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Book part
Publication date: 11 December 2023

Nicolae Stef and Anthony Terriau

We investigate how firing notification procedures influence wage growth. Using a sample of 33 countries over the period 2006–2015, we show that administrative requirements in…

Abstract

We investigate how firing notification procedures influence wage growth. Using a sample of 33 countries over the period 2006–2015, we show that administrative requirements in cases of dismissal have a positive and significant effect on wage growth. The result is robust even after controlling for the endogeneity of the firing notification restrictions, the involvement of third parties in the wage bargaining process, the minimum wage, the firms' training policy, and the composition of employment. These findings suggest that firing notification procedures foster the growth of wages by increasing the bargaining power of incumbent workers.

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The Economics and Regulation of Digital Markets
Type: Book
ISBN: 978-1-83797-643-0

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Book part
Publication date: 30 March 2006

Audra J. Bowlus and George R. Neuman

Abstract

Details

Structural Models of Wage and Employment Dynamics
Type: Book
ISBN: 978-0-44452-089-0

Book part
Publication date: 23 January 2023

Edward P. Lazear, Kathryn Shaw, Grant Hayes and James Jedras

Wages have been spreading out across workers over time – or in other words, the 90th/50th wage ratio has risen over time. A key question is, has the productivity distribution also…

Abstract

Wages have been spreading out across workers over time – or in other words, the 90th/50th wage ratio has risen over time. A key question is, has the productivity distribution also spread out across worker skill levels over time? Using our calculations of productivity by skill level for the United States, we show that the distributions of both wages and productivity have spread out over time, as the right tail lengthens for both. We add Organization for Economic Co-Operation and Development (OECD) countries, showing that the wage–productivity correlation exists, such that gains in aggregate productivity, or GDP per person, have resulted in higher wages for workers at the top and bottom of the wage distribution. However, across countries, those workers in the upper-income ranks have seen their wages rise the most over time. The most likely international factor explaining these wage increases is the skill-biased technological change of the digital revolution. The new artificial intelligence (AI) revolution that has just begun seems to be having similar skill-biased effects on wages. But this current AI, called “supervised learning,” is relatively similar to past technological change. The AI of the distant future will be “unsupervised learning,” and it could eventually have an effect on the jobs of the most highly skilled.

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50th Celebratory Volume
Type: Book
ISBN: 978-1-80455-126-4

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Book part
Publication date: 25 February 2016

Stephen Machin

Labour markets across the globe have recently been characterized by rising wage inequality, real wage stagnation or both. Most academic work to date considers each in isolation…

Abstract

Labour markets across the globe have recently been characterized by rising wage inequality, real wage stagnation or both. Most academic work to date considers each in isolation, but the research in this paper attempts to pull them together, arguing that higher wage inequality takes on an added significance if real wages of the typical worker are not growing, and showing that inequality rises and real wage slowdowns have gone hand-in-hand with one another due to wages decoupling from productivity in the United States and United Kingdom. The lack of growth of real wages at the median in the United States is also shown to be linked to the declining influence of trade unions.

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Inequality: Causes and Consequences
Type: Book
ISBN: 978-1-78560-810-0

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Article
Publication date: 13 April 2015

Kanika Mahajan

The purpose of this paper is to examine the impact of National Rural Employment Guarantee Scheme (NREGS) on farm sector wage rate. This identification strategy rests on the…

Abstract

Purpose

The purpose of this paper is to examine the impact of National Rural Employment Guarantee Scheme (NREGS) on farm sector wage rate. This identification strategy rests on the assumption that all districts across India would have had similar wage trends in the absence of the program. The author argues that this assumption may not be true due to non-random allocation of districts to the program’s three phases across states and different economic growth paths of the states post the implementation of NREGS.

Design/methodology/approach

To control for overall macroeconomic trends, the author allows for state-level time fixed effects to capture the differences in growth trajectories across districts due to changing economic landscape in the parent-state over time. The author also estimates the expected farm sector wage growth due to the increased public work employment provision using a theoretical model.

Findings

The results, contrary to the existing studies, do not find support for a significantly positive impact of NREGS treatment on private cultivation wage rate. The theoretical model also shows that an increase in public employment work days explains very little of the total growth in cultivation wage post 2004.

Originality/value

This paper looks specifically at farm sector wage growth and the possible impact of NREGS on it, accounting for state specific factors in shaping farm wages. Theoretical estimates are presented to overcome econometric limitations.

Details

Indian Growth and Development Review, vol. 8 no. 1
Type: Research Article
ISSN: 1753-8254

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Article
Publication date: 1 October 2005

Martin Zagler

The purpose of this paper is to theoretically investigate the impact of wage pacts on economic growth.

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Abstract

Purpose

The purpose of this paper is to theoretically investigate the impact of wage pacts on economic growth.

Design/methodology/approach

This paper presents an innovation driven endogenous growth model, where firms and unions bargain over wages.

Findings

Finds that the degree of centralization of the bargaining structure plays a crucial rule for economic performance. Central bargaining, which incorporates the leapfrogging externality incorporated in firm‐level bargaining, will yield lower rates of unemployment for a given rate of economic growth. The increase in labor resources will in turn also yield faster growth rates in a corporatist economy. Indeed, when unions focus on issues other than short term wage increases, they may even outperform the non‐unionized economy, as they can internalize the knowledge externality through long‐term wage moderation pacts.

Research limitations/implications

The paper is theoretical with some anecdotal evidence, and lacks thorough empirical testing.

Practical implications

There are strong implications for economic policy, suggesting the promotion of wage pacts. Before implementation, prior empirical conformation of the results is required.

Originality/value

This is the first paper that demonstrates under which conditions unions can promote economic growth and reduce unemployment through long‐term wage pacts.

Details

Journal of Economic Studies, vol. 32 no. 5
Type: Research Article
ISSN: 0144-3585

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Book part
Publication date: 21 May 2007

Rucker C. Johnson

I use data from employers and longitudinal data from former/current recipients covering the period 1997 to early 2004 to analyze the relationship between job skills, job changes…

Abstract

I use data from employers and longitudinal data from former/current recipients covering the period 1997 to early 2004 to analyze the relationship between job skills, job changes, and the evolution of wages. I analyze the effects of job skill requirements on starting wages, on-the-job training opportunities, wage growth prospects, and job turnover. The results show that jobs of different skill requirements differ in their prospects for earnings growth, independent of the workers who fill these jobs. Furthermore, these differences in wage growth opportunities across jobs are important determinants of workers’ quit propensities (explicitly controlling for unobserved worker heterogeneity). The determinants and consequences of job dynamics are investigated. The results using a multiplicity of methods, including the estimation of a multinomial endogenous switching model of wage growth, show that job changes, continuity of work involvement, and the use of cognitive skills are all critical components of the content of work experience that leads to upward mobility. The results underscore the sensitivity of recipients’ job transition patterns to changes in labor market demand conditions.

Details

Aspects of Worker Well-Being
Type: Book
ISBN: 978-1-84950-473-7

Article
Publication date: 1 April 2001

Magda Kandil

Provides an evaluation of the reality of the German economy after unification, also answers to some of the questions that the post‐unification era has raised, analyzes aggregate…

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Abstract

Provides an evaluation of the reality of the German economy after unification, also answers to some of the questions that the post‐unification era has raised, analyzes aggregate and sectoral data of the former GDR and the Federal Republic of Germany over the period 1970‐1989. The results characterize the former GDR with a steeper supply curve. While the central plan assumed a steady growth of real output over time, it eliminated producers’ incentives to vary capacity utilization in response to demand pressures. Demand pressures proved inflationary without determining conditions in the labor market. In contrast, the market‐oriented plan in West Germany tied output expansion and contraction with demand fluctuations. Consequently, inflationary effects of demand fluctuations appeared moderate in West Germany and real output growth was not sustained at a high level over time. Demand fluctuations determined employment changes in West Germany. Implications of these differences are analyzed in light of the reality of the post‐unification in Germany.

Details

International Journal of Social Economics, vol. 28 no. 3
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 1 November 2006

Magda Kandil

Using quarterly data for a sample of 17 industrial countries, the purpose of this paper is to study asymmetry in the face of monetary shocks compared to government spending shocks.

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Abstract

Purpose

Using quarterly data for a sample of 17 industrial countries, the purpose of this paper is to study asymmetry in the face of monetary shocks compared to government spending shocks.

Design/methodology/approach

The paper outlines demand and supply channels determining the asymmetric effects of monetary and fiscal policies. The time‐series model is presented and an analysis of the difference in the asymmetric effects of monetary and fiscal shocks within countries is presented. There then follows an investigation of the relevance of demand and supply conditions to the asymmetric effects of monetary and fiscal shocks. The implications of asymmetry are contrasted across countries.

Findings

Fluctuations in real output growth, price inflation, wage inflation, and real wage growth vary with respect to anticipated and unanticipated shifts to the money supply, government spending, and the energy price. The asymmetric flexibility of prices appears a major factor in differentiating the expansionary and contractionary effects of fiscal and monetary shocks. Higher price inflation, relative to deflation, exacerbates output contraction, relative to expansion, in the face of monetary shocks. In contrast, larger price deflation, relative to inflation, moderates output contraction, relative to expansion in the face of government spending shocks. The growth of output and the real wage decreases, on average, in the face of monetary variability in many countries. Moreover, the growth of real output and the real wage increases, on average, in the face of government spending variability in many countries. Asymmetry differentiates the effects of monetary and government spending shocks within and across countries. The degree and direction of asymmetry provide a new dimension to differentiate between monetary and fiscal tools in the design of stabilization policies.

Originality/value

The paper's evidence sheds light on the validity of theoretical models explaining asymmetry in the effects of demand‐side stabilization policies. Moreover, the evidence should alert policy makers to the need to relax structural and institutional constraints to maximize the benefits of stabilization policies and minimize the adverse effects on economic variables.

Details

Journal of Economic Studies, vol. 33 no. 6
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 8 July 2014

Adian A. McFarlane, Anupam Das and Murshed Chowdhury

– The purpose of this paper is to examine the relationship among employment, real wage, and output growth in Canada.

Abstract

Purpose

The purpose of this paper is to examine the relationship among employment, real wage, and output growth in Canada.

Design/methodology/approach

Using quarterly data from 1994q2 to 2012q3, this paper employs a vector autoregressive framework while allowing for the derivation of output from its historical maximum over the sample period to affect future output, employment, and real wage growth dynamics.

Findings

There are three main findings: output growth is significant in predicting employment growth and vice versa; real wage growth neither Granger causes employment growth nor output growth, but employment growth Granger causes real wage growth; and non-linear dynamics, captured by the current depth regression (CDR) effect term, through the sign as well as the magnitude of output changes, are important in characterizing the evolution of the relationship among output, employment, and real wage growth.

Practical implications

The findings of this research have significant implications for policy makers. Output and employment growth are important in forecasting each other in Canada. In contrast to the mainstream theory, real growth is insignificant in explaining the future dynamics of employment in Canada. Policies need to be formulated to encourage the growth of employment to ensure sustain output growth.

Originality/value

This study examines empirically the real output, real wage, and employment link in Canada. This study uses the most recently revised GDP data arising from the 2012 Historical Revision of the Canadian System of National Accounts. The econometric methodology involves the standard vector autoregression (VAR) model to which the authors introduce non-linear dynamics through a term that controls for the deviation of output from its preceding historical maximum: the CDR effect.

Details

Journal of Economic Studies, vol. 41 no. 4
Type: Research Article
ISSN: 0144-3585

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