General Wage Research Articles

Parental Employment at the Onset of the Pandemic: Effects of Lockdowns and Government Policies

The COVID-19 pandemic had disproportionate impacts on women’s employment, especially for mothers with school-age and younger children.However, the impacts likely varied depending on the type of policy response adopted by various governments. New Zealand presents a unique policy setting in which one of the strictest lockdown restrictions was combined with a generous wage subsidy scheme to secure employment. We utilize tax records to compare employment patterns of parents from the pandemic period (treatment group) to similar parents from a recent pre-pandemic period (control group). For mothers whose youngest child is aged between one and 12, we find a 1-2-percentage point decline in the likelihood of being employed in the first six months of the pandemic; for fathers, we hardly see any significant changes in employment. Additionally, the decline in mothers’ employment rates is mainly driven by those not employed in the month before the lockdown. We also find similar employment patterns for future parents who had no children during the evaluation period. This indicates that the adverse labour market impacts are not uniquely experienced by mothers, but by women in general.

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.

An experimental study on the effect of penalties on employers' trust and employees' reciprocity and the moderating effect of communication

PurposeThere is growing scholarly interest in the use of penalty in employment contracts which reduce employees' pay if the employee's performance does not meet a pre-specified performance threshold. Prior accounting research has focused exclusively on the effect of penalty on employee performance. In this study, the authors extend earlier research by examining how penalty affects the employers' wage offers. Prior research suggests that employers' generous wage offers in employment contracts are normally translated as trust by employees who in turn reciprocate with higher effort. The authors present a theory that predicts penalty reduces employers' wage offers. Then, the authors propose unrestricted communication between employers and employees as a potential moderator for the negative effect of penalty on trust and reciprocity.Design/methodology/approachThe authors implement a controlled lab experiment with a 2 × 3 experimental design (Penalty: Present and Absent; and Communication: None, One-Way and Two-Way).FindingsThe authors develop their predictions by utilizing insights from motivational-crowding and organizational communication theories. The authors hypothesize and find evidence that employers' ability to penalize employees can reduce employers' motivation to offer generous wages. As a result, reduced trust demotivates employees to provide high effort. However, the authors find that a two-way communication moderates the negative effect of penalties by restoring trust, thereby, increasing reciprocity. Finally, the authors find evidence that relationship-oriented messages explain the moderating effect of communication.Research limitations/implicationsThis study is subject to limitations inherent in all experimental studies. The decisions in the study experiment are less complex than those found in practice. Moreover, there are significantly higher costs and potential benefits to shirk on effort in practice. The authors encourage future research on other organizational features that would influence the generalizability of their theory and results. Nonetheless, this study makes an important contribution to the literature on trust, reciprocity, gift-exchange contracts, managerial controls and communication.Practical implicationsThis paper has several important implications for theory and practice. The authors show that the presence of penalty may not automatically result in increasing employees' effort level, contrary to traditional economic theory predictions. This effect is driven mainly by the crowding out effect of a penalty on employers' desire to signal trust. Therefore, the presence of an open communication channel may become an important tool to reverse the psychological effect of reduced trust when penalty is present. Therefore, the study's findings contribute to the trust–reciprocity literature on how management control system influences employers' and employees' behavior. These findings are especially germane given the trend in the workplace toward establishing open communication at different levels within the firm hierarchy. The study also contributes to the literature on trust–reciprocity as critical informal controls and social norms in accounting practices (Bicchieri, 2006; Stevens, 2019), shedding light on how firms may influence employees' reciprocity in management control practices and induce them to act in line with the firm's objectives by opening communication channels.Originality/valuePrior accounting research document that penalty in employment contracts increases employee performance due to loss aversion. The study, however, demonstrates that the positive effect of penalty is not sustained in a gift-exchange contract. Specifically, the study's experimental results provide evidence that the availability of penalties can psychologically change the way employers perceive their decisions on offering generous wages (i.e. trust) and consequently reduce employees' reciprocation of high effort levels. Yet, the authors propose a two-way communication as a restorative mechanism for the lost trust. Implications for theory and practice are discussed.

Gender wage differential in the labour market of Bhutan (2009-2022)

This study investigated striking gender wage differentials trend in Bhutan between 2009 and 2022. In order to decompose the gender wage differentials, we used household level micro-data of Labor Force Survey (LFS), which was conducted by then Ministry of Labor and Human Resources (MoLHR) and National Statistics Bureau (NSB). The methodology estimates the sources of gender wage differentials by segregating gender-specific factors and general wage structure factors. The explanatory variables like women’s labor market skills (education, work experience) and women’s choice into certain occupational and industrial groups; and treatment towards women employees by employers (i.e., discrimination) are categorized into gender-specific factors. Whereas, the sum of observed prices of labor market skills (education and work experience) and price of women’s segregation into certain occupational and industrial groups and unobserved prices were termed wage structure factors. The result shows that gap in education and women’s choice into low paying jobs increased gender wage differentials. However, increase in women’s work experience narrowed the gender wage differential. Therefore, the widening gender wage differentials resulted from gender-specific factors by huge margin. The findings from this study will help decision and policy makers in developing policies which helps narrowing education and skills gaps between men and women. In addition, it will also help in drafting policies which helps women in getting better paying jobs.

Recruitment Policies, Job-Filling Rates, and Matching Efficiency

Abstract Recruitment intensity is important for the matching process in the labor market. Using unique linked survey–administrative data, we investigate the relationships between hiring and recruitment policies at the establishment level. Faster hiring goes along with higher search effort, lower hiring standards, and more generous wages. We develop a directed search model that links these patterns to the employment adjustments of heterogeneous firms. The model provides a novel structural decomposition of the matching function that we use to evaluate the relative importance of these recruitment policies at the aggregate level. The calibrated model shows that hiring standards play an important role in explaining differences in matching efficiency across labor markets defined as region/skill cross-products and for the impact of labor market policy, whereas search effort and wage policies play only a minor role.

How does the architecture in the movie Parasite help portray the social class differences?

Social class difference is the central plot in the film “Parasite”. The movie shows the difference in lifestyles of the upper-class and lower-class. One way it does so is through the architecture portrayed in it, which is precisely what this research paper focuses upon. The subthemes of architecture chosen for this paper include spatial elevation, interior orientation, and perspective of the outside world from the upper-class and lower-class streams. Different points are characterized into these three groups and are explored as a whole in the film. This research paper also tries to identify why a certain setting has been used, why has the layout been made a certain way, and why has a certain object been placed in a particular spot. All the answers to these questions mainly point in the direction of creating an empathetic response from the audience. This refers to the audience feeling sorry for the low-income Kim household and hence actively depicting their plight. As the film is set in South Korea, it can be derived that it not only highlights the general wage gap but rather specifically the one in Korea as it is filled with poverty and unequally distributed income. Moreover, architecture itself might have been one chosen medium to bring the social difference to notice as it is very subtle in nature. It makes the audience sympathize without them even realizing when or why. 

Who suffers from COVID-19 shock? Labour market risk and wage inequality in China

ABSTRACT Through an online survey from 2020, this study aims to investigate how labour market status and occupational factors shape the risk of wage drops resultant of the COVID-19 outbreak. Quantitative evidence shows the risk is amplified for lower-educated labourers working in administrative positions, and affiliated to the traditional service sector and foreign invested enterprises (FIE) and they are more likely to experience earning reduction. COVID-19 in China witnesses a significantly downward trend of labours` wage and general wage inequality has slightly eased. This study calls for policy shift in direct financial subsidies to workers to mitigate labours’ risk.

The Role of Circumstances in The Differentiation of Russian Wages

The purpose of this study is to determine the influence of circumstances (opportunities) and efforts on the wages differentiation of Russian citizens. Research objectives: identification of factors of circumstances, quantitative assessment of their contribution to the wages of Russians and their individual income groups. The research is based on the HSE RLMS data for 2004 and 2018 and LITS-III data for 2016. We applied parametric methods of regression analysis, the Morduch-Sicular method of inequality decomposition, as well as the construction of quantile regressions. As a result of the study, we obtained assessments of the contribution of circumstances to wages inequality of the Russian population. We found that income inequality in the Russian labour market was primarily determined by the regional factor, to a lesser extent by the employment sector and the gender of the respondents. The least contribution to inequality was made by the factor of the employment formality. The influence of parents’ education on future earnings of offspring was also negligible – according to the model based on the LITS-III sample. The reduction in the contribution of circumstances to the general wage inequality in Russia in 2004–2018 was mainly due to a decrease in interregional differences in wages, where an active government policy of income redistribution played a significant role. The influence of circumstances on wage inequality was uneven in different quantiles of the distribution scale. In particular, employment in the metropolitan area or in the oil and gas sector has been most beneficial to high-income groups of workers. At the same time, parents’ education had the least and even negative effect on the earnings of the highest-paid people, which can be explained by the peculiarities of the formation of the modern Russian elite. The results of the study are applicable for conducting an effective social policy of the state.

Theory of Fair Wage Setting (TFWS)

It has been more than two hundred years many theories related wage determination from supply-side (economics) and demand-side (industrial relation) have been introduced but all are criticized still, no satisfactory wage theory is introduced because markets do not work in reality as the theories assumed to be, on ground reality markets are segmented and complex, there are also many other factors beyond the supply and demand of labour, custom and culture that are determined and influence wages. TFWS matches with real world behaviour and human nature and contributes. To fill gaps this study aims to come out with a new theory name fair wage setting theory (TFWS). To achieve the objective, qualitative research is used while Semi-structured interviews were conducted by applying snowball sampling technique. Previous literature was also treated as a secondary data. This study reveals that, existing general wage determination and minimum wage criteria are the rooted issues that further creates problems like hours of work, union, debt behaviour, productivity and training, youth, taxes, pay settlements, benefits system, nature of non-compliance, employment, informality, income inequality or poverty gender pay gaps etc. To set the fair wage rate, role of timely paid wage, court of employee and employer and government involvement are compulsory. TFWS divided wage determination into parts which are “fix wage” that includes living cost on the economic level and other is the “variable wage” that includes employee contribution. TFWS is significant as it based on the real world. More present study contributes, socially, politically, ethically and economically on global level.

Farm labor productivity and the impact of mechanization

AbstractThere is a chronic shortage of agricultural labor in the US. Although growers increasingly turn to guest‐worker programs to meet their labor needs, few regard immigrant workers as a viable long‐term solution. Many producers of labor‐intensive agricultural commodities regard mechanization as a clear long‐term solution, making the slow rate of adoption of mechanized harvesting equipment in the US an empirical puzzle. In this article, we demonstrate that wage‐setting farmers have an incentive to “overmechanize,” or employ more than the cost‐minimizing level of capital when capital and labor are substitutes, but “undermechanize” when labor and capital are technical complements. This outcome can cause agricultural labor problems to persist under complementarity. To assess the potential role of farm under investment in labor augmenting capital equipment, we examine labor market outcomes following the adoption of non‐autonomous harvesting aids on a large strawberry farm in Central California. We develop an econometric model of peer‐affected productivity that controls for the group performance of farm workers operating in crews and find that mechanical aids complement labor in strawberry production, a finding that helps explain not only the relative lack of mechanized harvesting in strawberry production but, more generally, the persistent productivity gap in agricultural industries. We examine the broader implications of our theory for the slow rate of adoption of mechanical harvesting technologies in US agriculture by comparing general wage trends across several labor‐intensive and non‐labor‐intensive industries in California.

Labor allocation dynamics, problem, and strategy for plantation development in Indonesia

Women have important role in farming activities they have and running their household. This paper aims to analyze gender-based working time allocation in farming plantation to support the fifth SDGs “gender equality”. The data source was from a micro panel data survey of the National Farmers Panel (PATANAS) done by the Indonesian Center for Agricultural Socio Economic and Policy Studies, Ministry of Agriculture, in 2009 and 2018. The qualitative research was adopted, data analyzed descriptively by comparing results in 2009 and 2018. The results showed that the time allocation for female workers outside the family per hectare in 2018 increased compared to 2009 for sugarcane, rubber, and cacao commodities. The allocation of labor time in women’s families also increased in sugarcane (+ 37%) and rubber (+ 33%) but decreased for cacao (-55%) and oil palm (-42%) because were replaced by labor from outside the family. The allocation of time for labor within the family and outside the family in both 2009 and 2018 was dominated by male workers. Male and female laborer have certain activity in plantation farming and in general wages of male laborers are higher than those of women. In 2009 the labor wage difference was IDR 5,163 and getting higher in 2018 ranging from IDR 6,048 (cacao) to IDR 9,302 (sugarcane). Suggested that to increase the participation of women in plantation farming, special improvement should be addressed to women’s capacities in technical, managerial, wages system and problems of women’s working on plantations which showed increasing labor.

The Interactive Effect of Punishment and Communication on Trust and Reciprocity: An Experimental Examination in a Gift-Exchange Setting

A “gift-exchange” contract is a contract in which employers’ trust (by offering a generous wage) and employees’ reciprocity (by reacting to the wage with high effort) is a commonly studied contract in the accounting and economics literatures. In this study, we use a controlled lab experiment to examine how two important organizational features impact the effectiveness of the gift-exchange contract: A managerial control which punishes employees for shirking on effort, and a free-form communication between employers and employees. Building on motivational-crowding theory, we hypothesize that a punishment control makes employers feel trust is no longer necessary, as a result, reduces employers’ wage offers. Consequently, we predict that punishment does not foster employees’ reciprocity as employers no longer signal trust. However, when an informal communication channel is present between employers and employees, we predict that communication restores trust and reciprocity when punishment is in place. Our experimental results support our predictions that punishment controls reduce both trust and reciprocity. We also find that communication helps improving trust-reciprocity when punishment is present. Furthermore, the two-way communication (in which both parties communicate with each other) is superior to the one-way communication in increasing employers’ trust and employees’ reciprocity. Implications for theory and practice are discussed.

Recruitment Policies, Job-Filling Rates and Matching Efficiency

Recruitment behavior is important for the matching process in the labor market. Using unique linked survey-administrative data, we explore the relationships between hiring and recruitment policies. Faster hiring goes along with higher search effort, lower hiring standards and more generous wages. To analyze the mechanisms behind these patterns, we develop a directed search model in which firms use different recruitment margins in response to productivity shocks. The calibrated model points to an important role of hiring standards for matching efficiency and for the impact of labor market policy, whereas search effort and wage policies play only a minor role.

Farm Labor Productivity and the Effect of Mechanization

There is a chronic shortage of agricultural labor in the US. While growers are increasingly turning to guest-worker programs to meet their labor needs, few regard immigrant workers as a viable long-term solution. Further, many producers of labor-intensive agricultural commodities are considering mechanized solutions, the slow rate of adoption of mechanized harvesting equipment in the US remains an empirical puzzle. In this paper, we demonstrate that wage-setting farmers have an incentive to over-mechanize, or employ more than the cost-minimizing level of capital when capital and labor are substitutes, but under-mechanize when labor and capital are technical complements. To test this theory, we estimate the marginal value of augmenting labor with non-autonomous harvesting aids on a large strawberry farm in Central California using an econometric model of peer-affected productivity that controls for the group performance of farm workers operating in crews. Our findings indicate that mechanical aids complement labor in strawberry production, an outcome that helps explain the persistent productivity gap between agricultural and non-agricultural industries, and why the adoption of mechanization has been relatively slow. We confirm the broader implications of our theory for the apparent slow adoption of mechanical harvesting technologies in US agriculture by comparing general wage trends across several labor-intensive and non-labor-intensive industries in California.

Economics and Statistics Experts in Wage and Hour Litigation

Complex wage and hour litigation often involves an enormous amount of time records, payroll data, and other related information. Sorting and analyzing the mountain of data from numerous sources can be a colossal and convoluted task. To add to it, there may be gaps of missing employment information that requires some sort of extrapolation or scientifically-backed assumptions to be made in order to assess damages or liability. In this paper, we discuss general wage and hour data management issues, sampling and surveying, and the concept of statistical significance in employment and wage and hour litigation, as well as provide a case study as an example of the use of sampling and surveys in an overtime mis-classification case.

Politicizing the Minimum Wage: Wage Councils, Worker Mobilization, and Local Elections in Indonesia

Indonesia’s weak labor movement transformed local wage councils from institutions of wage restraint into institutions that delivered generous wage increases. This article argues that the arrival of direct elections created an opportunity for unions to leverage elections to alter the balance of power on the wage councils. Activating that leverage required increased contentiousness and coordination among unions. As unions mobilized around wages, conflict with capital intensified and produced disruptive protests that led incumbents to side with workers. Unions also developed innovative tactics to sustain momentum in nonelection years. As unions turned the wage councils in their favor, employers fought back by shifting the scale of the conflict to the national level; the result was the recentralization of wage setting and more modest increases. In a global context of ever weakening organized labor, the Indonesian case shows how weak unions can gain power by mobilizing politically at the local level.

WORKING CONDITIONS AS A FACTOR OF PRODUCTIVITY IN SMES // RADNI USLOVI KAO FAKTOR PRODUKTIVNOSTI U MALIM I SREDNJIM PREDUZEĆIMA

The theoretical framework by Diamond, Mortensen and Pissarides (Nobel Award in Economic Sciences, 2010) shows us how generous wages can determine the success in filling job vacancies. The empirical evidence is convincing: larger and more profitable enterprises pay higher wages. Nowadays, large leader companies are investing not only in paying efficient wages to prevent shirking, but also in the improvement of working conditions and even taking a rigorous analytical approach to etiquette. It is a common fact that small and medium-sized enterprises (SMEs) cannot compete in the same way with these high standards. However, recent examples have shown that a suitable work environment, techniques for reducing the stress factors, strategies to create workplaces with a more ethnical diversity and profound benefits for women, as well as the efforts in making the workers feel more liable to their jobs are possible in SMEs and have real benefits for their growth and productivity. At the same time, these approaches could be beneficial for developing countries in a large scale since SMEs play a major role in most of these economies. In this paper, we will conduct a study from the most popular current standards that the best companies promote and suggest some alternatives for SMEs in order to improve these factors.

Trade Unionism and Compensation Dynamics: A Research Overview

Over the years, government’s enacted laws and enunciated policies to provide for decent work life, guarantee minimum wages, cushion against rise in cost of living, ensure equal remuneration and deter employers from making unfair and arbitrary deductions from wages has led to a change in the impact trade unions had on wage determination. The present article discusses different aspects of trade union’s role in wage and salary administration in terms of choices and options for trade unions, unions’ impact on general wage levels, unions’ impact in terms of spill-over effect, role of trade unions in wage and salary policies and practices and so on.

Do public sector industrial relations challenge the Swedish model?

This article discusses recent developments in public sector labour relations in Sweden from a historical, gender and power relations perspective. The main question is whether these trends challenge the established Swedish industrial relations system. Our point of departure – yet chronologically also the point of arrival – is the Swedish Municipal Workers’ Union, Kommunal’s, exit from the coordinated wage setting model within the Swedish Trade Union Confederation (Landsorganisationen, LO) in 2015/2016. The immediate reason was that Kommunal, representing one-third of the LO members, including many low-paid women, turned down the LO’s proposal on a general wage increase for low-wage groups. Instead, Kommunal urged to upgrade wages for a specific member group, the auxiliary nurses. This broke an almost uninterrupted 20-year-long period of labour market cooperation and coordination that was introduced in 1997 through the so-called Industry Agreement (Industriavtalet). This agreement was launched in the wake of the deep financial crisis in the early 1990s, and the neoliberal move towards a complete decentralization of pay negotiations. How should this move by Kommunal be interpreted? Why, and when, has the centralized system become a straitjacket for Kommunal, when for decades it seemingly was a precondition for both private and public union strength?

Trade with China, Inequality and Policy Responses

The integration of China’s huge workforce into the global trading system has had profound effects on economies worldwide. Trade with China has been shown to lead to wage losses and declining employment in developed countries. The integration of the Chinese economy into the world trade is also frequently blamed for rising inequality. This article analyses policy instruments that can remedy the rising levels of income inequality in industrialised countries, differentiating between the short-term causes, e.g. the slow reallocation of workers across sectors, and the long-term ones, e.g. the increased demand for skilled workers. Instruments considered include a general wage tax, sector-specific taxes on consumption and profit, tailored subsidies for firms, and training subsidies.