Estimating Krugman’s Economic Geography Model for the Spanish Regions

This paper estimates Krugman’s (J Polit Econ 99:413–499, 1991) economic geography model using data from the Spanish NUTS 3 regions. The econometric formalization endogenously determines wages in a region as a function of income and wages in other regions. The specification adopted also allows us to study the relation between the agglomeration of economic activity, increasing returns and market access. The first result obtained is that the Spanish economy exhibits a spatial wage structure: wages in a region are positively determined by income and wages in neighboring regions. In second place it is found support for the structural relations of the underlying theoretical model, indicating the importance of scale economies and transport costs in shaping the Spanish economic geography.     

Labour market effects of public capital stock: evidence for the Spanish private sector

This paper provides a new rationale for the positive effect of public capital stock on employment and wages. We show that higher levels of public capital reduce wages along the wage equation and enhance employment due to the resulting larger elasticity of labour demand with respect to wages. The estimation of a structural model for the Spanish private sector reveals that this wage channel is empirically relevant. We use the estimated parameters to simulate the recent incidence of the ratio of public to private capital stock on the private sector economic performance. We find (i) sizeable effects on employment, capital stock and gross domestic product, and (ii) that the wage channel is particularly important for employment.     

Employment and wage dynamics in Estonia, 1989-951

This study monitors the effects of economic transition on wages and employment in a former Soviet Republic. Estonia's case is of particular interest because of its early adoption of relatively free labour market policies. Relative wages for the highest educated groups rose for all age groups. There were also rapid increases in returns to job experience, particularly at young ages. Increasing wage dispersion across human capital groups was accompanied by narrowing wage dispersion within human capital groups. Relative wages rose in sectors which gained relative employment, while they fell in shrinking sectors. In addition, there were large flows of labour between shrinking and growing sectors, suggesting that labour market equilibrating mechanisms developed very rapidly in Estonia.     

市场潜力、经济集聚与地区间工资差异

基于劳动力、产业在地区间分布的不平衡性以及地区间工资差异的事实,本文构建了一个市场潜力与工资的新经济地理学(NEG)理论模型。理论分析表明:市场潜力对工资产生正面影响。市场潜力对工资产生正面影响来自两种渠道:一是市场潜力引发了经济集聚效应;二是市场潜力产生了逆经济集聚。相比之下,市场潜力引发了经济集聚效应更能提高和扩大地区工资水平与差异,因为经济集聚需要更低的贸易成本、较大的市场规模以及较高的经济发展水平。     

Human capital,reservation wages and job competition: Heckman's lambda re-interpreted

This study integrates insights from three theories into a single model explaining the simultaneous distribution of employment and wages. Human capital theory is taken as the general framework, whereas search theory and the more recent ‘crowding’ or ‘job competition’ hypothesis are used to explain selectivity in employment and the resulting bias in wage regressions. An empirical test on Belgian data, using a two-stage probit-OLS model, indicates that the crowding theory dominates the search hypothesis for men. For women, it seems to be outweighed by relatively higher reservation wages, probably due to women's different behaviour with respect to family responsibilities.     

Capital tax,minimum wage,and labor market outcomes

Often an increase in the minimum wage is accompanied by a reduction in the capital tax. This paper analyzes the effects of interactions between the minimum wage and the capital tax in the general equilibrium framework. The analysis is conducted in an inter-temporal search model in which firms post wages. A (binding) minimum wage provides a lower support for the distribution of wages. The paper finds that the interaction of these two policy instruments significantly modify labor market outcomes and welfare cost. In the presence of a binding minimum wage, a decrease in the capital tax leads to an increase in wage dispersion. In contrast, when it is not binding, a lower capital tax may reduce the dispersion in wages. A binding minimum wage magnifies the positive effects of a lower capital tax on labor supply, employment, and output. It also enhances the welfare cost of capital tax. A policy change which involves an increase in the minimum wage and a fall in the capital tax such that employment level remains constant increases welfare and output.     

Market access and regional dispersion of human capital accumulation in Turkey

Building on early advances in development economics, the theoretical construct of new economic geography asserts that geography plays a crucial role in educational human capital accumulation. Based on this expectation, this study investigates the impact of market access on provincial human capital accumulation in Turkey. Results indicate that market access matters for understanding why some regions lag behind others in terms of average years of schooling. Our results are robust to the inclusion of spatial mechanisms, different specifications of the spatial weight matrix, endogeneity and alternative measurements of market access and to a host of other factors that affect regional human capital accumulation.     

Economic geography and wages in Brazil: Evidence from micro-data

This paper estimates the impact of market and supplier access on wage disparities across Brazilian states, incorporating the control for individual characteristics into the new economic geography methodology. We estimate market and supplier access disaggregated by industry, and we compute access to local, national and international markets separately. We find a strong correlation between market access and wage differentials, even after controlling for individual characteristics, market access level (international, national or local), and using instrumental variables.     

THE RESPONSE OF STATE‐OWNED ENTERPRISES TO IMPORT COMPETITION: EVIDENCE FROM CHINESE MANUFACTURING FIRMS

We examine the wage and employment impact on Chinese firms of an increase in import competition associated with China's WTO accession in December 2001, with an emphasis on state‐owned enterprises (SOEs). We find that both wage and employment are negatively impacted by an increase in import competition, but firms with high state ownership cut employment less and reduce wages more than their private counterparts, suggesting that they prioritize the protection of employment over that of wages. This finding supports the notion that SOEs may have ‘multitask’ responsibilities in terms of protecting employment as well as achieving efficiency. We also find that firms with higher capital intensity reduce their wages less but cut employment more in response to intensified import competition. This provides empirical support for the efficiency wage theory.     

最低工资标准提升的就业效应——一个基于自然实验的经验研究

本文以最低工资标准提升作为自然实验,应用回归调整的差中差方法分析了最低工资标准提升对青年和中年低技能劳动力就业的影响。研究结果表明,最低工资标准提升对低技能群体中的男性和青年女性的就业没有产生显著影响;但对低技能群体中的中年女性就业却产生显著的消极影响,且最低工资标准提升幅度越大,对就业的消极影响越大。因此,政府适当的提升最低工资标准将有助于低技能劳动力整体工资水平的增长。     

Estimation of the specification error in the expectations theory of the term structure

This paper tackles the issue of the procyclicality of the real wage. We present a dynamic relationship between real wages and employment consistent with the long-run stationary equilibrium using a cointegrated VAR model. We find that wages are anticyclical and that a negative relationship between real wages and employment is necessary to achieve an economically identifiable stationary long run solution. The contentiousness of the topic does not appear so important once we recall some measurement issues and economic features of the Italian labour market.     

Staggered wages,unanticipated shocks and firms’ adjustments

This paper empirically investigates the employment and wage effects of contract staggering, i.e., the asynchronous and infrequent way in which wages adjust to changes in the economic environment. Using an identification strategy based on exogenous start dates of collective agreements around the Great Recession, we estimate the effect of increases in base wages on firms’ labor cost adjustments. Our analysis is based on a large employers-employees dataset merged to collective agreements in the Netherlands, a country in which collective bargaining is dominant and contract staggering is relatively pervasive. The main result is that staggered wage setting has no real effect on employment. We find significant employment losses only in sectors covered by contracts with much longer durations than those normally assumed in macroeconomic models featuring staggered wages. Instead, we show that firms adjust labor costs by curbing other pay components such as bonuses and benefits and incidental pay. The overall result supports the idea that wage rigidities are not the main source of employment fluctuations.     

The heterogeneous regional effects of minimum wages in Poland

We evaluate the impact of large minimum wage hikes on employment and wage growth in Poland between 2004 and 2018. We estimate panel data models utilizing the considerable variation in wage levels, and in minimum wage bites, across 73 Polish NUTS 3 regions. We find that minimum wage hikes had a significant positive effect on wage growth and a significant negative effect on employment growth only in regions of Poland that were in the first tercile of the regional wage distribution in 2007. These effects were moderate in size, and appear to be more relevant for wages. Specifically, if the ratio of minimum wage to average wage had remained constant after 2007, by 2018, the average wages in these regions would have been 3.2% lower, while employment would have been 1.2% higher. In the remaining two-thirds of Polish regions, we find no significant effects of minimum wage hikes on average wages or on employment.     

Reservation wages, market wages and unemployment: Analysis of individual level panel data

Using individual level panel data, we analyse the divergence between the reservation wages of individuals who are out of work and their predicted market wages, focusing upon identifying the factors that influence the potential divergence. In addition, using propensity score matching techniques, we explore the implications of such divergences for future employment and wages. Our findings suggest that having reservation wages that are high relative to the predicted market wage influence both future employment and future wages.     

Worker flows, job flows and firm wage policies

Like many transition economies, Slovenia is undergoing profound changes in the workings of the labour market with potentially greater flexibility in terms of both wage and employment adjustment. To investigate the impact of these changes, we use unique longitudinal matched employer‐employee data that permits measurement of employment transitions and wages for workers and enables links of the workers to the firms in which they are employed. We can thus measure worker flows and job flows in a comprehensive and integrated manner. We find a high pace of job flows in Slovenia especially for young, small, private and foreign‐owned firms and for young, less educated workers. While job flows have approached the rates observed in developed market economies, the excess of worker flows above job flows is lower than that observed in market economies. A key factor in the patterns of the worker and job flows is the determination of wages in Slovenia. A base wage schedule provides strict guidelines for minimum wages for different skill categories. However, firms are permitted to offer higher wages to an individual based upon the success of the worker and/or the firm. Our analysis shows that firms deviate from the base wage schedule significantly and that the idiosyncratic wage policies of firms are closely related to the observed pattern of worker and job flows at the firm. Firms with more flexible wages (measured as less compression of wages within the firm) have less employment instability and are also able to improve the match quality of their workers. JEL Classifications: J23, J31, J41, J61, P23, P31.     

Long-run impact of increased wage pressure

An unanticipated permanent increase in wage pressure is analyzed in a dynamic general-equilibrium model combining standard theory of capital accumulation and monopolistic wage setting. The long-run (steady-state) implications are identical percentage reduction in employment, consumption, and capital stock whereas wages and the real interest rate are unchanged. The reduction in employment on impact is larger than the steady-state reduction whereas wages rise and the real interest rate declines on impact.     

The labor market impact of immigration in Western Germany in the 1990s

In this article we estimate the wage and employment effects of recent immigration in Western Germany. Using administrative data for the period 1987-2001 and a labor-market equilibrium model, we find that the substantial immigration of the 1990s had very little adverse effects on native wages and on their employment levels. Instead, it had a sizeable adverse employment effect on previous immigrants as well as a small adverse effect on their wages. These asymmetric results are partly driven by a higher degree of substitution between old and new immigrants in the labor market and in part by the rigidity of wages in less than flexible labor markets. In a simple counter-factual experiment we show that in a world of perfect wage flexibility and no unemployment insurance the wage-bill loss of old immigrants would be much smaller.     

我国工资差异变化及影响因素分析——基于家计调查的实证研究

尽管中国在经济转型过程中取得了令世人瞩目的经济增长速度,但随之而来的是不断扩大的工资收入差异和持续扩大的工资收入差距引发了广泛关注.一般认为,工资差距过大对社会公平和正义造成伤害,并直接影响中国经济和社会的可持续发展.基于家计调查数据并使用经济计量模型分析方法,本论文对中国在过去二十年日益增长的工资差距进行实证分析并探讨影响工资差距的主要因素.研究表明,政府对劳动力市场机构特别是工资政策改革是引发工资差距不断扩大的原因之一.本论文指出,劳动力市场机构的变化不是造成工资差异扩大的唯一因素;其它重要因素包括劳动力市场歧视以及制度性障碍,如中国现行的户口政策造成的劳动力市场分割等.本论文还从政策层面对减少工资差异提出建议.     

Tenure, business cycle and the wage-setting process

We analyze the interaction between job tenure and external labor market conditions in wage determination. First, we introduce a model that combines job matching with business-cycle effects. As the employment relationship progresses, the worker appropriates a portion of the value of the match-specific human capital she accumulates, gradually becoming shielded from the cyclical variations in external labor market conditions: the employment relationship is progressively “internalized”. Then, we present empirical evidence supporting this prediction: the elasticity of wages to the unemployment rate decreases with tenure. This finding is robust to different specifications that allow for job heterogeneity, and it contributes to the interpretation of recent evidence of changes in the effect of the business cycle on wages.     

Fertility Decisions and Gender Differences in Labor Turnover, Employment, and Wages

A striking observation of the U.S. and other labor markets is the weak position of women in terms of job attachment, employment, and earnings relative to men. We develop a model of fertility and labor market decisions to study the impact of fertility on gender differences in labor turnover, employment, and wages. In our framework, individuals search for jobs and accumulate general (experience) and specific (tenure) human capital when they work. They can also increase their wage by moving to a job of higher quality. Labor market decisions (e.g., job acceptance and job mobility) may differ across genders: females that give birth may decide to interrupt their labor market attachment in order to enjoy the value of staying at home with their children. The model economy is successfully calibrated to match aggregate statistics in terms of fertility, employment, and wages. We find that fertility decisions generate important gender differences in turnover rates, with long lasting effects in employment and wages. These differences in labor turnover account for almost all the U.S. gender wage gap that is attributed to labor market experience by Blau and Kahn (2000, Journal of Labor Economics15(1), 1–42). The model also implies a very small role of tenure capital in accounting for wage differences between males and females (gender gap), and between females with and without children (family gap). Journal of Economic Literature Classification Numbers: E24, J13, J21, J31.