The impact of trade on employment,welfare, and income distribution in unionized general oligopolistic equilibrium

This paper sets up a multi-sector general oligopolistic equilibrium trade model in which all firms face wage claims of firm-level unions. By accounting for productivity differences across industries, the model features income inequality along multiple lines, including inequality between firm owners and workers as well as within these two groups of agents, and involuntary unemployment. We use this setting to study the impact of trade liberalization on key macroeconomic performance measures. In particular, we show that a movement from autarky to free trade with a fully symmetric partner country lowers union wage claims and therefore stimulates employment and raises welfare. Whether firms can extract a larger share of rents in the open economy depends on the competitive environment in the product market. Furthermore, the distribution of profit income across firm owners remains unaffected, while the distribution of wage income becomes more equal when a country opens up to trade with a fully symmetric trading partner. We also analyze how country size differences and technological dissimilarity of trading partners affect the results from our analysis.     

Sources of inequality in selected MENA countries

The paper deals with income inequality in the selected MENA countries focusing on the dynamics of domestic wage differentiations. The main aim is to identify the sources of inequalities. GDP per capita, share of manufacturing sector, urban share of population, gender participation in the labor force, education and openness may be possible factors. The paper analyzes pay inequalities using a panel regression model where the Theil index is used as the dependent variable. The results show that GDP per capita and female labor force participation have positive (increasing) effects, and openness has a negative (decreasing) effect on pay inequalities in these countries.     

Corporate profit tax,firm entry with unemployment,and income inequality

In this paper, we provide a general equilibrium analysis of corporate profit tax on income distribution, unemployment, and wage inequality. With firm dynamics in industrial sector, we identify a new channel through which profit tax affects income and wage inequality: profit tax cut will widen not only the wage gap between skilled and unskilled labor, but also exacerbate the wage inequality of unskilled labor among different sectors. The welfare effect of profit tax cut depends on unemployment deepening (labor-distortion effect) and more manufacturing firms enter the market (business-creation effect), eroding the market share of incumbent firms (business-stealing effect).     

Wage Inequality,Increased Competition,and Trade Liberalization: Short Run vs Long Run

This paper examines the impact of increased competition and trade liberalization on skilled–unskilled wage inequality in the short run as well as the long run. It is shown that an increase in the number of firms in the producer services sector increases wage inequality in the short run even if the income shares of capital in the industrial and agricultural sectors were identical. A decrease in the services sector's fixed cost decreases wage inequality in the short run if the income share of capital in the agricultural sector is relatively large. Owing to the presence of external economies, a decrease in the services sector's fixed cost increases wage inequality in the long run. A decrease in import duty on the agricultural good increases wage inequality in the short as well as the long run but its effect in the long run is stronger due to the presence of external economies in the industrial sector.     

Aging and inequality: The link and transmission mechanisms

There exists a shortage of rigorous empirical analyses that focus on the aging‐to‐inequality transmission mechanisms although both developed and some developing countries have been confronted with the challenge of population aging. Using cross‐country panel data covering the period of 1975 to 2015, this paper contributes to the literature by directly modeling the relationship between aging and inequality and exploring the transmission mechanisms. Our estimation results show that (1) Aging worsens income distribution; (2) This adverse impact is attributable to its negative correlation with the share of labor income that in general is more equally distributed than capital income; (3) The labor share‐reducing effect of aging can be further attributed to the significant and negative impact of aging on both labor input or supply and wage or labor productivity; and (4) Our findings are robust to changes in model specifications, use of different indicators of aging, different inequality and labor share data sources.     

最低工资制度能提高民营企业劳动收入占比吗

本文以民营企业要素投入行为为切入点,探讨最低工资制度对民营企业劳动收入占比的影响。基于2005-2008年和2011-2013年中国工业企业数据库民营企业面板数据的研究发现：最低工资制度提高了劳动密集型和资本密集型行业民营企业的劳动收入占比,降低了技术密集型民营企业的劳动收入占比。通过分解影响机制发现,最低工资制度提高了劳动密集型和资本密集型民营企业的工资水平,带来正向的收入效应,但也导致资本替代劳动,产生负向的替代效应。整体而言,最低工资制度提高了民营企业的劳动收入占比。为发挥最低工资制度对民营企业劳动收入占比的正向作用,继续调整最低工资标准、贯彻相关法规实施、提高劳动者技能水平成为重要措施。     

Wage share,globalization and crisis: the case of the manufacturing industry in Korea,Mexico and Turkey

The aim of this paper is to analyze the changes in the wage share in the manufacturing industry in Mexico, Turkey and Korea in the era of globalization. The focus is on the one hand on the effects of globalization on the wage share, which is measured by the effects of international trade and FDI intensity of the economy. On the other hand, the process of opening up has been accompanied by major currency crises in most developing countries in the last decade, which has affected the wage share through exchange rate depreciation and economic recession. The paper develops a Post‐Keynesian conflicting claims model for an open economy under the pressure of globalization, and an equation for the wage share is estimated for each country using the Seemingly Unrelated Regression method. The results show that both recessions and nominal depreciations have a clear and lasting negative effect on the manufacturing wage share in all countries, whereas the effect of openness, in particular international trade depends on industrial policy structure. Increased export intensity leads to a decline in the manufacturing wage share in Turkey and Mexico, but has no significant effect in Korea. The positive expectations from FDI are also not materialized in any of the three countries.     

Industrial Location and Spatial Inequality: Theory and Evidence from India

The authors argue that spatial inequality of industry location is a primary cause of spatial income inequality in developing nations. Their study focuses on understanding the process of spatial industrial variation: identifying the spatial factors that have cost implications for firms, and the factors that influence the location decisions of new industrial units. The analysis has two parts. First the authors examine the contribution of economic geography factors to the cost structure of firms in eight industry sectors and show that local industrial diversity is the one factor with significant and substantial cost‐reducing effects. They then show that new private sector industrial investments in India are biased toward existing industrial and coastal districts, whereas state industrial investments (in deep decline after structural reforms) are far less biased toward such districts. The authors conclude that structural reforms lead to increased spatial inequality in industrialization, and therefore, income.     

Imported technologies,urban unemployment and the North-South dialogue

This paper extends the Harris-Todaro model with intersectoral capital mobility to include sector specific imported technologies. Technologies are assumed to be embodied in imported capital goods. The small economy in the South, for which the model is defined, can import any amount of these technologies from the North at given royalty rates. We find that if the North agrees to reduce the royalty rate on the industrial technology, both the level and the rate of urban unemployment would rise and the income distribution change against the wage earners, whereas such a reduction for the agricultural technology would have just the opposite effects. A decrease in either royalty rate would increase the national income in the South, although the magnitude of the increase in income would be larger with reduced royalty rate for agricultural rather than industrial technology. The policy implication is that the South should emphasize the import of agricultural technology over the industrial technology.     

INCOME AND CONSUMPTION DISTRIBUTION TRENDS IN THE PHILIPPINES, 1950–70*

Unlike most developing countries, the Philippines has had several (four) reasonably comparable family income and expenditure surveys, covering a reasonable period of time (15 years). This study draws on those surveys and on wage data in an attempt to judge how, if at all, the distribution of income has been changing. The household survey data shows a declining share of both income and consumption for the top income groups; for the bottom quintile the share of recorded income fell while that of recorded consumption rose. When possible biases of the data are allowed for, it is hard to argue that either a narrowing or widening of income differentials occurred over these years. Real wages of a number of important occupations appear to have fallen, however. Only a partial reconciliation of the trends indicated by these wage series and the income trends for various occupational groups implicit in the household survey data was possible, indicating either data problems or the need for more subtle interpretations of the data. Since structural change in the labour force has been rapid (an increasing share being found in the high income occupations as time passed), declining wage rates for certain lower income groups cannot be taken to imply a general worsening of distribution. Our final conclusion is that distribution has probably changed little, and is about as likely to have changed one way as the other.     

Effect of the Tax System ON R&D Intensity,Growth, Wages and Consumption Share

We propose a general equilibrium knowledge‐driven (semi‐)endogenous‐growth model with horizontal R&D, which is extended to consider two types of labour, skilled and unskilled, and exogenous government expenditure, financed through taxes on financial assets and on labour income, to analyse the implications of the tax system on R&D intensity, economic growth, wage inequality and consumption share in the output. In particular, we show that: (i) taxes have negative influence in the consumption share, being higher the marginal effect of the labour‐income tax; (ii) for any given government expenditure share, an increase (a decrease) in financial‐assets tax decreases (increases) the labour‐income tax; (iii) only the financial‐assets tax affects negatively the R&D intensity and the skill‐premium; thus, to reduce the skill‐premium the financial‐assets tax must increase; (iv) ignoring the effect on wage inequality and on R&D intensity, taxes are substitutes.     

Child participation,nature of work,and fertility demand: a theoretical analysis

A model of utility maximization with home production of children and standard of living is used to analyze the fertility behavior of a subsistence farming household in an agricultural lesser developed country. Assuming children as both consumer and producer goods, and assuming a prestige cost of their participation in labor force, the author derived alternative levels of fertility demand. The following different conditions of child participation were identified depending upon the size of the prestige cost and the resultant net gain from child work: (1) participation in wage-labor, if marginal child income from the family farm is less than marginal wage income; (2) participation in family farm works only, if the larger wage income is neutralized by a higher prestige cost, implying a lower child contribution; (3) participation in family farm works only, if its marginal child income is greater than wage income, thus providing the largest child contribution; and (4) no participation in labor force at all, implied by a very high prestige cost and resulting in no child contribution. The household demands a larger number of children under conditions (1) and (3) than under conditions (2) and (4). The results are then used to draw inferences regarding fertility behavior across different landholding households. It appears that landholding reduces fertility initially, increases it at the intermediate levels, and then decreases it when the household becomes a non-cultivating rental income earner. The nonmonotonic landholding-fertility relationship explains the contradictory empirical evidence which exists in the literature while also suggesting important implications for fertility regulation policy.     

Marx Inside the Circuit: Discipline device,wage bargaining and unemployment in a sequential monetary economy

The aim of this paper is to show that Marxian labour theory of value can be consistently interpreted in terms of the monetary circuit model, where firms need initial finance to start production and where the money supply is endogenous. In contrast to the recently revived Marxian monetary models, in particular the New Interpretation, it is argued here that although the money wage is bargained for on the labour market, the real wage is determined by firms' choices, since firms autonomously determine the structure of production and hence real consumption for the working class as a whole. This does not mean that firms are able to set the real wage without economic and social constraints. Starting from our circuitist reading of the labour theory of value and distribution, a model is developed in order to determine the level of employment and income distribution, on the assumptions that (i) the industrial reserve army affects wage bargaining and labour effort and that (ii) workers react to the failure of their expectations on the real wage by reducing their work intensity. In this context, it is shown that firms may increase their share of profits over time only be means of innovations.     

The Effect of Foreign Affiliate Employment on Wages,Employment, and the Wage Share in Austria

This paper estimates the effects of outward Foreign Direct Investment (employment in affiliates abroad) on employment, wages and the wage share in Austria using panel data for the period 1996–2005. There is evidence of significant negative effects of FDI on both employment and wages, and consequently on the wage share. The results are not limited to workers in low-skilled sectors. The negative employment effect is mainly due to the rise in employment in the foreign affiliates in Eastern Europe. The negative wage effects originate from affiliate employment in both Eastern Europe and the developed countries in the industrial sector, but FDI in Eastern Europe has positive wage effects in the services sector due to possible scope effects.     

FROM BOTTOM TO TOP: THE ENTIRE INCOME DISTRIBUTION IN GERMANY, 1992–2003

We analyze the distribution of market income in Germany in the period 1992 to 2003 on the basis of an integrated dataset that encompasses the whole spectrum of the population, from the very poor to the very rich. We find a modest increase of the Gini coefficient, a substantial drop of median income and a remarkable growth of the income share accruing to the economic elite, which we define as the richest 0.001 percent of persons in the population. While the elite mainly obtains its income from business and capital, the income share that it receives in the form of wage income has been increasing. We also show that the dramatic decline of market income in the bottom half of the distribution is very much mitigated by income transfers within private households and by governmental redistribution.     

Perpetual growth,the labor share,and robots

ABSTRACT

The recent literature on the economic effects of machine learning, robotization and artificial intelligence suggests that there may be an upcoming wave of substitution of human labor by machines. We argue that these new technologies may lead to so-called perpetual growth, i.e. growth of per capita income with a non-progressing state of technology. We specify an exact parameter threshold beyond which perpetual growth emerges, and argue that ongoing technological change may bring the threshold in reach. We also show that in a state of perpetual growth, factor-eliminating technological progress reduces the role of labor in the production process and that this leads to a rising wage rate but ever-declining share of wage income. We present simulation experiments on several policy options to combat this inequality, including a universal basic income as well as an option in which workers become owners of ‘robots’.     

Gender gap,capital accumulation and the demographic transition

This paper focuses on explaining the demographic transition and some of the broad patterns that are associated with it. We present an endogenous growth model that incorporates altruism and son preference within the family as well as gender wage gap and gender wage discrimination in the labour market. We show that with the accumulation of physical capital and human capital, the output share of mental labour increases and the gender wage gap narrows. In the early stages of economic development, gender discrimination is becoming prevalent and the substitution effect of capital accumulation, which raises the cost of child rearing, is dominated by the income effect, so the growth rate of population increases with income. When the degree of gender wage discrimination starts to decline, the increased cost of child rearing induces families to invest more in the human capital of children and the growth rate of the population falls. The quantitative analysis shows that gender wage discrimination is indeed an important contributor to the demographic transition.     

Human resources in China: the birth quota, returns to schooling, and migration

Abstract. The rural elderly in China have 40% of the income of the urban elderly, spend a larger share of their income on food, are in worse health, work later into their lives and depend more on their children, lacking pensions and public services. The birth quota since 1980 has particularly restricted the childbearing of rural, less educated, women, who therefore have fewer children to rely on for support. This inequality is reinforced by increasing returns to schooling, especially beyond secondary school. Government restrictions on rural–urban migration reduces national efficiency, adds to the urban–rural wage gap and increases inequality.     

一个古典经济周期波动模型——对Goodwin古典周期模型的重构

基于古典主义思想对于劳动与资本这一经济运行核心关系的论述,本文对Goodwin周期模型进行了重构,构建一个由工资份额与资本存量组成的二维古典经济周期波动模型.稳定性分析结果表明,模型的均衡状态为非稳定焦点均衡,一旦脱离均衡点,经济将在工资份额与资本存量相互作用的驱动下围绕均衡点做周期性波动,且波动的幅度逐步加大.产生这一现象的根本原因在于工资性收入与资本性收入即资本存量之间比例结构的波动.     

The Distribution of Top Incomes in Five Anglo‐Saxon Countries Over the Long Run

Taking five Anglo‐Saxon countries that have relatively similar backgrounds and tax systems – Australia, Canada, New Zealand, the UK and the USA – we see that the shares of the very richest exhibit a strikingly similar pattern, falling in the three decades after World War II, before rising sharply from the mid‐1970s onwards. The share of the top 1 per cent is highly correlated across Anglo‐Saxon countries, more so than with the share of the next 4 per cent. Controlling for country and year fixed effects, we find that a reduction in the marginal tax rate on wage income is associated with an increase in the share of the top percentile group. Likewise, a fall in the marginal tax rate on investment income (based on a lagged moving average) is associated with a rise in the share of the top percentile group.