Wage Effects Research Articles

Effects of educational mismatch on wages across industry and occupations: sectoral comparison

PurposeThis study conducts a comparative analysis of the impact of educational mismatch on Spanish wages. This paper aims to focus on the industrial, construction and service sectors at three levels of disaggregation: sector, occupation and gender.Design/methodology/approachThe over-education, required education and under-education (ORU model), was applied to data from the 2018 Spanish Wages Structure Survey conducted by the Spanish National Statistics Institute.FindingsThe industrial sector is the one that best manages over-education by offering the highest returns to each year of over-education. It is also the sector that most values the education of women, particularly those in highly qualified positions.Originality/valueThis study compares the wage effects of educational mismatch in the service, industry and construction sectors. Previous literature has ignored the latter sectors in this field of study, but the results of the present study show that the industrial sectors significantly value and remunerates worker education. Therefore, it may be worthy to focus certain economic and social policies on this sector, to contribute to reducing gender wage gaps and gender employment discrimination in the economy.

Public sector wage compression and wage inequality: gender and geographic heterogeneity

Abstract Studies of wage inequality concentrate on private wages. Public sector wages are typically assumed to contribute to the overall wage equality. We challenge this understanding in an analysis of the relative skill premium in the public versus private sectors. The analysis of heterogeneity across gender and geography is based on rich register data for Norway. The raw data confirm the relative wage compression in the public sector. However, this is a male phenomenon and only prevalent in large cities when unobserved worker and firm characteristics are taken into account. With identification based on shifters between private and public sectors and movers between city-size groups, wage setting for female workers in the public sector increases wage inequality in all regions, particularly in the periphery. The result is consistent with policies promoting the recruitment of high-educated female workers and the expansion of public services in the periphery counterbalancing the desired equality effect of public wages.

Do outside options drive wage inequalities in retained jobs? Evidence from a natural experiment

AbstractWe provide evidence that suggests that a reduction in outside wage options reduces wage increases in retained jobs. We use the natural experiment of a reform that reduced outside wage options for employees in deregulated crafts occupations in comparison to employees in not reformed crafts occupations. To avoid estimation biases from general reform effects on wages, we concentrate on employees active in crafts occupations who worked for employers in the industry and commerce sectors and exclude employees in the crafts sector. Four years after the reform, the wages of treated employees in deregulated crafts were 5 per cent lower than wages of employees in not reformed occupations (control group). The reform, therefore, led to wage differentiation between comparable employees. The wage effects are concentrated in employers with high general wage increases after the reform and they can be found even at individual employers.

Returns to digital skills use, temporary employment, and trade unions in European labour markets

This paper investigates the moderating role of institutional factors on returns to ICT skill usage among different groups of workers in eight European labour markets. Using PIAAC data, the paper leverages the segmentation of contractual status, allowing for heterogeneous wage effects among workers holding permanent and temporary contracts. Furthermore, this study considers how gaps in ICT wage premiums mirror the compositional differences in national-specific trade union densities among contractual groups, demonstrating that wage premiums associated with ICT usage are not univocally defined by task content or demand-supply dynamics for specific sectors and occupations. The results highlight different returns between labour market segments according to national-specific trade union densities of temporary and permanent workers, revealing how the consequences of technological change are shaped by institutional cleavages.

The Effect of Minimum Wage and Per Capita Expenditure on Poverty in Provincial Districts D.I. Yogyakarta

Poverty is a condition when a person lives below the poverty line and is unable to meet his basic needs. Poverty is one of the economic and social problems that is difficult to overcome. Province of D.I. Yogyakarta is the province with the highest poverty on the island of Java and ranks 11th out of 34 of the poorest provinces in Indonesia in 2021. The purpose of this study is to analyze the effect of the minimum wage and per capita expenditure on poverty in the district/cities of the province of D.I. Yogyakarta with the chosen model, namely the Random Effect Model (REM). The data used in this study are panel data for 2013-2021, the data analysis technique used is multiple linear regression with the Generalized Least Square (GLS) method with eviews 12. The results show that simultaneously the minimum wage and per capita expenditure have an effect towards poverty in the district/cities of the Province of D.I Yogyakarta. The results of the study also prove that partially the minimum wage does not have a significant effect on poverty, and per capita expenditure has a significant negative effect on poverty, which means that an increase in per capita expenditure will reduce poverty.

Labour Market Concentration and Worker Mobility: Evidence from Online Vacancies

This paper uses big data on German online vacancies to investigate the impact of local labour market concentration on wages. Herfindahl-Hirschman Indexes are calculated based on the number of vacancies posted by firms in geographic-occupational labour markets. Based on IV results, a 1% increase in labour market concentration decreases posted wages for full-time employees by 0.098%. Workers who can work remotely do not face negative wage effects from labour market concentration suggesting that worker mobility can mitigate the negative wage effects of labour market concentration. While most vacancies occur in competitive labour markets, rural areas exhibit notable concentration.

Impact of Minimum Wage Policy on Income Inequality: Azerbaijan Case

The effects of the minimum wage on income inequality in households were assessed in the article, by using the differences-in-differences method. The authors claim that since the minimum wage in Azerbaijan is much lower than the average wage, as well as because the number of waged (and salaried) employees has a small share in the total employment, the impact of the minimum wage on the total income of households is not felt. However, such an effect can be observed in the income inequality of low-income families. The authors suggest that the minimum wage should be closer to the average wage and the level of self-employment in the country should decrease. This can lead to a reduction in income inequality between households.

The impact of trade on employment: New evidence from a global value chains perspective.

Given the magnitude impact of global value chains (GVCs) in reconstructing the pattern of world trade, its employment implications deserve thorough study. In this paper we explore the impact of GVCs position on employment across countries and its heterogeneous mechanisms. We perform an in-depth theoretical analysis followed by an empirical test using panel data for 56 industries in 42 countries from 2000 to 2014. The results show that enhancing the GVCs position will significantly increase employment, with a more pronounced effect in developing countries. Mechanical tests demonstrate a positive wage effect for developed countries. For developing countries, there is a positive demand effect and a negative factor substitution effect. Heterogeneity tests show that developed countries promote employment primarily by improving the forward GVCs position. Developing countries boost employment mainly by reducing the backward GVCs position. Further research has revealed that employment in developed countries has a clear preference for industries with higher GVCs, crowding out employment in other industries. This paper has enriched research on the employment implications of GVCs position and exploring the possible crowding effect during the evolution of the position of GVCs, which has been informative and insightful for countries in formulating GVCs participation and employment policies.

The Effect of Wages, Infrastructure, and Political Stability on Foreign Investment in Indonesia

The aim of the this research is to examine the impact of wages, infrasrtructure, and political stability on foreign investment in Indonesia. The data used is secondary data in the form of panel data covering 34 province in Indonesia from 2017 to 2021. Dynamic panel regression estimation is used in this work to analyze statistical data using Stata 13 and Eviews 10 software. According to the study’s partial findings wages have positive effect but not significantly on foreign investment in short and long term. In addition, infrastructure has a positive and significant impact on foreign investment both the long and short term. Meanwhile political stability was found to have a negative but insignificant effect on foreign investment, both in short and long term. However, wages, infrastructure, and political stability simultaneously have a significant effect on foreign investment in Indonesia. Therefore, according to this study, the government must continue to increase infrastructure development. In addition, workers and employers must take into account their needs when setting wage rules. Even though the nation is in a dynamic condition, another component that must be considered is related to a solid democracy.

Employees’ Compensation Packages and Profitability of Consumer Goods Firms in Nigeria

The study examined the effect of wages and salaries, bonuses and incentives, and training costs on the return on capital employed of sampled consumer goods firms in Nigeria. Data were collected from annual financial reports of the firms for the period, 2013-2022. The research adopted an ex-post facto research design. The systematic Sampling technique was used to select a total of four (4) companies for the study. The analytical tool used for the study was ordinary least square multiple regression. Results of the test of hypotheses indicate that Wages and Salaries have a negative but significant effect on Return on Capital Employed. Bonuses and Incentives have a negative and insignificant effect on the Return on Capital Employed however; training Cost has a positive and significant effect on the Return on Capital Employed of consumer goods firms in Nigeria. The study suggests that Wages and salaries should not be higher than the value addition made by the employees and labourers, rewards should be directly related to performance and as wanted by the recipient and Training of staff is very pertinent to a company’s overall success.

Revisiting the wage effects of vocational education and training (VET) over the life cycle: The case of Thailand

This paper estimates the potential impact of vocational education on wage differentials between vocational and general graduates over the life cycle in Thailand, using the national Labor Force Survey (LFS) from 2017 to 2022. The returns to vocational education are analyzed at three levels of education: upper secondary, diploma, and college. The inverse-probability-weighted regression adjustment (IPWRA) method is implemented to account for non-random assignment in choosing the academic track. The results show, on average, that vocational educated workers receive higher wages than those with general education, but it has no significant differences by comparing to university graduates in science and engineering with the same years of education. Additionally, the wage premiums associated to vocational education tend to increase at older ages. The empirical evidence corroborates the crucial role of vocational education in increasing long-term earnings and the number of technical-skilled workers in the Thai labor market.

Wage Returns to Field of Study-Occupation Mismatch in Turkish Graduate Labor Market: Quantile Regression Approach

In this paper we estimate the income effects of horizontal mismatch and its interaction with fields of study for Turkish higher education graduates using Turkish Labor Force Survey dataset. After controlling the vertical mismatch to reduce potential bias, our baseline findings show that one point (decrease) increase in (mis)matching index leads to 21.9% wage (penalty) growth. However, the return to the matching varies significantly between fields of study. We also explore extent to which impact of horizontal mismatch is sensitive to the ability levels represented by conditional quantile of the income distribution of graduates. Our quantile regression estimations point us heterogenous matching returns for different quantiles of fields of study. While positive wage effect of matching is significantly valid at the above and below the median income in six and three majors respectively, three majors’ negative matching is at above the median income.

Minimum Wage Employment Effects and Labour Market Concentration

Abstract This paper shows that more highly concentrated labour markets experience more positive employment effects of the minimum wage. In the most concentrated labour markets, employment rises following a minimum wage increase. The paper establishes its main findings by studying the effects of local minimum wage increases on a key low-wage retail sector, and using data on labour market concentration that covers the entirety of the U.S. with fine spatial variation at the occupation level. The results carry over to the fast-food sector and the entire low-wage labour market and are robust to using proxies of labour market concentration available for a broader range of industries, such as the number of establishments and population density. A model of oligopsonistic competition can explain these effects: there is more room to increase wages in high-concentration areas where wages tend to be further below marginal productivity. These findings provide evidence supporting monopsonistic wage setting as an explanation for the near-zero minimum wage employment effect documented in prior work.

The Effect of the Minimum Wage on Employment in Taiwan: Evidence from 2013–2018

The Effect of the Minimum Wage on Employment in Taiwan: Evidence from 2013–2018

A Brief Analysis on the Dynamic Effects of the Minimum Wage on the Economy in Romania

A Brief Analysis on the Dynamic Effects of the Minimum Wage on the Economy in Romania

On-the-job training, wages and digitalisation: evidence from European firms

PurposeThe authors illustrate that there are significant differences in the wage performance across companies in relation to the digital content of their production and training activities.Design/methodology/approachUsing company-level data from three waves of the Continuing Vocational Training Survey (2005, 2010 and 2015), this paper provides an overview on European firms implementing training and the magnitude of their training effort.FindingsThe authors conduct a regression analysis documenting that a wage premium of 9% is associated with companies undertaking training and that an additional 8% is paid by firms arranging training for IT skills-intensive workers. The latter effect is pervasive across sectors and is not strictly related to industry exposure to the digital transformation.Originality/valueThe authors assess the wage effect of training, in relation to the digital content of firm production or job tasks, using a large set of European companies (112,000), from countries with different degree of specialisation and institutional setting. The analysis covers a significant period of time of the last wave of digitalisation (2005, 2010, 2015).

Immigration and occupational downgrading in Colombia

Between 2015–2019, approximately 1.8 million Venezuelans fled an economic and political crisis into neighboring Colombia. Despite being well-educated on average, these migrants disproportionately entered occupations that typically employ less-educated Colombians. I use a model of labor demand with imperfect substitutability between migrants and natives to study the effect of migrant occupational downgrading on native wages and inequality. Counterfactual scenarios reveal that migrant downgrading amplifies the negative wage effect of migration for natives without completed secondary schooling by 30%, and this increases to 80% after allowing for full capital adjustment in the long term. At the same time, migrant downgrading has little consequence for the wages of more-educated natives, who benefit from reduced competition but are harmed by reductions in aggregate productivity. The results highlight the consequences of migrant downgrading for wage inequality and productivity. In developing countries, these consequences are amplified by low imperfect substitutability across education groups.

Determining the Effect of Wage on Employee Satisfaction through Work Environment: A Case Study of Cooperative Office of PRIMKOPPOL, Tebing Tinggi, Indonesia

Various factors, such as wage and work environment, can influence employee job satisfaction. Rewards in the form of wages or salaries are extrinsic rewards that someone, through work activities, can achieve. It can help organizations achieve these workers to work hard to achieve high performance. In contrast, the work environment is the company's physical, social, and psychological life, affecting employee performance and productivity. This research aims to determine the influence of wages on employee satisfaction with the work environment as an intervening variable. In this study, the population was 32 employees of the PRIMKOPPOL cooperative in Tebing Tinggi. Because the target population is less than 100, the sampling technique used is the census method, where the entire population of 32 Tebing Tinggi PRIMKOPPOL Cooperative employees will be used as the research sample. This study also uses path analysis with the help of SPSS for Windows software. The results are that wage has a positive and significant effect on the work environment, wage has a positive and insignificant effect on employee satisfaction, the work environment has a positive and significant effect on employee satisfaction, and the path analysis showed that the work environment could be an intervening variable between wage and employee satisfaction.

Do minimum wages deliver what they promise? Effects of minimum wage on employment, output, and income inequality from occupational choice theory

This paper addresses the unresolved debate on the effects of minimum wages on output, employment, and income inequality by modeling an occupational choice economy calibrated for a representative OECD economy. The minimum wage sets a minimum skill requirement for employees, which reduces the effective labor supply and raises its price. Consequently, salaries increase, business profits fall, and some entrepreneurs transition to solo self-employment. With a minimum-to-average wage ratio of 0.43 (the OECD countries average in 2020), a 10% increase in the minimum wage reduces output, employment, and inequality among employees by 0.2%, 1.0%, and 2.1%, respectively, and increases total income inequality by 0.57%. If the minimum-to-average wage ratio were 0.55, output, employment, and inequality among employees would decrease by 0.87%, 3.55%, and 5.19%, respectively, and income inequality would rise by 2.09%. In summary, the effects are mainly negative, contrary to what is promised, and quantitatively large for high minimum-to-average wage ratios.

대학 졸업자의 IT 자격 보유가 취업과 임금에 미치는 영향분석

The purpose of this study is to identify the current status of university graduates' holding of IT certificate and to determine the effect of holding qualification on employment status and wages. The subjects of analysis were university graduates in August 2018 and February 2019, the data were referenced from GOMS(Graduates Occupational Mobility Survey). For the research method, the Logistic regression analysis and Heckman's two-step analysis were used. The types of IT qualification covered in this study are: Engineer Information Processing, Industrial Engineer Information Processing, Computer Specialist in Spreadsheet & Database, and MOS(Microsoft Office Specialist Qualification). The investigation results are as follows: First, it was found that IT qualification had a negative impact on employment. Second, IT qualification had a positive impact on the wage effect. These result may contribute to how college graduates should prepare for the IT qualification and what the qualification system implies.