MARKUPS AND THE REAL EFFECTS OF VOLATILITY SHOCKS

This article studies the role of endogenous markups in the transmission of volatility shocks in real models. I design a variant of a small open economy model with volatility shocks and firm dynamics that gives rise to endogenous markups. I calibrate this model to match the business cycle facts in emerging economies and show that the impact of volatility shocks is substantially amplified if markups are endogenously time varying. Volatility shocks increase savings, due to precautionary motives, and markups, which act as a wedge that endogenously decreases real wages and labor supply with further negative aggregate dynamics that are absent in the models with constant markups.     

Markups and income inequality: Causal links, 1975-2011

Using data for 20 countries during 1975–2011, this study provides new evidence on the association between the lack of competition, measured by an increase in markups, and income inequality. We find that an increase in markups is positively associated with rising income inequality. More interestingly, not only do extra profits from higher markups accrue to the top-income group, but also, within the top-income group (top 10%), the higher top-income earners (top 1%) tend to benefit disproportionately more than the lower top-income earners (top 5% or 10%). Finally, we highlight the role of labor market policies; the positive relationship between markups and income inequality is less pronounced in countries with better labor protection such as the statutory protection and power of labor unions, generous unemployment benefits, and mandatory minimum wages.     

基于行业视角的广东劳动收入份额实证研究

中国资源配置效率存在地区差异,而目前对劳动收入份额的探讨很少有基于一省或一区的研究。文章结合广东2005-2009年14个行业的劳动报酬数据,用Pooled EGLS方法发掘提升广东省劳动收入份额的行业途径。结果显示,行业规模、工资水平对劳动收入份额增长有正向作用,行业垄断程度则起负向作用,而行业劳动密集程度对该份额的拉动作用存在行业差异性。要提升劳动收入份额,广东应加快推进行业转型升级,降低行业行政垄断程度,着重发展服务业。     

Does automation technology increase wage?

This paper examines the relationship between automation technology and wages. In the model, producers either choose automation or non-automation technology, whichever is more profitable. Furthermore, when producers introduce automation technology, they must pay fixed costs, which differ between industries. The main results of this paper indicate that the increased productivity of automation technology promotes automation, decreases labor income share, and also decreases wages when the level of automation diffusion is sufficiently high.     

Market power and markups: Malign markers for the Australian macroeconomy

Research on markups by Hambur (Treasury Working Paper, 2021) shows that markups in Australia have increased since the turn of the century. This is consistent with findings for other advanced economies over the same period. Australia's most digitally intensive firms increased markups the most. Australian industries with the greatest increase in concentration also recorded the greatest increases in markups. This aligns with other economic evidence around declining dynamism. Over recent decades, market concentration has risen, the start-up rate has dropped, and the share of workers starting a new job has declined. Evidence on markups is consistent with a lack of dynamism in the Australian economy.     

最低工资对中国就业和工资水平的影响

本文以1998—2007年全国各市(地区、自治州、盟)最低工资标准随时间变化的外生差异来识别最低工资上涨与企业平均工资、企业雇佣人数的关系。利用1998—2007年规模以上制造业企业报表数据进行的分析显示,最低工资每上涨10%,制造业企业平均工资将整体上涨0.4%—0.5%。借助2006—2007年福建省最低工资上涨的"准自然实验"本文也证实了该结论。对于不同行业、不同人均资本水平的企业,最低工资上涨的影响也存在异质性。最低工资将更多地增加劳动密集型或人均资本较低企业的平均工资。研究还发现,最低工资每增加10%,制造业企业雇佣人数将显著减少0.6%左右。政府在制定最低工资时应权衡其在收入分配上的积极效果以及其对就业的负面影响。     

The productivity-wage and productivity-employment nexus: a panel data analysis of Indian manufacturing

This article investigates the long-run relationship between labour productivity and employment, and between labour productivity and real wages in the case of the Indian manufacturing sector. The panel data set consists of 17 two-digit manufacturing industries for the period 1973–1974 to 1999–2001. We find that productivity-wages and productivity-employment are panel cointegrated for all industries. We find that both employment and real wages exert a positive effect on labour productivity. We argue that flexible labour market has a significant influence on manufacturing productivity, employment and real wages in the case of Indian manufacturing.     

FDI、劳动异质性与我国劳动收入份额

不同技能劳动的划分一直是劳动力市场的一个重要研究视角,也是难点之一。文章创新性地采用模糊聚类方法测算了我国第二产业中各行业的劳动高技能性,推算了高低劳动技能行业的工资比率,并进一步实证分析了高低劳动技能行业的工资比率、FDI等因素对我国劳动收入份额的影响。研究结果表明:(1)由于高技能劳动一般与资本结合得更为紧密,高低劳动技能行业工资比率的提高抑制了劳动收入份额的上升;(2)FDI引入对我国劳动收入份额也具有负向影响。     

On estimating efficiency differentials between the public and private sectors in a developing economy—Iraq

This study compares the allocational and technical efficiency of private and public firms in three industries in Iraq. The Hicks-neutral index of technology is found to be lower in private firms than in public firms, while the ratio of the marginal product of labor to real wages is about unity in private firms but significantly more than unity in public firms. These findings imply that the public firms in Iraq tend to be more technologically efficient but less allocationally efficient than the private firms.     

International migration and real wages: a resolution note

The authors examine the impact of international labor migration on wages in country of origin. Two types of emigration are distinguished: bundled emigration, which can result in a reduction of real wages; and pure labor emigration, which results in an increase in real wages.     

Transition to market economics: Employment and informal activity in rural areas

According to the neo-liberal model, the high levels of unemployment and collapsing real wages of transition will reallocate labor to new activities. But whether and how households actually reallocate labor is the subject of growing debate. We use survey data from Bulgaria to develop a typology of rural households based on their labor allocation characteristics. We find a diversity of outcomes. A significant share of households experience no change in labor allocation, some shift labor to own commercial enterprises, but a significant minority are displaced from the emerging market economy. Potential for informal activity among these households appears limited. Of great concern is the regional concentration of such households.     

Transition to market economics: Employment and informal activity in rural areas

According to the neo-liberal model, the high levels of unemployment and collapsing real wages of transition will reallocate labor to new activities. But whether and how households actually reallocate labor is the subject of growing debate. We use survey data from Bulgaria to develop a typology of rural households based on their labor allocation characteristics. We find a diversity of outcomes. A significant share of households experience no change in labor allocation, some shift labor to own commercial enterprises, but a significant minority are displaced from the emerging market economy. Potential for informal activity among these households appears limited. Of great concern is the regional concentration of such households.     

The Effect of Changes in Real Exchange Rates on Employment: Evidence from Manufacturing Industries in China, 1980–2002

This paper analyzes the effect of changes in real exchange rate on manufacturing employment. Our theoretical model predicts the positive effect of depreciation of real exchange rate on employment through a firm’s expectation on changes in real exchange rate and the interaction between real exchange rate and a firm’s import and domestic input. Using China’s manufacturing data during the 1980–2003 period, we find that depreciation of real exchange rate promotes employment growth in manufacturing industries, while change in real exchange rate is not a significant factor in promoting wage growth. We also find that an increase in export share offsets partially the effects of real exchange rate on employment and real wages. Translated from Journal of World Economy, 2005, (4): (in Chinese)     

垄断行业工资改革的可行性研究——基于国际垄断行业视角

在垄断行业中,员工的工资一般高于其他行业,表现出收入分配的不平等.引起垄断行业工资问题的原因很多,垄断行业工资问题也对社会经济各方面产生着重要影响,导致公共福利受损,减少了劳动者的流动及其对人力资本的投入,加剧了社会收入的不公平.对于垄断行业工资所引发的种种问题已经受到社会各界的重视,各国政府已开始采取措施解决这些问题,把竞争机制等改革引入垄断行业.     

Agglomeration and Spreading in an Asymmetric World

We study Krugman's core–periphery (CP) model for most general cases of nonidentical regions and fully characterize instant and long‐run equilibria. Assuming immobility of labor, we describe the behavior of equilibrium wages/real wages. Moreover, the relative wages/real wages of industrial workers can both increase and decrease with the population with which they are associated. Under the assumption of industrial labor mobility, possible patterns of economic evolution, as responses to trade freeness, are fully described. We show that in the case of noticeable agricultural asymmetry, all mobile labor inevitably accumulates in countries with larger agricultural populations.     

Real wages and labor-saving technical change: evidence from a panel of manufacturing industries in mature and labor-surplus economies

Recent theories have provided a persuasive account of a key stylized fact of mature economies: the common long-run trends of average real wages and labor productivity, and the ensuing stationarity of functional distribution. Central to these theories is the notion of directed technical change, which claims that a rise in labor costs sparks the adoption of labor-saving innovations. This paper empirically examines a core prediction of these theories, namely that shocks to functional distribution elicit compensatory adjustments in real product wages and labor productivity. Using two disaggregated data-sets of manufacturing industries (EU-Klems and Unido), I find evidence of cointegration and two-way, long-run Granger causality between these two variables. These findings suggest that directed technical change is indeed key for producing stationarity in functional distribution, and they complement the recent empirical literature on distributive cycles and productivity growth. Preliminary evidence from the Unido data-set also suggests the importance of directed technical change in developing countries. To illuminate the empirical procedure, I present a theoretical model of growth and distribution with directed technical change.     

Non-linear adjustment of real wages,employment and output in the UK

We employ the Brock, Dechert and Scheinkman statistic to investigate non-linearity in conditional mean in UK real wages, employment and output, and to fit threshould regression models to the series. The latter porvide reasonable representations for thenon-lineraity in real wages and output but the residuals from the threshold autoregressive model for employment still contain a non-linear component. In a forecast comparison the TAR models performed better than simple autoregressions. Using the lagged share of wages as an error-correction term we find evidence that all three series respond asymmetrically to lagged changes in wage share and other variables. Fore-casts of real wages and employment derived from these models were superior to those derived from standard, symmetric, ECMs.     

Inequality in Pre-Industrial Europe (1260–1850): New Evidence From the Labor Share

The dynamics of economic inequality and its relationship with economic growth in the preindustrial world is increasingly attracting the attention of both economists and economic historians. In this paper, we tackle this theme by introducing new estimates of the labor share in five major European countries (England, France, Holland, Spain, and Portugal) for the period 1250–1850. Our estimates are constructed using an innovative method based on the conversion of real wages in 2011 PPP $. Overall, we find a complex pattern of evolution of the labor share with major fluctuations. Furthermore, using the inequality possibility frontier (IPF) framework, our results suggest that preindustrial Europe was characterized by a negative relationship between the extraction ratio and GDP.     

Real wages,productivity and economic growth in the G7, 1960–2002

Abstract

This paper investigates empirical real wage and productivity dynamics in the G7 countries using annual data for 1960–2002. The findings suggest that the level of labor productivity is positively related to GDP growth in all countries, and real wages are positively related to growth in some of them. The results tend to confirm the ‘profit paradox’. This postulates a positive relationship between economic growth and the aggregate profit share, and suggests that the frequent support of business interests for deflationary economic policies is a puzzle.     

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.