Offshoring, labour market institutions and the elasticity of labour demand

This paper analyses the evolution of the elasticity of labour demand and the possible role of offshoring therein using industry-level data for a large number of OECD countries. The first main finding is that the wage elasticity of labour demand has increased substantially since 1980, although some of this increase may reflect a trend increase in the speed of adjustment rather than an increase in the long-run wage elasticity. The evidence on the potential contribution of offshoring to raising labour demand elasticity is mixed. No association is found between increases in offshoring and demand elasticity during the second half of the 1990s, but there is a significant cross-sectional association between higher average offshoring intensity during this period and higher demand elasticity. We also find some evidence that strict employment protection legislation weakens the cross-sectional association between offshoring and higher labour demand elasticity, suggesting that the relationship between offshoring and the labour demand elasticity may depend on the national institutional environment.     

Capital account openness and the labour share of income

This paper investigates the relationship between capital accountopenness and the share of labour in national income. Employinga new index of financial openness and a cross-country panelof labour shares available from the United Nations System ofNational Accounts, the author shows a robust negative correlationbetween the degree of openness and the labour share. Althoughthis effect is not present for low income countries, the directnegative relationship holds for all other subsamples and inthe presence of a variety of controls. A plausible explanationis that openness alters the conditions of bargaining betweenlabour and capital. By increasing the bargaining strength ofcapital vis-a-vis labour, increased capital mobility raisesrents accruing to capital. Thus, capital account openness mayreduce labour's share of income in the firm, and thereby, atan economy-wide level, its share of national output.     

Evaluating innovation and labour market relationships: the case of Italy

In this paper the link between labour market flexibility andinnovation is analysed paying particular attention to the differenttechnological regimes of economic activities and the differentgeographical areas of the Italian economy. A dynamic panel dataspecification is used to assess the endogenous relationshipbetween patents, included as a proxy for innovation, and jobturnover and wages, which represent labour market indicators.Our results show that higher job turnover only has a significantand negative impact on patent activities in regional sectorsof Northern Italy, while blue and white collar wages have beengenerally found to have a positive and significant impact oninnovation.     

Import penetration and returns to tasks: recent evidence from the Peruvian labour market

This paper provides original evidence on the impact of import penetration on wages of individuals performing manual/cognitive task-intensive jobs in the Pe     

Lost in transition: the costs and consequences of sectoral labour adjustment

Abstract This paper uses an equilibrium search and matching model to study Canada’s sectoral labour adjustment in 2002–2006 during an increase in global commodity prices and exchange rate appreciation. I estimate economically significant adjustment costs for the aggregate economy in this episode and demonstrate that difficulty in transferring skills between jobs for individual workers can be an important contributor to these aggregate costs. The analysis also demonstrates that the level of unemployment benefits impacts the economy’s sectoral composition, its aggregate productivity, and the speed of its adjustment to shocks.     

Labour market reform and the macroeconomic efficiency of the labour market in Australia

This paper assesses the effects of a decade and a half of labourmarket reform in Australia on labour market flexibility at themacroeconomic level. Increased labour market flexibility isinterpreted as reduced structural unemployment and enhancedefficiency of matching. We use shifts in the Beveridge Curveas a measure of changes in labour market efficiency (followingSolow, R., What is labour-market flexibility? What is it goodfor?, Keynes Lecture, British Academy, London, December, 1997).Time series analysis of unemployment, vacancies and other relevantvariables strongly suggests that changes in the efficiency oflabour market matching over the period reflect the cyclicaleffects of hysteresis rather than the effects of labour marketreform.     

A farewell to critical junctures: Sorting out long-run causality of income and democracy

We consider the empirical relevance of two opposing hypotheses on the causality between income and democracy: The Democratic Transition hypothesis claims that rising incomes cause a transition to democracy, whereas the Critical Junctures hypothesis denies this causal relation. Our empirical strategy is motivated by Unified Growth Theory, which hypothesizes that the present international income differences have roots in the prehistoric past. Thus, we use prehistoric measures of biogeography as instruments for modern income levels, and find a large long-run causal effect of income on the degree of democracy. This result rejects the Critical Junctures hypothesis, which is an important part of the Primacy of Institutions view.     

Illicit drug use and labour market achievement: evidence from the UK

This study, using data from the British Crime Survey (BCS), examines the effect of drug use on occupational achievement. It starts by attempting to overcome the identification problem that results from the limited set of drug use questions presented in the BCS. Taking this into account, and allowing for the endogeneity of drug use in equations for unemployment and labour market outcomes, that a mild positive association with ‘soft’ drugs and occupational achievement is observed that diminishes with age. This relationship holds for males but not for females. In contrast, it is also found that past use of ‘hard’ drugs significantly increases the likelihood of current unemployment, although it appears to be unrelated to occupational success, conditional on achieving employment.     

The disintegrating Canadian labour market? The extent of the market then and now

Abstract.  Analysis of real wages for three occupations in 13 Canadian cities for 1901–50 suggests Canada had a national labour market at least until 1950. However, analysis of real wages for 10 Canadian cities for 1971–2000 yields little evidence favouring integration of Canada's regional labour markets. The apparent lack of labour market integration reflects a weakness of an approach that assumes markets are in equilibrium. Unemployment rates after 1970 suggest that some regional markets may be characterized by excess labour supply. Analysis of relative provincial unemployment rates yields evidence consistent with local labour force adjustment to changing labour market conditions. JEL classification: E24, J61     

Discrimination and Job Quality: the youth labour market in the 1980s

The purpose of this paper is to investigate the extent to which discrimination early in one's career can have lasting effects on job quality even after the discrimination itself disappears. The results show that for young workers in the 1980s, discrimination is a short run phenomenon, and furthermore, the effects disappear relatively quickly. This research makes two contributions to the existing empirical literature on labour market discrimination. First, we broaden the measure of discrimination beyond wages by utilizing the Duncan Index of job quality to measure differences in labour market outcomes. Second, most empirical work has been concentrated on the effects of discrimination at a point in time using cross-sectional data. We develop a dynamic model to measure changes in job quality over time as workers gain experience over their first three years in the permanent labour market. From the results found in our empirical work, we are able to analyze the long run impact of initial discrimination. In other words, our methodology allows us to examine time dependent effects that are not observed in cross-sectional studies.     

Wages and productivity: the role of labour market institutions in OECD countries

In the context of a monetary union, to keep a territorial equilibrium in terms of economic activity and employment, the relationship between real wages and productivity is crucial. In this paper, empirical evidence about the response of wages to productivity is obtained for 20 OECD countries and the role of labour market institutions to explain differences in this response is analysed.     

Comparable worth in a decentralized labour market: the case of Ontario

Abstract.  We document the application of pro‐active pay equity legislation to the private sector of the Canadian province of Ontario in the early 1990s. We report substantial lapses in compliance among smaller firms where the majority of men and women work. We also find that the pay equity law had no effect on aggregate wages in female jobs or on the gender wage gap. This experience provides unique perspectives on (1) the tensions between the workings of a decentralized labour market and the principles of comparable worth and (2) the obstacles to its extension to the private sector. JEL classification: J7, J3     

Federal and union job queues: further evidence from the US labour market

Recent research on union differentials suggests that although the premium to unionization is higher in the private sector, it can hardly be ignored in the federal sector. Consequently, the nature and length of the federal queue may differ between union and non-union sectors. Similarly, the union queue may not necessarily be homogeneous between federal and private sectors. We estimate separate queues for federal-union, federal-non-union and private-union jobs from the same sample. This avoids the problem of simultaneity between the federal queue and the union queue. In addition, it explores several important differences that exist between these queues.     

Efficiency frontier and matching process on the labour market: Evidence from Tunisia

The purpose of this paper is to study the determinants of the inefficient functioning of the Tunisian labour market. The study takes advantage of the recent development in the stochastic frontier techniques and estimates, the matching function for Tunisia using disaggregated data. We include control variables as determinants of matching efficiency and regional disparities. We confirm that the persistently high rate of unemployment is the result of not only excess labour supply but is also related to a shortfall between supply and demand (sector, location, and qualification).     

Glass ceiling and double disadvantage effects: women in the US labour market

Gender pay issues in the US labour market are examined using 1990 and 2000 US Census data for three groups: the native born, immigrants from English-speaking countries and immigrants from non-English-speaking countries. Quantile regression estimates reveal different patterns of wage effects across the wage distribution. Females have lower rates of pay across the entire wage scale. There is minimal evidence of glass ceiling effects. Immigrant women from non-English-speaking countries are argued to experience a double disadvantage effect.     

The effect of shocks to labour market flows on unemployment and participation rates

This article presents an analysis of labour market dynamics, in particular of flows in the labour market and how they interact and affect the evolution of unemployment rates and participation rates, the two main indicators of labour market performance. Our analysis has two special features. First, apart from the two labour market states – employment and unemployment – we consider a third state – out of the labour force. Second, we study net rather than gross flows, where net refers to the balance of flows between any two labour market states. Distinguishing a third state is important because the labour market flows to and from that state are quantitatively important. Focusing on net flows simplifies the complexity of interactions between the flows and allows us to perform a dynamic analysis in a structural vector-autoregression framework. We find that a shock to the net flow from unemployment to employment drives the unemployment rate and the participation rate in opposite directions while a shock to the net flow from not in the labour force to unemployment drives the rates in the same direction.     

Criminal behaviour and youth in the labour market: the case of the pernicious minimum wage

This paper empirically tests the relationship between variations in Uniform Crime Reports (UCR) index crime rates for teenagers 16–19 years of age with changes in the real minimum wage adjusted for industry coverage in the United States for the period 1960–1987. The analysis reveals that there exists a positive relationship between changes in the real minimum wage and teenage criminal homicide, forcible rape, and motor vehicle theft crime rates. These findings are consistent with the empirical evidence concerning the impacts of the minimum wage on youth labour market opportunities and also with the theoretical ad empirical evidence regarding the incidence of criminal activity made as an occupational choice decision formulated under risk and uncertainty. However, the results indicate no impact of the minimum wage on the other teenage UCR index crime rates as found by Hashimoto (1987). The evidence also suggests that variations in real criminal justice expenditures per capita reduce teenage propety crime rates over time. Thus, there exists weak empirical evidence suggesting that policymakers should not only concern themselves with the traditionally known impacts of the minimum wage on youth labour market activities but also with the added social costs these impacts have on the incidence of youth criminal behavior. Matters of data exigencies and issues pertaining to the direction of future research are also discussed.     

Married womens' tastes and the decision to participate in the labour market: results from a fixed effects model

In the paper, we report estimates from two logit models of Women's labour force participation. A model with out fixed effects, estimated from cross-sectional data-indicates a significant postive relation between work experience and particiption. We ask whether the relation is due to a causal influence extered by the former variable on the latter or to a common underlying variable: taste for market attachement. To answer this question. we present results from a fixed effects model estimated from panel data. In this model, the estimated coefficients of experience are insignificant, suggestion that a taste for market attachement underlies both experience and participation is the presence of preschool children.     

Structural change,specialization and regional labour market performance: evidence for the UK

While structural change and regional differences in the pattern of employment specialization are widely perceived to be significant factors in accounting for disparities in the labour market performance of regions in the United Kingdom, there have been relatively few recent attempts to gather detailed evidence on this issue. The current study aims to fill this gap by examining the effects of structural change and associated changes in the pattern of employment specialization on three key indicators of regional labour market performance: the rate of employment growth, the unemployment rate and the rate of nonemployment. The findings indicate that while industry structure has statistically significant effects on regional labour market performance, the quantitative significance of these effects is relatively small.