The Effects of Germany's Statutory Minimum Wage on Employment and Welfare Dependency

In January 2015, Germany introduced a federal, statutory minimum wage of 8.50 € per hour. This study evaluates the effects of this policy on regular and marginal employment and on welfare dependency. Based on the county‐level administrative data, this study uses the difference‐in‐differences technique, exploiting regional variation in the bite of the minimum wage, i.e., the county‐specific share of employees paid less than 8.50 € before the introduction of the minimum wage. The minimum wage had a considerable negative effect on marginal employment. There is also some indication that regular employment was slightly reduced. Concerning welfare dependency, the minimum wage reduced the number of working welfare recipients, with some indication that about one half of them left welfare receipt due to the minimum wage.     

最低工资、就业弹性及就业效应研究

最低工资标准的提升对于就业的效应究竟是正是负,目前理论界并没有一致的论证结果。本文首先从市场结构和企业应对措施两个角度,梳理了西方学界关于最低工资对就业影响的作用机理,然后建立一个涉及农民工、企业和政府三方的博弈模型,推导出行业就业弹性对劳动参与的关键作用,并利用全国各省市六个行业的面板数据进行了实证分析。本文的主要结论是,最低工资的实施标准按行业设置比目前按地区＂一刀切＂的模式更具科学性。     

Migration Effects of Welfare Benefit Reform

This study tests for a migration response to the implementation of stricter rules for receiving welfare benefits (means-tested social assistance for individuals who lack sufficient work-related income), in the form of mandatory participation in activation programmes in Stockholm town districts. The results give no indications that activation programmes affect the moving choices of recipients of welfare benefits.     

Technology Transfer,Welfare, and Wage Inequality

We use a linear two‐country, two‐factor, two‐product, two‐different technologies (2×2×2×2) model to study technology transfer and its effects on each country's welfare and factor prices. We demonstrate that technology transfer could benefit both the recipient and the transferring countries. For the recipient country, technology transfer increases the price of the factor that is more intensively used and decreases the price of the other factor. Our results provide an alternative explanation of a trend observed in the past half century: a rise in real wage inequality between relatively skilled workers and less‐skilled workers because of technological progress in numerous countries.     

On the Long-Run Growth Effects of a Minimum Wage for a Two-Sector Economy*

This paper investigates the effect of (nationally enforced) minimum wage regulation on economic growth using the standard two-sector model. The paper shows, inter alia. that the minimum wage regulation (if it is effective) always lowers the rate of growth by inducing over-capitalization in the economy, and that a minimum wage poor which is sufficiently high causes the economy to decay continually. A diagrammatical exposition of some of the results is also provided.     

Participation,Recruitment Selection,and the Minimum Wage

In this paper, we re‐examine the efficiency of participation with heterogeneous workers in a search‐matching model with bargained wages and free entry. Assuming that firms hire their best applicants, we show that participation is always too low. The reason for this is a hold‐up phenomenon: to be active, a worker must pay the entire search cost whereas part of the gain from this investment goes to the firm. As a consequence, introducing a (small) minimum wage raises participation, job creation, and employment. Therefore, net aggregate income of the economy is increased.     

Minimum Wage Legislation, Investment and Human Capital

A two period, general equilibrium, model is analysed in which agents foresee how the second period outcome is determined by the investment decisions which they make in the first period. These decisions concern the acquisition of human and physical capital. The paper considers the impact of a minimum wage in the second period. It shows that, in equilibrium, this policy increases both types of investment. There is a range of values of the minimum wage at which the increases in investment are obtained without any reduction in period 2 employment. This is welfare-improving for a range of parameter values. Under very specific circumstances, the minimum wage achieves a Pareto efficient outcome.     

The Welfare and Employment Effects of Centralized Public Sector Wage Bargaining

In many countries, the government pays almost identical nominal wages to workers living in regions with notable economic disparities. By developing a two‐region general equilibrium model with endogenous migration and search frictions in the labor market, I study the differences in terms of unemployment, real wages, and welfare between a regional wage bargaining process and a national one in the public sector. Adopting the latter makes residents in the poorer region better off and residents of the richer region worse off. Private sector employment decreases in the poorer region and it increases in the richer one. Under some conditions, the unemployment rate in the poorer region soars.     

Relative Deprivation, Wage Differentials and Mexican Migration

This paper constructs and tests a model that incorporates relative deprivation into the migration decision. Relatively deprived individuals view their situations as less than a community standard. Another innovation of this paper is the utilization of a cluster approach to wage differentials. This cluster method takes account of individual characteristics while avoiding the severe multicollinearity problems inherent in the standard wage equation approach. Using data from the Mexican Migration Project, relative deprivation is found to be a significant motivating factor in domestic migration decisions. The results also suggest that Mexico‐US migration may be increasing relative deprivation in Mexican communities. For policymakers, the results indicate that policies attempting to slow domestic rural‐to‐urban migration must address both relative and absolute outcomes in communities. Investments in communities that raise aggregate incomes, but increase relative deprivation, could result in an increase in migration out of the community, not in a decrease as intended.     

Capital Flows, Vertical Multinationals, Wage Inequality, and Welfare

Wage inequality between skilled and unskilled labor in the US and its trading partners, Mexico and Chile, has increased since 1980, while Taiwan's wage inequality has decreased since the mid‐1980s. The authors provide a new explanation for the latter, involving a rise in capital flows from Taiwan to less‐developed countries (LDCs) in the form of vertical multinationals (MNEs), and a corresponding rise in intermediate‐good exports from the MNEs to subsidiaries in LDCs. Moreover, national income in both countries definitely improves.     

Globalization,Wage Volatility,and the Welfare of Workers*

This paper analyzes the effects of trade liberalization on the level and volatility of factor returns, in a model with identical technologies across industries and industry‐specific uncertainty. The results show an increase in the return to capital and, under certain conditions, a decline in the real wages and welfare of workers, along with an expansion of wage dispersion and volatility. Unlike the Solper–Samuelson mechanism, our results do not depend on the factor intensity of imports and exports and are borne out by all patterns of trade, including among industrialized countries, suggesting that the traditional analysis has missed some important linkages between trade and wages.     

Indra-Industry Trade,Endogenous Technical Change,Wage Inequality and Welfare

By using alternative intra-industry trade models (1. New goods cannot be introduced into the economy; 2. The possibility for a set of capital goods available in the economy to vary; the models consider the existence of intersectoral linkages), I show by means of Applied General Equilibrium (AGE) analysis that trade rises wage inequality between skilled and unskilled workers; but the impact on wage inequality is far larger, when countries are assumed to exchange differentiated capital goods. The latter result has been obtained by using an imperfect competitive model, which embodies a sector bias technological change that arises from trade. In addition, the gains from trade, insignificant under the standard trade hypotheses, are extraordinarily large when endogenous technological change is taken into account. The main policy conclusion is that if policy makers of flexible wage economies introduce trade barriers to reduce wage inequality, these protective measures, by affecting the diffusion of technology, would cause a large welfare loss. [D58, f12, F43, J3, O3]     

论国际移民与经济发展

国际移民作为一种历史产物和社会现象,与全球经济形势、各国的经济和社会发展状况等有着紧密的联系。当今国际人口迁徙数量的增长是经济全球化的直接产物,国际移民对接受国和原籍国的经济发展和社会生活都会产生重要影响。主要发达国家在调整其移民政策的同时,趋向进一步放宽对技术移民的准入,政策趋于务实;为实现互利共赢,加强协调,尽量减少或消除国际移民的消极作用,推动全球化朝有利于共同发展方向发展,各国政府对加强移民问题国际对话与合作持更加开放和积极的态度。     

Regulation,Minimum Wage and Informality: Introduction to Symposium

Are markets in developing and transition economies over‐regulated or under‐regulated? This is a perennial question in the development discourse, but one for which answers appear to come more from preset ideology than from context‐specific analysis and evidence. These issues become even more pressing when the debate turns to the links between regulation, deregulation and inequality. The recent experience of rising inequality in many countries has also brought to the fore predictable policy positions. A key aspect of labor regulation in developing countries, and one becoming more prominent in the era of rising inequality, is the minimum wage. The range of issues around regulation, minimum wage and informality was addressed by papers presented to a conference held in New Delhi on December 17–18, 2014. The conference was co‐sponsored by the World Bank, UK Department for International Development, Cornell University and Columbia University. The organizers of the conference were Kaushik Basu, Stefan Dercon, Ravi Kanbur and Jan Svejnar. A selection of papers from the conference which passed the usual review procedures of the Review of Development Economics, and a further selection of papers from those submitted to the journal, form this symposium.     

Differential Migration Prospects,Skill Formation,and Welfare

This paper develops a one sector, two‐input model with endogenous human capital formation. The two inputs are two types of skilled labor: “engineering,” which exerts a positive externality on total factor productivity, and “law,” which does not. The paper shows that a marginal prospect of migration by engineers increases human capital accumulation of both types of workers (engineers and lawyers), and also the number of engineers who remain in the country. These two effects are socially desirable, since they move the economy from the (inefficient) free‐market equilibrium towards the social optimum. The paper also shows that if the externality effect of engineering is sufficiently powerful, everyone will be better off as a consequence of the said prospect of migration, including the engineers who lose the migration “lottery,” and even the individuals who practice law.     

Kaldorian Disaggregation,Temporary Migration and Domestic Welfare

We build a model with two agents: domestic residents and temporary immigrants. The model incorporates Kaldorian disaggregation, with the two groups consuming different goods produced in the economy. It is established that, under certain conditions, an increase in immigrant labor lowers the welfare of the domestic residents. This runs against conventional wisdom that temporary immigration enhances the welfare of domestic residents.     

Migration,Foreign Aid and the Welfare State

Aspects related to the links between international migration, foreign aid and the welfare state are highlighted in this paper. Migration is modeled as a costly movement from an aid‐recipient developing country with low income and no welfare state, towards a rich donor, developed country with a well‐developed welfare state. Within this model, it is found, among other things, that the best response of the developed donor country is to increase aid as the co‐financing rate by the recipient country increases. When the immigration cost decreases, e.g. as a result of greater economic integration between the two countries, it is beneficial for the donor country to increase aid and the recipient country to increase the co‐financing rate.     

International Outsourcing, Technological Change, and Wage Inequality

This paper analyzes the impact of international outsourcing on UK wage inequality during the 1990s by applying the mandated wage approach proposed by Feenstra and Hanson (1999 ). The methodology is extended in order to obtain additional insight into the relative importance of the factor and sector bias of international outsourcing and technological change. The results indicate that technological change is the predominant force behind the increase in wage inequality, but international outsourcing also contributed significantly. In explaining the increase in wage inequality the factor bias of technological change was slightly larger than its sector bias, while for international outsourcing the sector bias was much more important. The relative importance of the two effects hinges crucially on the estimated rate of productivity passthrough.     

Its Bark is Worse Than its Bite: The Wage and Employment Effects of the Minimum Wage in the US

This study examines the effect of changes in the US minimum wage on wages and employment in 32 industries selected for their presumed sensitivity to the minimum wage. Applying time series techniques commonly used in macroeconomics and finance to changes in the minimum wage occurring from 1967 and 1991, we initially test for a wage response; only where one is found do we test for an employment response. Twenty-five per cent of the industry/minimum-wage-increase pairs show evidence of an appropriate wage response. Eight of these 54 show a statistically significant negative employment response, while six show significant, positive employment responses. Positive effects may be due to either a high variance distribution centred on zero or markets with 'lemons' problems concerning worker quality. Limiting analysis to industries in which the minimum wage binds provides no evidence of a consistent negative relationship between the historical minimum wage and employment.