Foreign Wage Research Articles

Labour relations at the transition from Fordism to Postfordism, or : why are an increasing number of "foreign foreigners" employed in the Swiss hotel and catering industry today?

Abstract. In the present paper, we discuss a key factor in the entrepreneurial and regional capacity of innovation and competitiveness. By basing our arguments on regulation theory, we consider changes in domestic and foreign wage relations and their regulation as an expression and a reflection of flexible accumulation. In doing so, the dominant discussion of a labour market orientated towards innovation and competitiveness is given a critical dimension that focuses on the winners of the modernisation process as well as on possible losers of the flexibilisation. We analyse the trend by using the hotel and catering industry as an example of an industry which assumes a pioneering role as far as the flexibilisation of the labour market is concerned. The Swiss example represents a national «development path», which is greatly challenged by the new conditions of competitiveness, giving rise to a strong call for a reduction in barriers that stand in the way of flexibilisation. The empirical discussion is the result of qualitative interviews. It shows that the changes are characterised firstly by an increasing diversity of labour relations and secondly by an accenluated lower ethnic stratification of the labour market. Thirdly, the increasing diversity and the ethnic stratification are projected on the regulative level. Fourthly, the analysis leads to an expanded notion of regulation, which not only focuses on the conflict line between capital and labour, but also on the conflict line between ethnicities or nationalities (the dual regulation System). Finally, as a coexistence of Fordist and Postfordist labour relations is apparent, the impact of regulation theory is erilieally examined.

The Real Effects of Transnational Activity upon Investment and Labour Demand within Japan's Machinery Industries

This paper attempts to estimate the real effects of transnational activity upon both investment and labour demand, within each of the five industries that comprise Japan's domestic machinery sector. The study uses a standard model of investment and labour demand, which is augmented to include foreign wages. It is argued that this approach is the most suitable for capturing the real effects of transnational activity, since foreign wages indicate the attractiveness of alternative sites for investment, production and employment. A simultaneous equations estimator is employed and, for each industry, there is evidence that both the behaviour of investment and labour demand are sensitive to foreign wage conditions. The results indicate the extent to which transnational activity has had a real effect upon Japan's domestic machinery sector.

Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training

Foreign-owned firms have consistently been found to pay higher wages than domestic firms to what appear to be equally productive workers in both developed and developing countries alike. Although a number of studies have documented and some attempted to explain this stylized fact, the issue still remains unresolved. In a multi-period bargaining framework we show that if firm specific training is more productive in foreign firms, foreign firm workers will have a steeper wage profile and thus acquire a premium over time. Using a rich employeremployee matched data set we show that the foreign wage premium is only acquired by workers over time spent in the firm and only by those that receive on the job training, thus providing empirical support for a firm specific human capital acquisition explanation.

Social dumping and relocation: is there a case for imposing a social clause?

Public opinion in Europe seems worried about the relocation of production plants toward low wage countries often accused of practicing ‘social dumping’. To reduce the incentives for relocation trade unions proposed the adoption of ‘social clauses’ protecting domestic markets from commodities produced in countries where minimal labor condition are not met. We analyze the effects of the adoption of a social clause in a vertically differentiated Bertrand duopoly. We assess how such a policy affects firms’ relocation decisions in order to be able to assess its welfare implications. We also characterize the optimal social clause policy, both under domestic welfare maximization, and from an efficiency point of view. While we show that a social clause policy cannot be dismissed on domestic (or world) welfare grounds, its case is weaker the higher is the domestic wage and the lower is the foreign wage.

Foreign Exchange Intervention For Internal Balance

This paper is concerned with the optimal combination of sterilization and wage Indexation in a small open economy subject to various disturbances. In most cases the Effects of these policy instruments are interdependent such that they act like a single Instrument. At the optimum, in addition to the well-known substitutability of foreign Exchange intervention and wage indexation , the complementarity of foreign exchange Intervention and sterilization is obtained. The relationship between the degree of Capital mobility and the optimal combination of the policy instruments is also examined. [E52, F4]

Domestic Jobs and Foreign Wages

It is plausible that the labour demand decisions of multinational corporations (MNCs) depend not only on domestic, but also on foreign labour costs. This hypothesis is tested by estimating labour demand equations for a sample of Swedish MNCs. Indeed, higher foreign costs increase an MNC's Swedish employment and reduce its foreign employment. As MNCs become more important in many OECD countries, the responsiveness of domestic output and employment to foreign labour costs is likely to increase.

Monopoly Unions and Corporatism: Implications for Strategic Trade Policy

This paper analyzes the effects of corporatism on wage, employment, and optimal trade policy in the context of international market share rivalry. A Striking result of the paper is that when an optimal (Nash)subsidy is in place, wages, employment and the level of the optimal export subsidy itself become independent of the degree of corporatism. This result breaks down under free trade or when domestic policy makers endogenize the foreign wage, yielding in the familiar negative relationship between the degree of corporatism and wages. [F13, J51]

Some implications of external labour mobility for the development of micro‐states

Uses a one‐sector model to investigate how external labour mobility can affect the economic performance of micro‐states. In the absence of restrictions on labour market flows between a micro‐state and a larger economy, the micro‐state becomes virtually an extension of the large economy. It may expand or contract in total size relative to the larger economy, and gain or lose population accordingly; but the linkage of its level of real wages to the level of real wages in the larger economy constrains opportunities for independent growth in labour productivity and hence in output per capita. A labour‐exporting micro‐state will experience a more autonomous form of economic development when a binding quota on emigration detaches the domestic real wage from the foreign real wage. However, per capita growth is likely to be of a lower base than under conditions of unrestricted access.

International Macroeconomic Interdependence and International Migration of Labour

SUMMARY In the modem world of open economies, interna­tional labour flows are large, increasing andvolatile. These stylized facts have made interna­tional migration of labour an issue of increasingimportance in international economics. Indeed, inrecent years there has been an expansion of thealready vast literature on international migration oflabour (IML). This literature is characterized by avariety of research interests reflecting the differentaspects of international migration.While the issue of international migration hasbeen given much attention recently, it has hardlybeen analysed in the context of a macroeconomicframework.The purpose of this paper is to explore interna­tional macroeconomic interdependence in the pre­sence of international labourflows. In particular, weinvestigate the role of international migration oflabour in the transmission of fiscal disturbancesbetween countries. CCC 1076-9307/96/020133-15 © 1996 by John Wiley & Sons, Ltd. Toincorporateinternational migration into a two­coutnry framework we follow the literature onlabourmigrationin making three assumptions: first,that international migration is generated by realconsumption-wage differentials between the twocountries; second, that migration is a continuousprocess taking place over time; and, third, at anypointin time, labour supplyin each countryis fixedby the past decisions of workersk about migration,and each country's workforce is fully employed.This last assumption, often madein the literature ofinternational migration is, also, made here forpurposes of analytical tractability.With a fixed labour supply in the short run andwithoutnominal rigidities, an unanticipated foreignfiscal contraction leads to a real exchange rateappreciation buthas no impact on employment andoutput at home and abroad. Over time, however,the appreciation of the real exchange rate, bylowering the foreign real consumption wage rela­tive to the home real consumption wage, willgenerate a net flow of labour from the foreign

Protectionism and Wage Resistance:A Two Country Analysis

This paper examines the macroeconomic effects of tariffs in a two-country monetary optimizing model. With universal real wage rigidity, a tariff is likely to be more contractionary, (i) the larger the proportion of the labor force employed in the exportable sector, (ii) the smaller the share of expenditure on the exportable, and (iii) the lower (higher) the employment elasticity in the importable (exportable) industry. Under complete specialization in production, a tariff is contractionary domestically and beggar-thy-neighbor internationally, independent of the foreign wage behavior. [F13]

The potential benefits of reallocation of government subsidies in Bangladesh

AbstractIn this study subsidies are treated as both an element of government expenditure and a source of household income. The impacts of reallocating existing subsidy expenditure to selected alternatives are estimated upon factors such as growth, employment, personal saving indirect tax and import using a semi‐closed input‐output model. The results indicate substantial scope for deriving additional benefits by reallocating the existing subsidies on foreign wage earnings and urban food ration (enjoyed by the richer classes) to fertilizer, foodgrain procurement or rural food rations (enjoyed by the poorer classes). Reallocation of fertilizer or rural food ration subsidies have no benefits. The benefits of reallocation to production activities are higher than for consumption activities.

Perspectives on ‘buy-outs’ and the Ramaswami effect

In a simple two-factor, one commodity model in which foreign labor can be hired at low foreign wage rates and technology is common to both countries, optimal strategy at home involves hiring almost all factors abroad at their autarky prices — a ‘buy-out’ strategy. This paper shows that when technologies differ, partial or, times, complete buy-out of factors from the technologically superior country may still be optimal. Alternatively, a partial buy-out may be appropriate when there exists a third internationally immobile productive factor.

International Trade and Worker Rights

INTERNATIONAL TRADE AND WORKER RIGHTS Steve Ckamovâz UNKING WORKER RIGHTS TO INTERNATIONAL TRADE is not a new idea. Its roots stretch back into the nineteenth century in both Europe and the United States. The earliest congressional attention to the issue came in 1890, when the McKinley Tariff prohibited imports manufactured by convict labor. Despite this long history, the rapid reemergence of worker rights as an issue in U.S. trade policy in the last few years has surprised trade and labor experts alike. Consider how quickly events have moved. Since 1983 the U.S. government has applied a labor standard to four trade or investment laws: in 1983, to the Caribbean Basin Initiative (CBI); in 1984, to the Generalized System of Preferences (GSP); in 1985, to the Anti-Apartheid sanctions against South Africa and to the operations of the Overseas Private Investment Corporation (OPIC). In 1986, the U.S. House of Representatives passed the Trade and International Economic Policy Reform Act (H.R. 4800), which would make the denial of "internationally recognized worker rights" by foreign governments an unfair trade practice subject to possible U.S. countermeasures.1 Used in the context of international trade, the term "worker rights" is of recent vintage. In the nineteenth century the issue of unfair competition stemming from the poor conditions of foreign employment was known as the "pauper labor" problem. At the World Economic Conference of 1927 this export practice was termed "social dumping." When the Charter of the International Trade Organization was completed in 1. H.R. 4800, 99th Cong., 2d sess., 22 May 1986, Section 112 (5). Steve Charnovitz is an international relations officer at the U.S. Department of Labor. He has recently written on international trade issues for theJournal of World Trade Law and the California Management Review. The views expressed here are not necessarily endorsed by the Department of Labor. 185 186 SAIS REVIEW 1948 under United Nations auspices, it included a special article under the rubric of "Fair Labor Standards." Although the transformation of the longtime concern about foreign working conditions into an assertion that all workers possess certain "rights" is a decidedly contemporary approach, the ideals invoked by these different terms have remained fairly constant over the years. Basically, there are two motivations behind worker rights. One is the argument that domestic workers should not have to compete against foreign goods produced by coerced or sweated labor. The other is the belief that improving conditions of labor will advance social justice. While the emphasis placed on these motivations by worker rights advocates has shifted over the years, both ideals have always been present. WHY HAS THE ISSUE OF WORKER RIGHTS suddenly achieved such prominence in U.S. trade policy? Mainly because worker rights stands at the nexus of two very important issues — unfair trade and human rights. First the trade problem: The mushrooming trade deficits of the mid-1980s and the concomitant increase in U.S. industrial unemployment have necessitated an examination of the factors that give foreign countries their competitive edge. One obvious factor is that many of these countries have the advantage of very low labor costs, often less than 15 percent of U.S. wages. While lower labor costs established by a free market might be viewed as a legitimate comparative advantage, some of these foreign wages are, in reality, set by government policies that ban unions or otherwise inhibit workers from seeking a just wage. Moreover, while U.S. manufacturers are bound by certain minimum standards for child labor and employee hours, foreign competitors are sometimes free to extract whatever toil they can from whoever will provide it. Unfair or repressive labor laws can thus confer real benefits to foreign producers. Implicit subsidies in the form of unfair labor standards can make exports as artificially advantageous as do explicit subsidies, such as low-interest loans or export rebates. Yet while these subsidies are punishable under U.S. trade law through the imposition of countervailing duties, labor subsidies are not. Conversely, the suppression of local labor costs can effectively protect the domestic market by making home goods artificially cheap. Repressive labor laws can thus serve as a type of nontariff barrier. The...

Immigrant decisions concerning duration of stay and migratory frequency

The temporary and repetitive character of contemporary labor migration is explained by assuming that immigrants have a preference for location. A life-cycle model of immigrant behavior is developed to determine net lifetime income, total time allocated to home-country and foreign-country residence, and the number of migratory trips. Because of income effects, home wages and foreign wages are not symmetric in their effect on the location of work effort. It is also shown that changes in travelling costs have predictable consequences for the number of border crossings, but not for the total time spent in the foreign labor market.

Wages, Relative Prices and the Choice between Fixed and Flexible Exchange Rates

This paper reexamines the choice between fixed and flexible rates to take into account wage indexation and flexible prices. The model employed is of a small open economy faced by monetary and aggregate demand disturbances originating at ham and abroad. Aggregate supply behavior in this &el varies depending upon whether wages are set in one-period labor contracts or are indexed to current changes in the general price level, Two central conclusions emerge from the analysis. First, for all disturbances the difference in output variation between fixed and flexible rates is dependent upon the degree of wage indexation, being proportional to one minus the degree of wage indexation in the domestic economy. Thus the more highly indexed the economy, the less difference the choice of exchange rate regime makes to output variation, Secondly, the effect of foreign disturbances on the domestic economy depends as much on foreign wage and price behavior as domestic. If the rest of the world is fully indexed, flexible rates insulate the domestic country completely from foreign monetary disturbances, If the rest of the world is more highly indexed than the domestic country, then for high price elasticities at least, a flexible rate dampens the output variation associated with foreign demand disturbances.

Myth, Methodology, and Mathematics: Rorschach in the Trobriands

relationship between sending and receiving societies is one of asymmetrical dependency; labor migration is a means to feed growth in the core while stimulating decay and perserving stagnant institutions on the periphery. Migrants, since they function as lower class laborers abroad, do not bring home skills applicable to rural revitalization. Through various mechanisms the banking system, consumption habits of the migrants, transfer of rents, etc.--remittances gravitate away from sending villages almost as soon as they arrive. The absence of the young creates labor shortages in both the primary and secondary sectors, leaves the elderly and children with a greater burden in agriculture, and villagers left behind become dependent on foreign wage earnings of kinsmen. This often fosters a decline in

Racial Discrimination and Trade Unionism

Racial Discrimination and Trade Unionism