Skill transferability and the earnings of immigrants

Using data on immigrants from the Canadian Census, we compare immigrants who received a bachelor's degree from a Canadian university to immigrants who receive a bachelor's degree in their home country, in order to investigate the returns to skills acquired in Canada versus skills acquired abroad. Our measure of skill is based on postsecondary fields of study linked to the O*NET matrix of skills and competencies. We find that immigrants educated in Canada receive higher returns to their communication skills than those educated abroad. To a lesser degree, they also receive higher returns to their logical and technical skills. These gaps in skill returns explain the entirety of Canadian-educated immigrant's 10% earnings advantage. Our results are robust to controlling for the quality of universities in the immigrant's country of study and for occupation and industry choice. The gaps are stable across time and across quantiles of the immigrant earnings distribution.     

Why it Pays to Major in Economics

In this article, the authors use a large, recent, and accessible data set to examine the effect of economics major on individual earnings. They find a significant positive earnings gain for economics majors relative to other majors, and this advantage increases with the level of education. Their findings are consistent with Black, Sanders, and Taylor (2003), documenting that about two-thirds of the bachelor's degree premium for economics majors can be attributed to the type of job economics majors perform, and about one-third is a premium that economics majors earn over other workers within the same job.     

Increasing dispersion of skills and rising earnings inequality

In recent decades many countries have simultaneously liberalized their trading regimes and expanded their education systems. The theoretical effect of these regime shifts on the wage differential between skilled and unskilled workers is ambiguous. On the one hand, openness to trade causes demand shifts in the labor market which may widen or narrow the differential. This result depends on whether the unskilled wage is depressed, as in the case of importing countries, or raised, as in the case of exporting countries. On the other hand, an increased supply of more educated workers reduces their wages and narrows the skill wage gap. In this study of the labor market of Hong Kong, we document that recent changes in response to the trade liberalization of Mainland China and expanded access to education have increased the earnings differential between skilled and unskilled workers. Using detailed census data, we argue that the main reason for this outcome is the widened dispersion of skills across the earnings distribution, resulting from demand and supply shifts in the labor market caused by trade openness and expanded access to higher education.     

An Anatomy Of Racial and Ethnic Trends in Male Earnings in the U.S

Progress in narrowing black–white earnings differences has been far from continuous, with some of the apparent progress resulting from labor force withdrawal among lower‐skilled African Americans. This paper documents racial and ethnic differences in male earnings from 1950 through 2010 using data from the decennial census and American Community Surveys. Emphasis is given to annual rather than weekly or hourly earnings. We take a quantile approach, providing evidence on medians and other percentiles of the distribution. Treatment of imputed earnings greatly affects measured outcomes. Hispanic men have exhibited earnings growth similar to white men over several decades. Black men have been left behind economically due in large part to increased joblessness, a process exacerbated by weak labor market conditions. By 2010, joblessness had risen to over 40 percent and the median black–white earnings gap was the largest in at least 60 years.     

Public sector pay and corruption: Measuring bribery from micro data

This study provides the first systematic measure of bribery using micro-level data on reported earnings, household spending and asset holdings. We use the compensating differential framework and the estimated sectoral gap in reported earnings and expenditures to identify the size of unobserved (unofficial) compensation (i.e., bribes) of public sector employees. In the case of Ukraine, we find that public sector employees receive 24–32% less wages than their private sector counterparts. The gap is particularly large at the top of the wage distribution. At the same time, workers in both sectors have essentially identical level of consumer expenditures and asset holdings that unambiguously indicate the presence of non-reported compensation in the public sector. Using the conditions of labor market equilibrium, we develop an aggregate measure of bribery and find that the lower bound estimate of the extent of bribery in Ukraine is between 460 million and 580 million U.S. dollars (0.9–1.2% of Ukraine's GDP in 2003).     

Differential rewards to, and contributions of, education in urban China's segmented labor markets

Abstract. Using worker data from a 1999–2000 urban enterprise survey, we examine the effects of education on the current earnings of continuously employed urban workers, migrants and laid off but subsequently re‐employed workers. We also decompose the earnings differentials between each of these groups of workers and then assess the contribution of education to explanations of the differentials. The empirical results demonstrate that returns to education increase with marketization and competition in the workplace. We also find educational attainment to be an important explanator of the earnings differentials between institutionally differentiated groups of workers in China's urban labor markets.     

Sex Differentials in Earnings in the South Korean Labor Market

We examine gender differences in earnings among South Korean workers in 1988 – the year the South Korean National Assembly enacted the Equal Employment Opportunity Act. Using the "88 Occupational Wage Bargaining Survey on the Actual Condition," we calculate women's mean earnings as a percentage of men's mean earnings by major industrial category and educational attainment. We find a larger wage gap among clerical and sales workers than production workers or professionals. Generally, the more education a woman has, the smaller the gap between her earnings and those of her male counterparts. Women with a middle-school education have a mean income 53.5 percent that of comparable men, while the female-to-male wage ratio among college graduates is 76.1 percent. We analyze wage differences separately for women and men. Following Ronald Oaxaca's (1973) work, we decompose male–female wage differentials. We also calculate a discrimination coefficient. Our work shows that, all else equal, men earn from 33.6 percent to 46.9 percent more than women with comparable skills. We attribute the difference to gender discrimination.     

Black–white wage differentials: duration and probability unemployment effects in a multiple of sample selection bias model

The extent to which probability and duration of unemployment affect the black–white wage differentials is examined in this paper. The paper simultaneously incorporates in the wage equation the multiple sample selection bias that occurs as a result of individuals’ propensity to be in the labor force, and the firm’s hiring decisions. The results reveal a substantial contribution of the duration of unemployment variable to the black–white wage differential, but a small portion of the differential is explained by the probability of unemployment. The results also indicate a sizeable difference between the contribution of the duration of unemployment variable to the male’s wage differentials (26%) and to the female’s (35%). The study finds that an individual’s labor force decision as well as a firm’s hiring decision are important in the wage determination process and that failure to account for the sample selectivity bias due to these two decisions will result in either underestimating or overestimating the wage differentials between black and white workers. At the macro level, the results seem to suggest that promotion of racial wage equality should be associated with policies that will minimize blacks’ incidence of unemployment and duration of unemployment spells.     

Discrimination and Skill Differences in an Equilibrium Search Model*

We analyze an equilibrium search model with three sources for wage and unemployment differentials among workers with the same (observed) human capital but different appearance (race): unobserved productivity, search intensities, and discrimination due to an appearance‐based employer disutility factor. We show that the structural parameters are identified using labor market survey data. Estimation results for a black and white high school graduate sample imply: black productivity is 3.3% lower than white productivity; the employer's disutility factor is 31% of the white's productivity level; and 56% of firms have a disutility factor toward blacks.     

The Gender Pension Gap in China

ABSTRACT

China has had a large gender gap in labor force participation, sectors of employment, and earnings. This study shows that disadvantages in the labor market for women are the primary drivers of the gender pension gap. Among people age 60 and older, women receive about half of the amount of men's social pensions. Using the 2013 wave of China Health and Retirement Longitudinal Study (CHARLS) and the CHARLS Life History Survey of 2014, this contribution has three main findings. First, about three-quarters of the deficit in women's pensions is explained by women's lower likelihood of receiving occupational pensions, and one-third is due to smaller benefits when they do receive them. Second, the gender deficit in receiving an occupational pension can be explained by education level and employment sector. Third, among pension recipients, nearly one-third of the gender benefit gap is explained by women's fewer years of employment and lower salaries.     

Race and Income Distribution: Evidence from the USA,Brazil and South Africa

The aim of this paper is to provide some empirical evidence about black–white differentials in the distribution of income and wellbeing in three different countries: Brazil, the USA and South Africa. In all cases, people of African descent are in a variety of ways socially disadvantaged compared with the relatively more affluent whites. We investigate the extent of these gaps in comparative perspective, and analyze to what degree they are associated with differences in the observed characteristics of races, such as where they live, the types of household they have, or their performance in the labor market. We undertake this analysis with the Oaxaca–Blinder decomposition at the means and with a propensity score approach at the entire distribution. Our results show how the factors underlying the racial divide vary across countries and income quantiles.     

SCHOOLING AND OCCUPATIONAL EARNINGS*

This paper investigates the relation between schooling and earnings across and within occupations. Across occupations earnings are positively related to mean education. Within occupations the variance in schooling levels is generally substantial, but within two thirds of the occupations no relation between schooling and earnings is observed, while in the remaining third the pattern of sensitivity varies considerably. The sensitivity of earnings to education is greater for white males than white females and substantially greater for whites than blacks. When the white sample is divided into age cohorts, the degree of sensitivity of earnings to schooling is found to be greater for younger cohorts than older ones, except for the youngest cohort in 1970. In the conclusion, a structural interpretation of the distribution of earnings is proposed to account for the findings.     

Gender Inequalities in Labor Market Outcomes of Informal Caregivers near Retirement Age in Urban China

ABSTRACT

This study examines the impacts of unpaid family care on labor supply and earnings of women and men near retirement age in urban China. Using the 2011 China Health and Retirement Longitudinal Study (CHARLS) and ordinary least squares (OLS) and instrumental variable approaches, it finds that grandchild care is negatively associated with both women's and men's labor force participation, while there are no effects for eldercare. For women caregivers, caring for grandchildren substantially lowers paid labor hours compared to noncaregivers. No significant relationships are found between eldercare and paid labor hours of women workers. For men workers, neither grandchild care nor eldercare is significantly associated with labor hours. The study also finds no statistically significant relationships between grandchild care and labor earnings for either women or men. Eldercare, however, is positively associated with the earnings of men workers.     

How do Labor Unions Influence the Gender Earnings Gap? A Comparative Study of the US and Korea

Abstract

This paper provides a comparative study of the United States and Korea regarding the effects of unions on gender earnings gaps in 2004. Using datasets representative of the population of the US and Korea, this contribution shows that gender differences in the workers' observed characteristics and the unobserved component reduce gender earnings gaps in union jobs in both the US and Korea. Fringe benefits in the union sector attract women workers with higher labor market qualifications into the union sector and thereby reduce the gender earnings gap in this sector. The study finds that this self-selection process in the union sector is stronger in Korea than in the US, but the seniority-based wage system that prevails in the Korean union sector widens the gender earnings gap.     

Informal Employment and the Role of Regional Governance

The aim of this paper is to provide an explanation to why the degree of informal employment may vary substantially between different regions within a country. In Brazil, 45% of workers in the urban labor force are employed informally. The degree of informal employment, however, varies substantially across regions, with some cities having 20% and others having 80% or more of their labor force in the informal sector. The hypothesis assessed here is that the quality of local governance—or government effectiveness—affects the decisions of workers and businesses as to whether to participate in the formal or the informal sector. The empirical analysis, based on data from 5500 Brazilian municipalities, shows that informal employment is lower in regions with better governance, higher average education, and with a relatively large manufacturing sector. Endogeneity concerns are addressed as part of a series of robustness checks of the results.     

EARNINGS DIFFERENCES BETWEEN CHINESE AND INDIAN WAGE EARNERS, 1987–2004

This paper is one of the first comprehensive attempts to compare earnings in urban China and India over the recent period. While both economies have grown considerably, we illustrate significant cross-country differences in wage growth since the late 1980s. For this purpose, we make use of comparable datasets, estimate Mincer equations and perform Oaxaca–Blinder decompositions at the mean and at different points of the wage distribution. The initial wage differential in favor of Indian workers, observed in the middle and upper part of the distribution, partly disappears over time. While the 1980s Indian premium is mainly due to higher returns to education and experience, a combination of price and endowment effects explains why Chinese wages have caught up, especially since the mid-1990s. The price effect is only partly explained by the observed convergence in returns to education; the endowment effect is driven by faster increase in education levels in China and significantly accentuates the reversal of the wage gap in favor of this country for the first half of the wage distribution.     

Employee Profit-sharing and Labor Extraction in a Classical Model of Distribution and Growth

This article sets out a classical model of economic growth in which the distribution of income features the possibility of profit-sharing with workers, as firms choose periodically between two labor-extraction compensation strategies. Workers are homogeneous with regard to labor power, and firms choose to compensate them with either only a conventional wage or a share of profits on top of this conventional wage. Empirical evidence shows that labor productivity (i.e. labor extraction) in profit-sharing firms is higher than labor productivity in non-sharing firms. The frequency distribution of labor-extraction employee compensation strategies and labor productivity across firms is time-variant, being driven by satisficing imitation dynamics from which we derive two significant results. First, heterogeneity in labor-extraction compensation strategies across firms, and hence earnings inequality across workers can be a stable long-run equilibrium outcome. Second, although convergence to a long-run equilibrium may occur with either a falling or increasing proportion of profit-sharing firms, the share of net profits in income and the rates of net profit, capital accumulation and economic growth nevertheless all converge to the highest possible long-run equilibrium values.     

Earnings functions: Testing for the demand side

To analyze labor market phenomena, one may simultaneously grade workers (by education) and jobs (by level of difficulty and complexity). Human capital theory predicts earnings based on only worker quality. Thurow's version of a segmented labor market theory predicts that only the job level is relevant, and the assignment theory predicts that both variables are relevant. Using three different data sets for The Netherlands, testing demonstrates convincingly the superiority of the assignment theory.     

An analysis of occupational upgrading differentials between black and white males

The racial occupational mobility gap is examined by applying a decomposition methodology to logistic functions. Results indicate that approximately one-third of the mobility gap between black and white male workers is due to differences in average characteristics (the endowment effect). The residual difference accounts for the remaining two-thirds. Formal education is found to be a major component of both the endowment effect and the resdiual difference. The ‘returns’ to tenure with a firm, overall labour market experience and marriage reduce the mobility gap in favour of black workers.