Employer and Employee Ignorance in Developing Countries: The Case of Trinidad and Tobago

The authors examine the degree of employer and employee ignorance about reservation and offer wages in Trinidad and Tobago and find this to be considerable. On average employers pay more than 26% above workers’ reservation wages, while employees earn 22% less than the maximum wage on offer, ceteris paribus. However, there are some differences across sub‐groups of jobs, particularly with regard to individuals’ lack of information about the best wage offers. Some differences are also found compared to previous results for developed nations, although the level of ignorance does not appear to be higher in Trinidad and Tobago.     

Risk attitudes and reservation wages of unemployed workers: Evidence from panel data

This paper studies risk attitudes of unemployed job seekers and their relationship to self-reported reservation wages. We find that risk aversion is prevalent, and that reservation wages decrease slightly over time. Furthermore, risk aversion and reservation wages are negatively correlated.     

Returns to job satisfaction in the presence of horizontal mismatch

ABSTRACT

In this paper, we study the relationship among horizontal mismatch, job satisfaction and wages using data from the 2013 Scientists and Engineers Statistical Data System (SESTAT). Estimates from 2SLS indicate that 1) field-occupation match in the highest degree has a positive effect on job satisfaction and wages; and 2) controlling for field-occupation matches, job satisfaction has a positive but diminishing effect on wages with a large heterogeneity across different age groups. In addition, we also distinguish between job satisfaction arising from benefits and job satisfaction that is productivity enhancing and find both to have a positive but nonlinear effect on wages.     

The Gender Wage Gap in Offered,Observed, and Reservation Wages for Spain

The literature on the gender wage gap and wage discrimination has exclusively analyzed observed wage differences, ignoring inactive or unemployed individuals. In order to obtain a more complete overview of gender wage differences, this paper analyzed inactive or unemployed individuals in terms of offered and reservation wages in Spain in the years 1994, 2000, and 2006. The results show that the observed wages give a more positive perspective of the gender wage gap than offered ones. Furthermore, the existence of an important gender wage gap for reservation wages has been noted, which is possibly because women take charge of household and family caregiving tasks to a greater degree than men. The results show that Spanish women had higher reservation wages and lower offered wages than men, which explains their lower participation in the labor market.     

The impact of local unemployment rates on reservation wages and the duration of search for a job.

Evidence about the relationship of local unemployment rates and individuals' reservation wages and duration of search for a job if unemployed is sparse and mixed. This study uses US data from the Panel Study of Income Dynamics (PSID) to test whether relatively high local unemployment rates reduce the reservation wages of area residents or increase the duration of search. Labour search theory provides the grounding for the sample selection corrected simultaneous equations econometric model. In neither OLS nor 2SLS results is evidence found that local unemployment rates affect either reservation wages or the duration of search. These results suggest that policies targeted at alleviating unemployment should focus on increasing the demand for labour rather than hope that such policies will be beneficial if pursued in high-unemployment areas because of their effects on labour force characteristics.     

Effect of cognitive abilities and non-cognitive abilities on labor wages: empirical evidence from the Chinese Employer-Employee Survey

ABSTRACT

The existing literature suggests that worker’s cognitive and non-cognitive abilities have a significant impact on wages. However, presently there is little research in this area of ??China’s labor force, due to scanty data. To this end, this Paper conducted a CEES-based data research, which found that, the cognitive and non-cognitive abilities of male, skilled workers have a greater impact on their wages, as compared with those of the female, unskilled workers. The OLS regression based on the Mincer Wage Equation found that, the impact of non-cognitive abilities on wages is generally larger than that of the cognitive abilities. All cognitive abilities have a positive impact on wages, wherein English proficiency has the greatest elasticity of wages, which is 12.1%. Of all non-cognitive abilities, Conscientiousness has the highest wage elasticity, which is 13.6%, whereas Agreeableness has a negative wage elasticity of ?6.32%.

Abbreviations: CEES: Chinese Employer-Employee Survey OLS: Ordinary least squares     

Classical political economy: the subsistence wage,and job guarantee concerns

Abstract:

In the theoretical framework of classical political economy, including the revisions of Marx and the more recent work of Piero Sraffa and others, the concept of the subsistence wage figures prominently. Here, following a recounting of this concept and demonstrating its significance not only for classical theory but also for larger social concerns, I argue that the “base wage” (as it is sometimes termed) as articulated within a “Job Guarantee” program, is (or should be) comparable to the subsistence wage but requires modification to make it (roughly) equivalent. It will be demonstrated that adherents of the classical approach did not rest their wage theory on a quasi-neoclassical supply–demand approach (with some primitive marginal productivity notion lying behind a supposed demand for labor schedule), but understood wages as socially determined where institutional and historic forces established a normative standard around which market wages gravitated. Such an approach was shared by, among others, Thorstein Veblen and John Maynard Keynes.     

Can Insider Power Affect Employment?

Abstract. Do firms reduce employment when their insiders (established, incumbent employees) claim higher wages? The conventional answer in the theoretical literature is that insider power has no influence on employment, provided that the newly hired employees (entrants) receive their reservation wages. The reason given is that an increase in insider wages gives rise to a countervailing fall in reservation wages, leaving the present value of wage costs unchanged. Our analysis contradicts this conventional answer. We show that, in the context of a stochastic model of the labor market, an increase in insider wages promotes firing in recessions, while leaving hiring in booms unchanged. Thereby insider power reduces average 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.     

"Holding hands at midnight": The paradox of caring labor

Abstract

The gender wage gap in the United States narrowed considerably throughout the 1980s and then more slowly in the 1990s. Using a decomposition methodology and US Current Population Survey data, this study investigates the impact of deindustrialization's continuing shift in employment away from manufacturing to services on the US gender wage gap between 1990 and 2001. The study finds that the widening of the gender wage gap in the service sector caused a slowdown in the narrowing of the US gender wage gap. Within the service sector, two occupational elements affected the growing gender wage gap: women's entry into traditionally male occupations characterized by high wages and high gender wage differentials that resulted in the relative increase in men's wages compared to women's wages in these occupations.     

Active labour market programmes and reservation wages: it is a hazard

This article uses a randomized controlled trial to show that positive earnings effects of a labour market programme can be caused by either a faster return to employment together with a lowering of reservation wages or a more moderate return to employment together with an increase in reservation wages. I model wages and unemployment duration simultaneously in a hazard framework allowing for unobserved heterogeneity.     

Reservation wages of first- and second-generation migrants

We analyse the reservation wages of first- and second-generation migrants, based on rich survey data of the unemployed in Germany. Our results confirm the hypothesis that reservation wages increase over migrant generations and over time, suggesting that the mobility benefit of immigration may be limited in time.     

Wage determination and the gender pay gap: A feminist political economy analysis and decomposition

Abstract

This paper develops a heterodox analytical framework of wage determination and a new method of decomposition of the gender pay gap drawing on Marxian and feminist theories. The proposed framework utilizes two wage equations for the analysis of the gender gap: the first equation refers to average occupational wages and the second to individual wages as deviations from occupational wages. Using a data set for wages from industries in Greece, this paper demonstrates and explains differences in results between this proposed decomposition of the gender pay gap and that of Oaxaca-Blinder, and discusses the merits of this new technique compared to the Brown-Moon-Zoloth method. The authors argue that the main advantage of this proposed method of decomposition over the other two methods is that the proposed method allows for separate estimates of the impact of social and individual gender wage discrimination on the gender pay gap.     

The Spatial Determinants Of Wage Inequality: Evidence From Recent Latina Immigrants In Southern California

Abstract

Recent Latina immigrants to the United States earn lower hourly wages than any other broad demographic group. This paper investigates the role space and scale play in shaping the employment opportunities and wages this group receives in Southern California relative to others there. Results suggest that, although individual factors such as education, experience, and ability to speak English are important, spatial forces also influence wages. Access to jobs, particularly low-skilled jobs and those held by Latinos, as well as ethnic neighborhood networks, explain a large share of the variation in hourly wages. The paper provides evidence that labor-market scales differ across groups within US metropolitan areas, with recent Latina immigrants being more geographically constrained and hence more dependent on local opportunities and resources than other workers, with the exception of black women.     

Technological and Organizational Change and the Employment of Women: Early Twentieth-Century Evidence from the Ohio Manufacturing Sector

Abstract

Using a data set that tracks the employment and wages of male and female production and clerical workers in Ohio from 1914 to 1937, this study finds that among manufacturing establishments, female employment and real wages rose rapidly throughout this period, particularly within clerical occupations. There were also substantial increases in the proportion of women in Ohio's manufacturing workforce, and women's wage increases kept pace with those of men. After matching the employment and wage data to input and output data from Ohio's manufacturing census, the study estimates the parameters for industry group translog production functions. The estimates indicate that Ohio's manufacturers adopted new organizational structures and technologies that favored an increasingly intensive use of female clerical labor. The study performs a counterfactual exercise that illustrates the extent to which non-neutral technological and organizational changes over this period explain the observed increases in the employment and remuneration of female clerical workers.     

Caste discrimination and transaction costs in the labor market: Evidence from rural North India

This paper is an empirical attempt to quantify caste-based discrimination in the labor market using household data taken from rural North India. In the regression analysis, transaction costs associated with entry into the labor market and reservation wages are estimated simultaneously along with market wages. The estimation results provide evidence of the existence of transaction costs in the labor market and discrimination against backward classes with regard to access to regular employment. In line with previous studies, the results suggest that the achievements of India's reservation policy so far have at best been limited. In addition, a comparison between the estimates from the model employed in this paper and conventional (reduced-form) approaches shows that discrimination in labor market entry is likely to be underestimated in the conventional reduced-form approaches.     

Youth reservation wages in Romania: are wage expectations realistic?

Romania has been experiencing difficulties in integrating young people into the labour market in recent years. Moreover, the problem of migration is extremely acute, young people being the most eager to leave the country. Considering also the demographics – declining birth-rates and an aging population, the risk of imbalance is extremely high. Thus, it is important to design strategies targeting young people, helping them find quality jobs so they contribute to the sustainable growth and development of the Romanian economy. In this context, the paper aims to identify the determinants of youth reservation wages and to analyse whether youth wage expectations are too high and prevent the acceptance of available jobs. The article contributes to the explanation of youth unemployment by analysing their behaviour, complementing the existing studies that focus mainly on macroeconomic and institutional factors. The results indicated that young unemployed people really have high reservation wages, expecting more than we estimated to earn on the market, considering their personal characteristics. The main factors influencing their reservation wage are: age, gender, education, intention to emigrate, duration of unemployment, and friends’ wages.     

RESERVATION WAGES AND THE UNION JOB QUEUE: A SAMPLE SELECTION APPROACH

This paper uses a unique data set of unemployed semi-skilled workers to examine the relationship between reservation wages and the decision to queue for a union sector job. Estimation of selected reservation wage equations indicates that the failure of all previous estimates to model the queuing decision results in biased coefficients. Those workers who queue for a union job are subject to a distinct reservation wage formation process which differs from those not queuing. Moreover, a structural estimate of the queuing decision demonstrates that workers with the greatest differences between estimated reservation wages in the union and non-union sector are the most likely to queue. This estimate of the queuing decision stands as one of the few which focus on unemployed workers. Among other results, women and minorities are more likely to queue for union jobs, all else equal.     

An Old-Keynesian Note on Destabilizing Price Flexibility

Tobin's (1975) macrodynamic model on 'recession and depression' is extended by introducing two separate adjustment rules for money wages and the price level. It turns out that sluggish prices and, under an additional assumption, also sticky wages are favourable for local stability of the long-run equilibrium, while a high degree of flexibility tends to be destabilizing. In addition, a disposition to cyclical behaviour is indicated.     

AN EQUILIBRIUM SEARCH MODEL WHEN FIRMS OBSERVE WORKERS' EMPLOYMENT STATUS*

This article considers an equilibrium search model, where firms post wages using information on workers' employment status. Earnings differentials between workers of different employment statuses are driven by firms' ability to discriminate workers' reservation wages. I study how these wage policies depend on firms' and workers' characteristics, and how these policies affect the wage distribution. The model delivers new predictions for the amount of wage dispersion that can be generated with search models and provides a better representation of the left tail of the wage distribution in the presence of a legal minimum wage than standard equilibrium search models.