Culture and labour productivity: An empirical investigation

Culture is considered as one of the most powerful forces that shape human behaviour and thereby economic activity. This paper investigates the effects of culture on labour productivity and examines the cultural traits driving this relationship. Using panel data analysis, empirical evidence is provided covering a sample of 34 OECD countries over a wide period of three decades. Our empirical results suggest a significant positive relationship between the cultural background and labour productivity. The main channels of this positive impact are control and work ethic environment, while obedience has a negative impact on productivity. These findings are robust to a series of robustness checks, including alternative cultural measures, additional control variables, various country samples, and alternative specifications.     

Temporary employment and segmentation in the Spanish labour market: An empirical analysis through the study of wage differentials

We aim to add empirical evidence to the already studied field of wage differentials between temporary and permanent workers in Spain. Our goal is to find out which determinants of wage differentials are relevant when explaining such differences. Furthermore, the endogeneity of such feature (the type of contract) is controlled for. The same exercise is done with two data sets: the ECHP and the Structure of Earnings Survey. Results show that wage differentials between temporary and permanent workers are explained by the differences in the distribution of personal and job characteristics in both groups, but not by differences in the rewards for those characteristics. These results remain mostly unchanged during the second part of the 1990s, using information from five waves of the ECHP, and are robust to different changes in the econometric specification.JEL Classification: J31, J41The authors would like to thank the participants in the 3rd Summer School of Labour Economics (organised by IZA in Amersee, Munich), in a seminar in the University of Alcalá and in another seminar in the European University Institute in Florence and especially Alison Booth, Luis Toharia, Juan F. Jimeno, Juan José Dolado and two anonymous referees for their helpful comments and suggestions. Florentino Felgueroso kindly helped us with the handling of data. The usual disclaimer applies. The ECHP is being used on behalf of the contract reference ECHP/15/00 between the University of Alcalá and EUROSTAT.     

Wage inflation and labour conflicts in the Netherlands : An empirical investigation using the co-integration approach

The ‘wage space’, which is defined as the sum of price inflation and labour productivity growth, has played a major role as an indicator of allowable wage increases in the post-war wage negotiations in the Netherlands. This paper shows that: (a) wages and the wage space are co-integrated; (b) the deviation between wages and the wage space may act as an error correction term in the wage equation when both variables are identified as I(2); and (c) political consensus and the threat of labour conflicts (rather than actual strike activity) may be identified as the ‘mechanism’ behind this error correction in the wage equation.     

Employers' recruitment behaviour and vacancy duration: an empirical analysis for the Dutch labour market

The functioning of labour markets from a demand-side perspective is examined. In particular, the determinants of vacancy duration are studied in the context of a model of employers' search behaviour. A model for the choice of the recruitment strategy at the start of the search process and the corresponding recruitment duration is developed in which allowance is made for different patterns of duration dependence for each recruitment strategy. This model is applied to data on employers' search behaviour in the Dutch labour market. It is found that employers prefer advertisements as the first recruitment channel when applicants are required to have work experience. Moreover, employers prefer to start searching via the labour exchange office when jobs in the secondary segment of the labour market have to be filled. It is also found that - when advertisements are used as the first recruitment strategy - employers need some time to acquire a pool of applicants and to select candidates from this pool. It is interesting as a contrast that applicants seem to be evaluated rather quickly if employers start searching via informal contacts.     

An empirical approach to distributive justice

This paper starts from the idea that it would be interesting to complement the deductive reasoning about economic justice with an empirical approach which tries to describe and interpret the actual value judgements held by the economic agents. We present results from a pilot study with 180 subjects. Factor analysis indicates that it makes sense to work with desert and compensation criteria, as most economists and philosophers do. We then illustrate that it is possible to operationalise equity judgements, estimating for each subject separately an equation describing his perception of the equitable compensatory income variation. We use the factor analysis results to construct a ‘compensation’ and a ‘desert’ index. All coefficients can be nicely interpreted and interesting patterns of interindividual variation emerge.     

An explorative empirical analysis of the influence of labour flows on wage formation

This study presents an explorative econometric analysis of the influence of labour market flows on wage formation. It applies the vector cointegration and common trends methodology of Johansen (Likelihood-based Inference in Cointegrated Vector Autoregresssive Models, OUP, Oxford, 1995). According to this approach, a combination of the flow of layoffs (flow from employment to unemployment) and the flow of filled vacancies (successful matches) appears to be an adequate alternative to the unemployment rate as indicator of labour market tightness in the wage equation for The Netherlands.     

An empirical approach to ecosystem-based fishery management

Marine scientists and policymakers are encouraging ecosystem-based fishery management (EBFM), but there is limited guidance on how to operationalize the concept. We adapt financial portfolio theory as a method for EBFM that accounts for species interdependencies, uncertainty, and sustainability constraints. Illustrating our method with routinely collected data available from the Chesapeake Bay, we demonstrate the gains from taking into account variances and covariances of gross fishing revenues in setting species total allowable catches. We find over the period from 1962-2003 that managers could have increased the revenues from fishing and reduced the variance by employing EBFM frontiers in setting catch levels.     

Soviet postwar industrial growth and capital labour substitution: An empirical note

This note tests an aggregate transcendental production function for Soviet industry. The estimated equation shows the elasticity of substitution in aggregate Soviet industry in less than unity and it is decreasing quite rapidly.     

An empirical test of the segmented labour market theory for the Netherlands

In this paper an orthodox segmented labour market theory (SLM theory)is tested by means of the data provided by the research project, Quality of Labour 1977 (Zanders et al., 1977). The segmented labour market theory is restricted to the dual labour market approach, although a major extension is taken into account (a primary segment consisting of two tiers). The segments are created by making use of an objectivemethod. Nine quality characteristics of jobs are taken into account. A number of logit estimations are carried out to test the competing theories of human capital and the segmented labour market. The conclusion is that although discrimination in the labour market appears to exist, the SLM theory has to be rejected.     

Traded and non-traded goods: An empirical test with Nigerian data

An income expenditure model is used to describe the relationship between the balance of payments and price inflation of non-traded goods. Real and monetary approaches to the balance of payments suggest different relationships among these variables, and compatible elements of the monetary approach are incorporated into the income-expenditure model. The model is then tested with Nigerian data for the period 1960–1979. The pattern of economic growth and conduct of monetary policy make the Nigerian economy a convenient test of the empirical significance of these macroeconomic relationships.     

An empirical test of purchasing power parity in selected developing countries: a panel data approach

Abstract

This paper examines the empirical validity of Purchasing Power Parity (PPP) for certain large developing economies by using a panel unit root methodology. The test results show that a long run real exchange rate depreciation trend exists in certain developing countries. Without considering this depreciation trend, it is hard to verify the stationarity and to explain the existence of the extremely long half-lives of the real exchange rates. When a linear time trend is included in the tests, the results tend to support the stationarity of the underlying real exchange rate processes, and the half-lives are significantly shorter and their range can be explained by transitory disturbances.     

Impact of trade liberalisation on labour market and poverty in Sri Lanka. An integrated macro-micro modelling approach

This paper revisits the long standing controversy of trade and poverty linkage using a macro-micro modelling approach based on general equilibrium and microsimulation analytical frameworks. Sri Lanka, the first country in South Asia which undertook trade reforms more than three decades ago, is taken as a case in point in this study. The paper analyses the effects of trade liberalisation on income distribution and poverty in the urban, rural and estate sectors in Sri Lanka using the first ever microsimulation model built for the country in combination with a multi-household computable general equilibrium (CGE) model. The results reveal that without any fiscal policy adjustments a 100% tariff cut would lead to an increase in economic growth and a reduction in poverty incidence both in the short run as well as in the long run. However, when the tariff cut combined with the fiscal policy adjustments to maintain the budget neutrality, poverty outcomes showed mixed results. In contrast, results show that trade liberalisation increases the income inequality in Sri Lanka.     

An empirical analysis of night-time light data based on the gravity model

This article aims to explore the feasibility of applying night-time light data to the study of trade. Based on 61 countries’ panel data from 1995 to 2012, this research used night-time light data, as the substitute for GDP, to study trade development based on the traditional gravity model. The method of ordinary least squares, Poisson pseudo-maximum-likelihood and two-stage least squares were used. The results show that geographical distance, country borders and regional agreements have a significant effect on China’s trade with other Belt and Road countries, which verifies the validity of trade research based on night-time light data analysis. Additionally, comparisons reveal the trade trends predicted by night-time light data from 1996 to 2012, were highly consistent with the actual data. This article stands as the first study to apply night-time light data to the gravity model in the research on trade between China and other Belt and Road countries. Breaking new ground, this research uses night-time light data as an economic indicator to study trade, in combination with micro foundations and the latest findings of the gravity model. Thus, this article deepens the understanding of trade analysis and contributing to the field of related researches.     

And the winner is... An empirical evaluation of unitary and collective labour supply models

An empirical evaluation is presented of two competing flexible labour supply models. The first is a standard unitary model, while the second is based on the collective approach to household behaviour. The evaluation focuses on the testing of the model’s? theoretical implications and on their ability to identify structural information, like preferences and the intrahousehold allocation process. Models are applied to Dutch microdata from the DNB Household Survey. The unitary model cannot be rejected for male and female singles, while it is rejected for a sample of couples. The alternative collective model cannot be rejected for the same sample, allowing identification of individual preferences and an intrahousehold sharing rule that can be used as a basis for welfare economic policy evaluations.     

Using base-year data with empirical scenario models

In quantitative scenarios, empirical models are frequently used to provide estimated values for variables. However, in the base year the values are known, and will almost certainly be different from the values estimated by the model. It is shown that the gaps between observed and modeled values (the residuals, or shift factors) in the base year can be used to provide estimates of the residuals in the scenario that improve the performance of the empirical model. A self-consistent estimator is proposed, and is shown to be effective by applying it to specific examples.     

A structural VAR approach on labour taxation policies

This paper presents a Structural VAR analysis on the employment and output effects of labour tax policies in six European countries for the period 1974–1997. By considering impulse response functions, it turns out that, on average, a shock to the total personal income tax revenues is positively correlated to employment, whereas there is mixed evidence on the output effect. Moreover, the quantitative impact of these effects, especially those related to the output, appears to be quite small. However, by introducing explicitly four labour tax parameters (namely the marginal and average tax rates for the personal income tax and the payroll tax), it turns out that these effects are not negligible after all: for some countries it is possible to conceive labour taxes as policy instruments favouring more employment and a better economic performance. However, the empirical support on the sign of the output and employment effects is mixed, suggesting that the same domestic fiscal policy does not produce the same impact in all the European countries.     

Financial cycle and business cycle: An empirical analysis based on the data from the U.S

In this paper, we first study the relationship between the financial cycle and the business cycle in the time and frequency domain. Then we also explore the interactions and dynamic mechanisms of the financial cycle, the business cycle, real interest rate and exchange rate by the VAR model. The empirical results show that the financial cycle is closely related to the business cycle, especially at medium-term frequencies (8–30 years), the business cycle leads the financial cycle with a high positive correlation. However, the relationship between them is not significant during the Great Moderation at business-cycle (2–4 years). In addition, the financial cycle not only becomes a main driver of real interest rate, the financial cycle and the business cycle, but also serves as an important source of the business cycle fluctuations. In general, our results lay some theoretical foundation for the policy practice of financial and economic stability.     

Technological progress and market growth: An empirical study based on the quality-ladder approach

This paper develops an extended version of the quality-adder model by allowing for heterogeneous markets. Based on this model, it presents an empirical analysis of innovation-based growth at the market level using a technometric measurement concept. It can be shown that a growth-promoting effect due to technological progress in a particular single year is observed after between 2 and up to 7 years. This is true not only for highly innovative markets but also for those in which fewer R&D resources are invested.     

The impact of sectoral shifts and the aggregate labour market on unemployment duration

This study investigates the effects of sectoral shifts among industries on unemployment duration. These effects are decomposed into two subeffects: the overall effect and the specific industrial effect. The former is equal for all of the unemployed in all industries, while the latter depends on the tightness of the demand for labour of the industry in question. In addition, the impact of the aggregate labour market on unemployment duration is also explored. The empirical results show that most of the overall and all of the specific effects are significant, indicating that the sectoral shifts among industries as well as the aggregate labour market do in fact impact unemployment duration, and that the effects on unemployment duration vary in terms of their tightness in the different industrial labour markets.