schooling yielding relatively low returns. The results suggest that mismatch does not account for the gender wage gap in the Australian labour market; rather the gender wage differential is entrenched in the fundamentals of pay determination.     

Decomposing productivity growth and divergence: an index number approach

We propose a cross-country productivity growth decomposition that allows us to quantify the industry-level contributors to an aggregate productivity growth differential. We deploy this cross-country decomposition to quantify—for the first time—the disaggregate contributors to the divergence in market sector productivity growth between Australia and New Zealand. The results suggest that large contributions to the divergence arise from differences in labour growth across the two countries and that cross-country structural differences are large, and generally act to reduce the divergence. Most of the industries are found to add to the divergence, with particularly large contributions coming from differences across the mining and wholesale trade industries. The views expressed in the paper are entirely my own, and do not necessarily reflect those of the Reserve Bank of New Zealand. I would like to thank Les Oxley and Kevin Fox for useful comments on earlier drafts. All errors and omissions are my own.     

Comparable worth in a decentralized labour market: the case of Ontario

Abstract.  We document the application of pro‐active pay equity legislation to the private sector of the Canadian province of Ontario in the early 1990s. We report substantial lapses in compliance among smaller firms where the majority of men and women work. We also find that the pay equity law had no effect on aggregate wages in female jobs or on the gender wage gap. This experience provides unique perspectives on (1) the tensions between the workings of a decentralized labour market and the principles of comparable worth and (2) the obstacles to its extension to the private sector. JEL classification: J7, J3     

The Polish wage inequality explosion1

This paper presents and analyses the sharp increase in hourly wage inequality after 1998 in Poland. The increase was similar in magnitude to the much‐studied increase in British wage inequality during the 1980s. Using data from the Polish Labour Force Survey, we find this increase to be associated with rising wage differentials and within‐group variances at both the upper and lower ends of the wage distribution. These increases are associated with differences in wage‐setting patterns between the public and private sector as well as with the rapid increase in demand for educated labour. One important difference between the sectors is the lack of an impact of local labour market conditions, or wage curve, clearly evident in private sector wages, on public sector wages.     

International factor mobility,informal interest rate and capital market imperfection: A general equilibrium analysis

This paper makes an attempt to provide a theory of determination of interest rate in the informal credit market in a less developed economy in terms of a three-sector static deterministic general equilibrium model. There are two informal sectors which obtain production loans from a monopolistic moneylender and employ labour from the informal labour market. On the other hand, the formal sector employs labour at an institutionally fixed wage rate and takes loans from the competitive formal credit market. We show that an inflow of foreign capital and/or an emigration of labour raises (lowers) the informal (formal) interest rate but lowers the competitive wage rate in the informal labour market when the informal manufacturing sector is more capital-intensive vis-à-vis the informal agricultural sector. International factor mobility, therefore, raises the degrees of distortions in both the factor markets in this case.     

Economic status of households and labour supply to market and non-market activities mdash; some results from a poor rural economy

Assuming a given underlying utility structure for all households, we have demonstrated that the differential labour supply behaviour among household categories results owing to the different sets of constraints they face depending on their economic status and asset ownership. Using the criteria implied by the theoretical model four household gorups are defined. The labour supply functions estimated for these four groups support the theoretical result of significantly different supply behaviour. The empirical exercise, as expected, indicates that the labour supply decision of the subsistence group is guided by their need to achieve the minimum level of consumption while the middle-income households, who do not have enough non-labour income to meet their minimum subsistence need, tend to work longer hours in market activities than the workers from high-income households. However, market labour supply by high-income households is found to be relatively more sensitive to changes in the wage rate. The behaviour of the household groups differ so significantly that if an aggregate model is estimated ignoring inter-household differences, the predicted hours will grossly over-estimate labour supply to market activities.     

Discrete Choice Experiments in Developing Countries: Willingness to Pay Versus Willingness to Work

A concern when conducting stated preference valuation studies in rural developing or very low income contexts is the use of monetary willingness to pay (WTP) estimates. In circumstances where cash incomes are extremely low, a significant proportion of the population are not engaged in waged labour and the exchange of goods or services is augmented through barter or work exchange, the role of money is likely to be different from that within an urban developed setting. As such, ability to pay using money may be impaired and downwardly biased when compared with other mediums of exchange. In recognition of this several studies have used hypothetical labour contributions as payment vehicles and a common finding is that households are more often willing to contribute labour than they are money. In this paper we present the results of a split sample DCE using money and labour contributions as payment vehicles for improved drinking water quality in Kandal Province, Cambodia. We find little differences between the payment vehicles in terms of attribute non-attendance, marginal utilities of attributes or derived welfare values. We argue that this provides support for the use of WTP in rural developing areas where there are functioning labour markets.