Labor Income Research Articles

Life-cycle risk-taking with personal disaster risk

Inspired by a growing body of empirical work, this paper models a non-linear labor income process allowing for a personal disaster, such as long-term unemployment or disability, during working years. Such a disaster entails an uncertain but potentially large permanent shock to earnings. Personal disaster risk allows to match moderate risk-taking of young investors and a flat investment profile in age, observed in the United States, when the calibration of both the disaster probability and the expected permanent loss in the disaster state is conservative.

Job expectations and financial fragility: evidence from pre-COVID Spain

Previous research has related household financial fragility (FF) and the employment status of the household members by focusing only on the labour income channel. In contrast, the literature has scarcely addressed the study of this relationship from a psychological perspective that could be related to the theory of bounded rationality. This article aims to analyse how job expectations relate to the level of household FF. Using a sample of 8554 Spanish individuals in the period 2016–2017, we construct a multidimensional index of household FF. The results indicate that households with unemployed, self-employed, or part-time workers have higher levels of FF, but the job expectations of the household and the individual play an even more important role in the level of the FF. These findings suggest that the perception of labour market uncertainty may influence the level of household FF to a greater extent than the objective employment situations of the individuals.

Development of Useful Cultural Tourism Increase Labor Absorption and Income in Baubau City Souteast Sulawesi Province

This research was carried out in 2020. The problem of cultural tourism in Baubau City is low productivity and competitiveness caused by the not yet optimal utilization of the potential of cultural tourism resources, the lack of integrated promotion systems, weak policy implementation, and inadequate infrastructure supporting cultural tourism. The results of the CPI analysis show that cultural tourism in Baubau City: (1) Tourist destinations in the Wolio Palace area (a) Wolio Palace Mosque average value of CPI 629, (b) Tombs of the Kings of Buton with an average value of CPI 427, (c) Historical sites of the Wolio Kingdom average CPI value of 424, (2) Art tourism destinations (a) Buton traditional dances average CPI value of 737, (b) Buton regional songs average CPI value of 559. (3) Wolio cultural tourism destinations (a) Wolio traditional clothing culture average CPI value 607, (b) Haroa culture average CPI value of 579, (c) Pakande-kandea culture average CPI value of 580, (d) Gotong royong culture average CPI value of 767. Concern for cultural values related to the monumental value of the Wolio Sultanate is an important part of the sustainable development of tourist destinations. Preservation of Wolio culture as a method of designing preservation with the collaboration of local government, traditional leaders, and the private sector through cultural galleries, cultural promotion, and cultural festivals, so that the younger generation loves and preserves the culture of the Buton area which will contribute to employment and community income.

Measuring livelihood resilience of farmers and diagnosing obstacle factors under the impact of COVID-19 in Jiangsu Province, China

Research on livelihood resilience not only helps to understand the adverse impact of COVID-19 on farmers' livelihoods, but also helps to formulate concrete actions to enhance the resilience of farmers' livelihoods and support economic recovery. Taking rural residents in Jiangsu Province of China as an example, this paper uses one-way ANOVA, entropy method and obstacle degree models to quantitatively analyze the characteristics of livelihood resilience of different types of farmers and the main obstacle factors. The main findings are as follows: (1) Both laboring type and part-time type farmers together accounted for 75.98% of the survey sample, and the non-agricultural phenomenon of farming households in Jiangsu Province is obvious; There are significant differences in livelihood characteristics among different types of farmers, with relatively high livelihood capital for planting and breeding type farmers and relatively low livelihood capital for asset and subsidy type farmers. (2) The livelihood resilience of farmers in Jiangsu Province from high to low is breeding type farmers (0.501), planting type farmers (0.493), laboring type farmers (0.465), part-time type farmers (0.455), subsidy type farmers (0.400), asset type farmers (0.389). (3) In the diagnosis of barrier factors of livelihood resilience, buffer ability disorder is the most obvious, learning ability disorder is the second, and self-organization ability disorder is the last; Among the specific factors, the most important obstacle factors for planting, breeding and asset type farmers are the number of productive assets, the number of agricultural technical services for laboring type farmers, the number of channels for obtaining information for part-time type farmers, and the family labor income for subsidy type farmers. Therefore, it is recommended that policies be improved in the post-epidemic era in terms of raising farmers' livelihood capital, developing knowledge and skills for learning, and enhancing organizational awareness.

The economic impacts of green stormwater infrastructure: An evaluation of novel stormwater management policies in Washington, D.C.

Increases in urban stormwater infrastructure needs have led cities around the world to turn towards nature-based ‘green’ stormwater infrastructure (GI). While GI can be an effective tool for addressing many urban flooding and water quality problems, many policymakers remain skeptical of GI due to concerns about financial uncertainties and performance risks. Moreover, cost-benefit analyses of changes to urban infrastructure policies often fail to consider the economic impacts – jobs created and value added to the regional economy – of infrastructure (traditional or GI) construction. Compounding this, few studies have modeled the economic impacts of GI. In this paper, we analyze the economic impacts arising from novel development regulations requiring GI to offset impervious cover expansion in Washington, D.C (USA). Using data from a survey of GI construction firms, we determine annual, direct GI investment, and construct an input-output model to estimate indirect and induced economic impacts at the regional scale. We find that, from 2015 to 2020, GI construction supported over $91 million in average annual economic output, ∼$45 million in labor income, ∼$60 million in value added, and created (or supported) 437 jobs in the DC metropolitan region. Sensitivity analysis around regulatory stringency (higher or lower stormwater retention requirements) reveals asymmetric economic impacts that increase more given higher retention requirements than they decrease for lower retention requirements. Our analytical approach can serve as a model to help other regions produce a more comprehensive accounting of the economic feasibility of green infrastructure for urban stormwater management.

Do marrying later and parenting later affect happiness? Analysis of data from the Chinese General Social Survey

We investigated whether marrying and parenting later influences people's happiness. Data were sourced from the Chinese General Social Survey 2017, with an average age when marrying of 25.34 years and an average age when becoming a parent of 27.03 years. Analysis showed that, compared to parenting later, those parenting at a younger age were happier. However, the effect of age at marriage on later happiness was not significant. Further, the effect of parenting age on happiness was greater among men than it was for women, and greater for rural residents compared with urban residents. Data analysis revealed three main channels through which parenting age affected happiness: First, parenting later increased labor income, but testing revealed that an increase in income led to a decrease in leisure time, and this lowered happiness; second, later parenting reduced the number of children born to the couple, and happiness was also reduced as the number of children in the family reduced; and third, later parenting reduced the likelihood of having grandchildren at the same time as other people of the same age, and a reduction in happiness was observed for those without grandchildren.

Homoploutia: Top Labor and Capital Incomes in the United States, 1950–2020

Homoploutia describes the situation in which the same people are rich in the space of capital and labor income. We combine survey and administrative data to document the evolution of homoploutia in the United States since 1950. In 1950, 10 percent of top decile capital‐income earners were also in the top decile of labor income. Today, this indicator is 30 percent. This makes the traditional division to capitalists and laborers less relevant today. We find that the increase in homoploutia accounts for 20 percent of the increase in interpersonal income inequality since 1986.

Child Penalties in Politics

Abstract Women tend to experience a substantial decline in their labour income after their first child is born, while men do not. Do such ‘child penalties’ also exist in the political arena? Using comprehensive administrative data from Norway, we find that women are less likely than men to secure elected office after their first child is born. The effects already manifest from the nomination stage, where mothers receive less favourable rankings on party lists relative to comparable fathers. This paper broadens our understanding of a fundamental social issue in political representation and demonstrates how motherhood even affects positively selected women.

Taxation of Consumption and Labor Income: A Quantitative Approach

I quantitatively characterize optimal consumption and labor income taxes in a structural life-cycle model of household consumption, saving, and employment choices that allows for irreversibility of durable goods and preference heterogeneity. I find that durables should be subsidized and nondurables should be taxed at a uniform rate. The durable subsidy is driven by the life-cycle features of the model together with durables’ irreversibility and borrowing constraints. Uniform taxation on nondurables holds under exogenous and endogenous—fully or weakly separable—labor supply and it relies on homogeneity of intertemporal preferences. Allowing for government’s equity concerns, I show that the model rationalizes the tax practice. (JEL D15, G51, H21, H23, H24, H31, J22)

Tax incentive and corporate hiring decisions: Evidence from China's VAT credit refund policy

AbstractHuman capital acts as an increasingly crucial factor for firms to sustain stable performance and maintain competitiveness. However, we know little about how tax incentive affects corporate hiring decision concerning highly skilled employees. Using the policy of value‐added tax (VAT) credit refund in China as a quasi‐natural experiment, we explore whether and how VAT credit refund affects firms' hiring decisions on highly skilled employees. The Difference‐in‐Differences (DiD) estimate reveals that the VAT credit refund policy significantly increases the proportion of highly skilled employees. Further, the policy effect becomes more prominent in firms with heavier tax burdens, lower capital intensity, and higher financial constraints. Our mechanism tests reveal that credit refund alleviates liquidity constraints and improves capital‐skill complementarity, thus exerting a positive effect on corporate human capital upgrading. In addition, we find that the VAT credit refund policy improves earnings‐per‐worker and labor productivity but plays an insignificant role in labor income share. Our findings support the proposition that VAT credit refund leads to a positive effect on corporate human capital upgrading, offering new insights for policymakers to improve corporate employment skill structure and support the implementation of tax incentives to upgrade the labor force.

TOOLS FOR ENSURING SOCIAL AND ECONOMIC INCLUSION OF FORCED MIGRANTS IN THE CONDITIONS OF RUSSIAN AGGRESSION AGAINST UKRAINE

The article proves that the formation of an inclusive environment for persons who have found themselves in difficult life circumstances due to Russia's war of aggression against Ukraine is carried out through the provision of humanitarian assistance, creation of favourable conditions for employment and earning labour income, provision of legal assistance and protection, access to education and training, socio-cultural integration, etc. It is determined that the main responsibility for providing assistance to the population affected by the humanitarian crisis in the context of war lies with the government, local authorities, the private sector, faith communities, local civil society, NGOs, volunteers, international humanitarian organisations, donor and partner countries, etc. The author emphasises the important role of various international and national organisations and associations in the implementation of humanitarian initiatives since the beginning of the full-scale war in Ukraine. It is substantiated that humanitarian aid and other charitable activities from various organisations have become a vital source of support for both forced users of temporary protection outside Ukraine and internally displaced persons. The author notes the role of grant funding and modern digital technologies in ensuring social and economic inclusion of vulnerable categories of forced migrants. The article examines Ukrainian and foreign experience in organising and conducting various events and activities for the socialisation and integration of war refugees. The author assesses the quantitative and qualitative indicators of forced resettlement, as well as the current state of funding for measures aimed at effectively addressing the migration challenges caused by the Russian-Ukrainian war.

법인세의 분배효과에 관한 연구

This study analyzes the effect of corporate income tax on income distribution in Korea. Studies on the economic effects of corporate income tax have mainly focused on investment and employment effects. This research trend is due to the prevailing idea that the investment effect of corporate income tax is decisive, employment and wages are determined incidentally, and that companies are merely conduits for distributing profits to shareholders. However, corporate income tax also affects the labor income share and household income distribution through changes in employment and wages, dividends, and internal reserve fund of a company. If corporate income tax cuts increase investment, but employment growth is weak and real wage growth rates falls short of labor productivity growth rates, the labor income share will decrease and household income inequality will widen. According to the results of the empirical research, the effects of corporate income tax rate on investment and employment are weak. The expanded investment is also capital-intensive, so the employment effect is not significant, and more the real wage increase does not keep up with labor productivity. As a result, a reduction in the effective corporate income tax rate lowers the labor income share and increases income inequality. Therefore, to increase the distribution effect of corporate income tax, corporate income tax should be reformed in a way that supports employment growth and real wage increases while including investment.

Spending on farms ripples into the region: agritourism impacts

Introduction/PurposeAgritourism is gaining popularity throughout the United States and is an important part of rural and regional development. However, the economic contributions of agritourism, the interface of agriculture and tourism, has received limited attention in regional impact estimation studies. This study was purposed to estimates the regional economic impact of visitor spending in agritourism farms in Tennessee.MethodsPrimary survey data was used from sampled farms in Tennessee and secondary industry-level data. Economic impacts—direct, indirect, and induced—are estimated based on the economic input-output modeling application (IMPLAN) and the social accounting matrix framework.Result and discussionWe found that an estimated $65 million from visitors' direct spending in agritourism farms contributes to the total industry output of $118.54 million in Tennessee. Additionally, we presented total value added, jobs created, labor incomes, and taxes generated through direct, indirect, and induced effects attributable to visitors' spending in agritourism farms. Our findings indicate that the expansion of agritourism could bring economic development at both the farm and state level, particularly in states like Tennessee, where agriculture is an important industry and tourism is expanding.

Effect of the East African Community Common External Tariff on Household Labor Income in Kenya

This study investigates how changes in prices caused by the adoption of the East African Community Common External Tariff affected the labor incomes of households in Kenya. Households in rural, urban, and fully urban areas are analyzed. Workers are classified as skilled versus unskilled, formal versus informal, and agricultural versus non-agricultural sector workers. Data from the Kenya Integrated Household Budget Surveys 2005/2006 and 2015/2016 are used in the analysis. Data from these surveys were used to categorize workers and extract the price values for commodities. One hundred and twenty-one commodities classified as agricultural or manufactured goods are analyzed. Much of the reduction in import tariffs and hence reduction in commodity prices is on manufactured goods. A Mincerian wage equation that is corrected for survey design and heteroskedasticity is estimated. Further, a sensitivity analysis using a Poisson Pseudo Maximum Likelihood model is estimated. The price-labor income effect is observed to vary with the classification of workers in the country. Skilled, formal, and non-agricultural workers gained compared to their counterparts. Workers in counties that border the EAC countries and those in the major cities in the country gained more than other workers in other counties in the country. However, in all parts where gains are experienced, the magnitude is small. This shows that generally, the Common External Tariff did not have a very significant effect on labor incomes in Kenya.

Using payroll taxes as a redistribution tool

Payroll taxes are usually designed to fund social insurance and not to contribute directly to redistribution. Over the last fifty years, France has modified dramatically the schedule of payroll taxation, turning it into the most progressive part of its tax system. Using administrative data and detailed microsimulation model of labor income taxation, we show that pretax wage (or labor cost) inequality measured by the P90/P10 ratio has increased by 15.4%, while net wage inequality has actually decreased by 18.9% over the 1967–2019 period. This reduction in wage inequality can be largely attributed to the policy mix of reductions of employer payroll taxes for low wage earners joined with minimum wage increases. We discuss whether this unusual French experiment carries lessons for other countries.

The Impact of industrial upgrading on labor income: Evidence from China

This paper demonstrates a new way of industrial upgrading from the perspective of improving labor income. By constructing a new index to measure urban industrial upgrading, the influence of regional industrial upgrading on labor income is more accurately evaluated. The results show that industrial upgrading has significantly improved the labor income of employees. The effect of industrial upgrading is the result of the optimal redistribution of resources between industries and within industries. Industrial upgrading enhances the demand and dependence of enterprises on high-skilled labor, that is, human capital. This skill structure change of labor income increases the total labor remuneration by increasing the relative wages, the proportion of employees and labor income of high-skilled workers.

Is increasing income the only reason for rural labor mobility?—A case study of Heilongjiang, China

IntroductionIt is widely known that rural labor mobility is of the utmost importance for the livelihoods of families in rural areas of developing countries. While it increases the income and overall labor productivity of rural households, it also creates many inevitable rural recessions. Existing studies have different views on whether increasing income is the only reason for rural labor mobility.MethodsThis paper discusses the influencing factors of rural labor mobility and investigates research on the causes of rural labor mobility. To do so, the study analyzes micro-survey data of 47 villages in 13 cities in Heilongjiang province, China, from 2014 to 2019. Considering the basic situation of rural families and labor mobility, the actual demand for rural laborers in Heilongjiang province is also analyzed.ResultsThe research results show that increasing income is not the only reason for the flow of rural labor, and that rural labor mobility requires more than just rising incomes.DiscussionThis study's main contribution is identifying that increased income does have a positive and significant impact on rural labor mobility, but seeking job opportunities, pursuing better-quality education for children, and developing prospects are significant factors in the current rural labor mobility.

Effects of manufacturing input servitization on labor income share and income distribution

In recent times, a transformative phenomenon has emerged within the realm of manufacturing known as “manufacturing input servitization.” This concept involves the integration of services into traditional manufacturing processes, and while it has received some attention, its implications for labor income distribution have not been extensively explored. This study embarks on an exploration of the intricate relationship between manufacturing input servitization and labor income share, with a specific focus on its impact on income distribution. Employing rigorous regression analysis techniques, this paper rigorously assesses the relationship between manufacturing input servitization and labor income share. Our analysis also delves into mediation effects, uncovering the pivotal roles played by labor productivity and human capital in driving labor income share improvements. The results consistently reveal a positive correlation between manufacturing input servitization and labor income share, an association that persists even after controlling for various factors. Heterogeneity analysis further showcases that the medium-technology manufacturing sector benefits the most from servitization, closely followed by the high-technology and low-technology sectors. In addition, this research highlights a pronounced impact of manufacturing servitization on labor income in developing economies compared to their developed counterparts. Beyond the empirical discoveries, extended analysis reveals a implication: the enhancement of labor income share in the manufacturing sector contributes significantly to reducing income inequality across the broader economy. These findings hold substantial implications for both policymakers and manufacturing firms. Encouraging the adoption of servitization strategies within manufacturing not only fosters labor income growth but also aligns with the broader societal goal of reducing income inequality. As such, this research provides invaluable insights for stakeholders committed to nurturing inclusive economic growth.

Optimal income taxation: An urban economics perspective

We derive an optimal labor income tax rate formula for urban models that nests the Mirrlees model as a limiting case. Optimal tax rates are determined by traditional forces plus a new term arising from urban forces: house price, migration and agglomeration effects. Based on the earnings distribution, housing costs and housing tenure in large and small US cities, we find that in a benchmark model (i) the optimal income tax rate schedule is U-shaped, (ii) urban forces raise the optimal tax rate schedule at all income levels and (iii) adopting an optimal tax system induces agents with low skill levels to leave large, productive cities.

Cities' low-carbon transformation and labor income share of companies: evidence from the low-carbon city pilot program in China.

This article investigates the impact of the low-carbon city pilot program on income distribution. The program is designed to reduce urban carbon emissions in China while also serving as a quasi-natural experiment to examine the income distribution effect of environmental regulatory policies. Using the firm-year level data during 2007-2020, we adopt the staggered difference-in-difference method to explore the impact of the program on labor income share. This study finds that the LCCP program significantly affects firms' labor income share. The proportion of highly educated employees and the level of financialization within the firm act as mediators that influence labor income share. This paper suggests that government should use reasonable environmental regulatory policy to facilitate labor income share to alleviate inequality, promote the scope of the program to more cities, and help firms to improve human capital level as well as serve more financial policies.