The Impact of Incomes Policy on Aggregate Wage Determination in Australia*

A model of aggregate wage determination for Australia is developed and used to examine the effects of incomes policies on the level of real wages. A theoretical model of wage determination which includes several channels of incomes policy effects is specified and estimated using aggregate data. The results provide strong evidence to support the view that during periods of certain incomes policies there have been important changes in behaviour in the Australian labour market. In particular, during the period of the Prices and Incomes Accord it is estimated that equilibrium real wages were over 5 per cent below what would have been expected from previous experience.     

Labour Utilization and Wage Inflation in Australia: An Empirical Examination*

This paper tests the hypothesis that the level of labour utilization within the firm should be substituted into the Phillips Curve in place of traditional measures of excess demand. Gregory and Smith (1983) proposed overtime hours as a proxy for labour utilization within the firm. For various reasons we prefer the deviation from trend in hours worked. The results support the underlying hypothesis, and add strength to the view that to understand the process of wage inflation at the macro level we must examine the utilization of labour at the micro level of the firm.     

Immigrant Wage Adjustment in Australia: Cross Section and Time-Series Estimates*

Cross-sectional estimates of the comparative wage performance of natives and immigrants can be distorted if there are changes in labour market quality between immigrant cohorts. This question is investigated with a study of 1973 and 1981 cross-sections of Australian migrants. We find that migrants from non-English-speaking countries entering Australia about 1965 perform significantly better between 1973 and 1981 than predicted from the 1973 cross-section. Migrants from English-speaking countries time-series wage performance is consistent with the 1973 cross-section prediction. The paper interprets the analytic importance of these results.     

Wage Inertia and Comparison Effects in Australian Award Wage Determination, 1964-74*

This paper attempts to explain the determination of average award wage changes without assuming that the outcome of certain strategic wage settlements is known. Models which allow for habit-inertia and comparison effects are constructed. It is argued that the main impact of these factors is on the specification and interpretation of lagged adjustment of wages to changes in its determinants. These models are empirically tested using the pre-indexation quarterly data. An analysis of 1973-74 wage experience is also provided.     

Jevons In Australia: A Reassessment*

Historians of economic thought have generally considered that W. S. Jevons' Australian work on political economy has little significance. This article presents three arguments for reassessing that account. First, while in Australia, Jevons formulated the basic premises of his Theory of Political Economy. Second, the key influence on him during this period was not D. Lardner, as previously thought, but Professor Maurice Pell of Sydney University. Third, in Australia, Jevons formulated the project which culminated in the publication of his Theory—the derivation of ‘laws’ of income distribution, showing economic agents were rewarded according to their contribution to production.     

Wage Determination in Japanese Manufacturing: A Review of Recent Literature*

This paper surveys the Japanese literature on wage determination, highlighting the debate between institutional and human capital explanations of inter-firm wage differentials. Both approaches predict (and find) that years of tenure in the current firm are more highly rewarded than outside experience, but do not explain adequately the systematic differences in this valuation of experience across industry, firm size and occupation. An alternative hypothesis linking technical change to skills and wage differentials is reviewed and shown to be supported empirically.     

Taxation and Wage Bargaining*

The paper analyzes the effects of personal taxes on wage bargaining It concludes that an increase in tax progressivity will normally increase union wage-bargaining pressure and so raise the equilibrium wage This is the opposite result to that recently derived by Creedy and McDonald (1990).     

Wage Effects of Drinking in Australia

This article analyses the wage effects of drinking using the Australian Twin Registry data. A multinomial logit framework is employed to explain the allocation of workers across various drinking states, and to correct for selection bias in the wage equations. It is found that there is a significant positive wage premium for moderate drinking. A favourable family background (during childhood) is positively related to the measure of moderate drinking. Greater genetic endowments are also associated with moderate drinking.     

Non-Standard Employment and Wage Growth in Australia

Using data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, and after restricting attention to employees, we observe an increase over time in the non-standard employment share, all of which is concentrated in the period since 2009. Further, we find clear evidence that employees in non-standard forms of employment have experienced relatively low rates of growth in hourly wages when compared with permanent full-time employees. Nevertheless, decomposition analysis suggests that changes in workforce composition by employment type have had a very small (and insignificant) impact on the overall rate of wage growth in recent years.     

Heterogeneous Wage Effects of Apprenticeship Training*

The relatively small average wage effects of employer and occupation changes after apprenticeship training mask large differences between occupation groups and apprentices with different schooling backgrounds. People who change employer and occupation within industrial occupations enjoy large wage advantages, whereas apprentices in commerce and trading occupations, as well as in construction and crafts occupations, face wage losses from an occupation change. The differences between the firms that provide the apprenticeship training are found to be small or insignificant. In this paper, we reconcile the differences between previous findings by comparing and replicating the empirical estimation strategies used. This demonstrates that selectivity in occupations and changes, unobserved heterogeneity between occupations, and sample selection do matter.     

Micro Foundations for Wage Flexibility: Wage Insurance at the Firm Level*

To what extent do firms insulate their workers' wages from fluctuations in product markets? Which firm and worker attributes are associated with wage flexibility at the micro level? We first rely on Guiso, Pistaferri and Schivardi (2005) to estimate dynamic models of sales and wages, finding that in Portugal, workers' wages respond to permanent shocks on firm performance, as opposed to transitory shocks. We then explore the factors associated with wage flexibility, finding that collective bargaining and minimum wages are associated with higher wage insurance by the firm, while the threat of firm bankruptcy reduces it. Managers receive less protection against permanent shocks than other workers.     

Wage Determination and Economic Policy

This article is a revised version of the Giblln Memorial Lecture presented on 1 September 1977 by Dr. J. E. Isaac, Deputy President of the Conciliation and Arbitration Commission. It is published by permission of the Australian and New Zealand Association for the Advancement of Science and the text of the lecture is to appear in Search , Volume 8, No 11/12.     

The Determinants of Relative Wage Change in Australia

This article uses data from 3500 Australian workers to investigate which factors have had a significant influence on microeconomic wage growth over the years 1997 to 2000. The relative importance of four types of factors—outside incomes, demand for labour, workers' relative bargaining strength and category of wage contract—are compared. Basic individual demographic characteristics and some indicators of workers' bargaining power provided most of the explanation for wage changes. Proxy variables for labour demand, while significant and correctly signed, were small in magnitude.     

Do Incomes Policies Restrain Wage Inflation? Some Evidence From Australia,Canada, and the United States*

The purpose of this paper is to reassess the impact of incomes policies on wages in Australia, Canada and the United States. These countries differ in institutional arrangements as well as in the form and timing of incomes policies adopted. Three methods of assessing the effect of incomes policies have been used: the simulation approach, the intercept-shift dummy variable approach, and the rotation approach. The results indicate that incomes policies exhibited considerable diversity in the effectiveness among the three countries. The results also show a consistent restraining influence of labour market variables on wage inflation.     

The Internationalization of the Us Wage Process*

This paper explains the wage-growth slowdown that occurred in the US in the 1980s. Using the vector auto regression method, it is shown that (I) a substantial portion of variations in the growth rate of average hourly earnings and other sectoral wages in the US can be attributed to exchange-rule changes; (2) during the 1983-1985 period the strong appreciation significantly reduced the growth rate of wages, but the subsequent depreciation had only modest effects; and (3) sectors like construction and services, traditionally assumed to be immune to foreign competition, have become sensitive to exchange-rate developments.     

Dual Labor Markets And Strategic Efficiency Wage *

We consider a dual labor markets model in which the primary sector requires the presence of eMiciency wage, while the secondary sector is competitive. We show that the Solow condition does not hold in a Stackelberg equilibrium where the primary sector acts as a leader and the secondary one as a follower.[J41]     

Sector Specific Wage Rigidity and Factor Accumulation*

Economic expansion resulting from factor accumulation is introduced in the mobile capital and small open economy version of the Harris-Todaro model. Among other things, it is shown that economy expansion leads to normal effects on urban unemployment if land is introduced as a scarce input in the agricultural sector. However, capital accumulation and labour growth have indeterminate effects on the absolute level of urban unemployment.     

Public–Private Sector Wage Differentials in Australia

This paper examines public–private sector wage differentials in Australia. After controlling for observed characteristics and individual fixed effects, we show that on average workers in the public sector earn about 5.1 per cent more in hourly wages than those in the private sector. The wage premium is slightly higher for females than males. Using a panel data quantile regression model with fixed effects, we show that the positive wage effects of public sector employment are heterogeneous, with comparatively larger impact at the lower end of the wage distribution than at other parts. We also find evidence of heterogeneity in the public sector wage premiums by qualification, time period, occupation and state/territory.