The effect of search frictions on wages

We aim to test whether the degree of informational search frictions in the labor market has a negative effect on wages. In a range of equilibrium search models of the labor market, this effect is predicted to be negative. Nevertheless, this has never been tested. We perform tests with matched worker–firm data. The worker data are informative on individual wages and labor market transitions, and this allows for estimation of the degree of search frictions. The firm data are informative on labor productivity. This allows us to investigate how the mean difference between labor productivity and wages in a market depends on the degree of frictions and other determinants, and to assess the quantitative relevance of frictions for wages.     

The ambiguous effect of minimum wages on hours

In a competitive model we ease the assumption that efficiency units of labour are the product of hours and workers. We show that a minimum wage may either increase or decrease hours per worker and the change will have the opposite sign to the slope of the equilibrium hours hourly wage locus. Similarly, total hours worked may rise or fall. We illustrate the results throughout with a Cobb-Douglas example.     

The responsiveness of wages to labour market conditions in the UK

If wages are more flexible in the sense that pay is more responsive to labour market conditions, this has important implications for the workings of the aggregate economy. First, the real fluctuations generated by both demand and supply shocks are smaller, and second, the economy can operate at a higher level of activity relative to potential without adverse inflationary consequences (i.e., the NAIRU is lower). Our empirical analysis of wage flexibility suggests that UK wages have become more responsive to labour market conditions since the mid-1980s, at least relative to the previous decade. Furthermore, this has happened within certain industrial sectors. Finally, a part of this move towards greater responsiveness has been due to the decline in national pay bargaining over the relevant period. However, the majority of this change is due to some other factors.     

The effects of multiple minimum wages throughout the labor market: The case of Costa Rica

This paper investigates the effects of legal minimum wages on employment and hours worked among workers covered by minimum wage legislation as well as those for whom it does not apply (the uncovered sector) in Costa Rica. This country's large uncovered sector and complex minimum wage policy, which has for decades set numerous wages throughout the wage distribution, provide a stimulating counterpoint to the U.S. framework for the analysis of the impact of minimum wages. Using 1988–2000 micro data, we find that a 10% increase in minimum wages lowers employment in the covered sector by 1.09% and decreases the average number of hours worked of those who remain in the covered sector by about 0.6%. We do not find a significant impact on hours worked in the uncovered sector. Finally, we show that despite the wide range of minimum wages, the largest impact on the employment of covered sector workers is in the lower half of the skill distribution.     

The effect of international firm mobility on wages and unemployment

Although the increase in international firm mobility is well documented, its effects on macroeconomic aggregates and the labour market remain controversial. Multinational enterprises (MNEs) benefit from an international outside option during wage bargaining, leading to a decrease in average wages. However, a strategic incentive to hire extra workers in a foreign (home) plant in order to reduce wages in the home (foreign) plant has an indirect positive effect on wages due to spillovers resulting from an increased demand for labour. In a framework of frictional unemployment, permitting MNEs leads to a decrease in unemployment. Abstracting from transport and plant fixed costs, MNEs lead to higher wages. Including transport and plant costs generally leads to lower wages, though the effects are small. The strategic hiring effect is important in mitigating the fall in wages.     

The greening of the EC agrochemical market: Regulation and competition

This paper analyses the process of harmonisation of national pesticides regulations in the EC. One of the outcomes of this process was, in 1991, the adoption of an EC regulation which includes new environmental requirements for pesticides to be sold on the EC market. This regulatory process shows an example of trade-off between competition policy and environmental policy. After having described the competition in the agrochemical sector, the paper examines this trade-off in two ways. Firstly, the behaviour of industrial interest groups throughout the process and their influence in the devising of the regulation is considered. Secondly, the impact of competitive issues on the implementation of part of the 1991 regulation (i.e. the re-registration of old pesticides commercialised in the EC) is analysed. This case study confirms some general results of the regulatory capture theory but it also points out some limits of these theories: firms seemed to be much more sensitive to negative pay-offs than to positive ones when deciding to become involved in this regulatory process. A second insight brought up by this case study concerns the link between competition policy and environmental policy and its influence on the efficiency of the latter. Environment-competition trade-off in the agrochemical sector confronts the regulator, when it adopts environmental policy, with two risks: a risk of changing the structure of the industry (from a differentiated and innovative one to a commodity one) if the regulator does not provide sufficient pay-offs for environmental R&D costs, or a risk of allowing part of the industry to increase monopoly rents. Both risks would affect environmental efficiency, either by reducing the innovation in the sector or by over-protecting ‘greener’ pesticides from competition on price.     

Labour market flows: Facts from the United Kingdom

This paper documents a number of facts about worker gross flows in the United Kingdom for the period between 1993 and 2010. Using Labour Force Survey data, I examine the size and cyclicality of the flows and transition probabilities between employment, unemployment and inactivity, from several angles. I examine aggregate conditional transition probabilities, job-to-job flows, employment separations by reason, flows between inactivity and the labour force and flows by education. I decompose contributions of job-finding and job-separation rates to fluctuations in the unemployment rate. Over the past cycle, the job-separation rate has been as relevant as the job-finding rate.     

The cyclicality of effective wages within employer-employee matches in a rigid labor market

This study analyzes real wage cyclicality for male full-time workers within employer-employee matches in Germany over the period 1984-2004. Five different wage measures are compared: the standard hourly wage rate; hourly wage earnings including overtime and bonus pay; the effective wage, which takes into account unpaid overtime; and monthly earnings, with and without additional pay. None of the hourly wage measures exhibits cyclicality except for the group of salaried workers with unpaid overtime. Their effective wages show a strongly procyclical reaction to changes in unemployment. Despite acyclical wage rates, salaried workers without unpaid overtime experienced procyclical earnings movements if they had income from extra pay. Monthly earnings were also procyclical for hourly paid workers with overtime pay. These findings suggest that cyclical earnings movements are generated by variable pay components, such as bonuses and overtime pay, and by flexible working hours. The degree of earnings procyclicality revealed for the German labor market is comparable to the United States.     

Import competition and market power: Canadian evidence

This study estimates price–marginal cost mark-ups for Canadian manufacturing industries during the 1970s in order to assess the impact of import competition on domestic market power. The results are mixed. Based on the analysis, there is no consistent evidence that imports reduced the mark-ups of Canadian firms during that period.     

网络外部性、市场锁定与AVS标准的竞争策略

随着技术的进步和市场的发展,行业的竞争早已由产品之争发展到标准之争。AVS（数字电视音视频标准）作为我国自主研发的第一个国家数字音视频标准,其竞争策略直接关系到我国整个数字音视频行业能否脱离国外标准的限制。文章在回顾整个数字音视频标准发展的历史进程的基础上,采用产业经济学的分析方法,研究了我国数字音视频标准的市场结构和市场特征,并建立一个直观的经济学模型分析了在这种市场结构和市场特征下影响AVS用户选择的多种竞争因素。文章最后给出了标准拥有者应当采取的竞争策略的相关建议。     

Effect of Certificate of Need Law on the intensity of competition: The market for emergency care

PurposeThis article aims to contribute to the academic literature in better understanding the impact of Certificate of Need (CON) Law on Emergency Department (ED) care. Impact of CON Law on ED competition remains an unanswered empirical question.MethodsWe examine the impact of CON Law and its stringency on the intensity of competition (rivalry among competitors) between EDs measured by the Herfindahl-Hirschman Index (HHI). We then estimate the effects of CON Law on HHI by treating CON as an exogenous (endogenous) variable.FindingsOn average the CON legislation enhances ED competition. A possible reason is that the law hinders predatory behavior, and therefore acts as an effective anti-trust tool. Other findings indicate that competition is found to be positively related to a state's population size and median income and negatively related with the prevalence of employer provided insurance and magnitude of illegal immigration in a state.Practical implicationsThis article sheds some light on how political regulations could affect healthcare market and hence may provide public policy makers some insights on reducing healthcare cost.OriginalityOur analysis of the impact of CON regulation on ED competition significantly contributes to the healthcare and strategy literature. The law potentially serves as an anti-trust tool in the hands of the government. We extend the empirical literature by treating CON Law and its stringency as exogenous (endogenous). Our comprehensive analysis considers a host of control variables such as population demographics, their health status and access to health care, healthcare facilities, political environment, in addition to the CON features.     

The effects of match uncertainty and bargaining on labor market outcomes: evidence from firm and worker specific estimates

In this paper we examine wage dispersion in labor markets across currently employed workers. We argue that differences in the potential productivity of a match (typically assumed to be known in the previous literature) generates a surplus between the minimum wage the worker is willing to accept and the maximum wage the firm is willing to offer for the job. Existence of this surplus leads to wage dispersion due to negotiating over the amounts extracted by each agent. Our objective is to estimate the surplus extracted by each firm-worker pair and the effect of the net extracted surplus on the wage, for each firm-worker pair using the two-tier stochastic frontier model. An empirical application finds that, on average, firms paid workers less than their expected productivity. More specifically, at the mean, the net effect of productivity uncertainty leads to equilibrium wages which are 3.33% below the expected productivity of matches.

The impact of minimum wages on wages,work and poverty in Nicaragua

In this paper we use an individual- and household-level panel data set to study the impact of changes in legal minimum wages on a host of labor market outcomes including: a) wages and employment, b) transitions of workers across jobs (in the covered and uncovered sectors) and employment status (unemployment and out of the labor force), and c) transitions into and out of poverty. We find that changes in the legal minimum wage affect only those workers whose initial wage (before the change in minimum wages) is close to the minimum. For example, increases in the legal minimum wage lead to significant increases in the wages and decreases in employment of private covered sector workers who have wages within 20% of the minimum wage before the change, but have no significant impact on wages in other parts of the distribution. The estimates from the employment transition equations suggest that the decrease in covered private sector employment is due to a combination of layoffs and reductions in hiring. Most workers who lose their jobs in the covered private sector as a result of higher legal minimum wages leave the labor force or go into unpaid family work; a smaller proportion find work in the public sector. We find no evidence that these workers become unemployed.Our analysis of the relationship between the minimum wage and household income finds: a) increases in legal minimum wages increase the probability that a poor worker's family will move out of poverty, and b) increases in legal minimum wages are more likely to reduce the incidence of poverty and improve the transition from poor to non-poor if they impact the head of the household rather than the non-head; this is because the head of the household is less likely than a non-head to lose his/her covered sector employment due to a minimum wage increase and because those heads that do lose covered sector employment are more likely to go to another paying job than are non-heads (who are more likely to go into unpaid family work or leave the labor force).     

The relationship between product market competition and unemployment with profit sharing

We investigate the implications of product market imperfections on negotiated wages and equilibrium unemployment under profit sharing. We show that intensified product market competition reduces equilibrium unemployment in a strictly monotonic way when the trade union's bargaining power exceeds the profit share. If the profit share exceeds the trade union's bargaining power, the effect of product market competition is ambiguous: there is a threshold for the benefit–replacement ratio above (below) which intensified product market competition increases (decreases) equilibrium unemployment. The profit share and the union's bargaining power affect the wage mark-up, and thereby equilibrium unemployment, in different directions.     

The impact of unemployment insurance taxes on wages

This paper examines the incidence of state unemployment insurance taxes on wages paid to workers in various demographic groups. The empirical work matches state level measures of unemployment insurance tax and benefit variables to data aggregated from the Current Population Survey on worker earnings for the period 1992 to 2002. Econometric evidence presented in the paper supports the paper's main hypothesis that UI tax rate structure has its greatest adverse impact on less mobile workers (prime age married women and young workers) and little impact on more mobile workers (prime age men).     

Platform competition: Betfair and the UK market for sports betting

We examine two episodes of strategic interaction in the UK betting industry: (a) Betfair (an entrant multisided platform, or MSP) versus Flutter (also an MSP), and (b) Betfair versus traditional bookmakers. We find that although Betfair was an underfunded second mover in the betting exchange space, it was able to attract punters at a much faster rate than the better‐funded first mover, Flutter. Moreover, while Betfair and traditional bookmakers competed aggressively for market share, they also developed a highly complementary relationship that favored all parties. We discuss implications for research in the economics and management of MSPs. Specifically, we argue that the literature would benefit from work that endogenizes platform design and that considers the possible competitive and cooperative interactions between the business models of traditional incumbents and those of potential innovative MSP entrants.