On compensation for risk aversion and skewness affection in wages

This paper presents extensive empirical testing of the hypothesis that greater post-schooling earnings risk requires higher expected returns. Expanding on this notion, on the basis of utility theory, we predict that workers not only care about risk but also about the skewness in the distribution of the compensation paid: workers exhibit risk aversion and skewness affection. To test these hypotheses, this paper carefully develops various measures of risk and skewness by occupational/educational classification of the worker and finds supportive evidence: for men, wages rise with occupational earnings variance and decrease with skewness, for women only the negative effect of skewness is significant.     

The rise of the middle class: the income gap between salaried employees and workers in Sweden,ca. 1830–1940

ABSTRACT

We present the first comprehensive, long run salary information on Swedish middle-class employees before the twentieth century. Our data include, for instance, school teachers, professors, clerks, policemen and janitors in Stockholm and Sweden, ca. 1830–1940. We use the new data to compare the annual earnings of these middle-class employees with the annual earnings of farm workers, unskilled construction workers and manufacturing workers. The results show that the income gap between the middle class and the working class widen drastically from the mid-nineteenth century to a historically high level during the 1880s and 1890s. The differentials then decreased during the first four decades of the twentieth century. The bulging earnings advantage of middle-class employees vis-à-vis unskilled workers chimes with Kocka’s depiction of the latter half of the nineteenth century as the era of the bourgeoisie.     

Optimal monetary policy in a small open economy with staggered wage and price contracts

We study optimal monetary policy for a small open economy in a model where both domestic prices and wages are sticky due to staggered contracts. The simultaneous presence of the two forms of nominal rigidities introduces an additional trade-off between domestic inflation and the output gap. We derive a second-order approximation to the average welfare losses that can be expressed in terms of the unconditional variances of the output gap, domestic price inflation, and wage inflation. As a consequence, the optimal policy seeks to minimize a weighted average of these variances. We analyze welfare implications of several alternative simple policy rules, and find that domestic price inflation targeting generates relatively large welfare losses, whereas CPI inflation targeting performs nearly as well as the optimal rule.     

Do sticky prices increase real exchange rate volatility at the sector level?

We introduce the real exchange rate volatility curve as a useful device to understand the relationship between price stickiness and the fluctuations in Law of One Price deviations. In the presence of both nominal and real shocks, the theory predicts that the real exchange rate volatility curve is a U-shaped function of the degree of price stickiness. Using sector-level US–European real exchange rate data and frequency of price changes, we estimate the volatility curve and find the predominance of real effects over nominal effects. Good-by-good variance decompositions show that the relative contribution of nominal shocks is smaller at the sector level than what previous studies have found at the aggregate level, consistent with significant averaging out of good-specific real microeconomic shocks.     

Too tall to be smart? The relationship between height and cognitive abilities

Recent research suggests for height–wage premiums because of differentials in cognitive abilities. This note adds to the discussion and examines whether verbal and non-verbal competencies are related to height. The results indicate that height is non-linearly associated to males' abilities.     

Non-separability and sectoral comovement in a sticky price model

This paper resolves the sectoral comovement problem between nondurable and durable outputs that arises in response to a monetary shock in a two-sector sticky price model with flexibly priced durable goods. We analytically demonstrate that the non-separability between aggregate consumption and labor can generate the comovement between nondurable and durable outputs in response to a monetary policy shock. We then estimate the degree of non-separability, together with other parameters, using a Bayesian approach. We find that the non-separable preferences are supported by the data and our estimated model generates the sectoral comovement in response to a monetary shock.     

Endogenous business cycle propagation and the persistence problem: The role of labor-market frictions

Contrasting sharply with a recent trend in DSGE modeling, we propose a business cycle model where frictions and shocks are chosen with parsimony. The model emphasizes a few labor-market frictions and shocks to monetary policy and technology. The model, estimated from U.S. quarterly postwar data, accounts well for important differences in the serial correlation of the growth rates of aggregate quantities, the size of aggregate fluctuations and key comovements, including the correlation between hours and labor productivity. Despite its simplicity, the model offers an answer to the persistence problem (Chari et al., 2000) that does not rely on multiple frictions and adjustment lags or ad hoc backward-looking components. We conclude modern DSGE models need not embed large batteries of frictions and shocks to account for the salient features of postwar business cycles.     

社会网络层次与农民工工资水平——基于身份定位模型的分析

本文在身份定位模型框架下研究社会网络层次对农民工工资水平的影响。基于2009年北京市农民工调查数据的计量结果,支持了高层次社会网络影响归属该网络的农民工、使得后者工资水平提高的假设;支持了高层次社会网络除了帮助农民工找工作之外,也可以在就业后通过影响行为模式和生产率来提高工资水平的假设。本文用倾向得分匹配的平均处置效应处理可能的内生性偏误,结论通过了较为严格的稳健性检验。政府鼓励农民工构建基于城市就业和生活的新型社会关系以及高质量的社会网络,不仅可能提高农民工的劳动生产率和相应的工资水平,而且可能提高整个国家人力资本投资的回报水平和劳动生产率水平。     

Wages,Profits, and Rent‐Sharing in an Open Economy

This paper examines the link between international trade and labor market bargaining power. It reviews simple theories of rent‐sharing in closed and open economies. Earlier studies on the issue of rent‐sharing implicitly assume a closed economy. This assumption may provide some misleading results, especially for studying current developments in the US labor market. Empirical results suggest that the apparent decline in labor’s bargaining power in US manufacturing may be attributable to growing international integration.