Local Wage Research Articles

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.

Determinants of Economic Growth, Poverty, and Unemployment: A Path Analysis Study

The main objective of this study is to reveal the role of regional own-source revenues, development spending, and regional minimum wages for economic growth, poverty, and unemployment in this research. A quantitative approach with path analysis was used in this study, which was in Cities and Regencies in Bali Province for the 2015-2021 period. A sample of 62 was analyzed using multiple linear regression methods. The results of the study state that Original Local Government Revenue (PAD), development expenditures, and regional minimum wages have a significant and positive effect on economic growth. PAD and regional minimum wages have a significant and positive effect on poverty, and development spending has a significant and negative effect. PAD does not affect unemployment. Development spending and regional minimum wages significantly and positively affect unemployment.

Early results of a natural experiment evaluating the effects of a local minimum wage policy on the diet-related health of low-wage workers, 2018-2020.

The current study presents results of a midpoint analysis of an ongoing natural experiment evaluating the diet-related effects of the Minneapolis Minimum Wage Ordinance, which incrementally increases the minimum wage to $15/h. A difference-in-difference (DiD) analysis of measures collected among low-wage workers in two U.S. cities (one city with a wage increase policy and one comparison city). Measures included employment-related variables (hourly wage, hours worked and non-employment assessed by survey questions with wages verified by paystubs), BMI measured by study scales and stadiometers and diet-related mediators (food insecurity, Supplemental Nutrition Assistance Program (SNAP) participation and daily servings of fruits and vegetables, whole-grain rich foods and foods high in added sugars measured by survey questions). Minneapolis, Minnesota and Raleigh, North Carolina. A cohort of 580 low-wage workers (268 in Minneapolis and 312 in Raleigh) who completed three annual study visits between 2018 and 2020. In DiD models adjusted for time-varying and non-time-varying confounders, there were no statistically significant differences in variables of interest in Minneapolis compared with Raleigh. Trends across both cities were evident, showing a steady increase in hourly wage, stable BMI, an overall decrease in food insecurity and non-linear trends in employment, hours worked, SNAP participation and dietary outcomes. There was no evidence of a beneficial or adverse effect of the Minimum Wage Ordinance on health-related variables during a period of economic and social change. The COVID-19 pandemic and other contextual factors likely contributed to the observed trends in both cities.

Climate Change and the Geography of the U.S. Economy

This paper examines how the spatial distribution of people and jobs in the United States has been and will be impacted by climate change. Using novel county-level weather data from 1951 to 2020, we estimate the longer-run effects of weather on local population, employment, wages, and house prices using a panel distributed lag model. The historical results point to long-lasting negative effects of extreme temperatures on each of these outcomes. We highlight that a long lag structure is necessary to appropriately capture the longer-run effects of climate change, as short-run effects are often small and imprecisely estimated. Using county-level weather projections based on alternative greenhouse gas emissions scenarios, we use the estimated models to project the spatial distribution of these local economic outcomes out to 2050. The results point to substantial reallocations of people and jobs across the country over the next three decades, with mobility increasing by between 33 and 100 percent depending on the scenario. Population and employment are projected to shift away from the Sunbelt and toward the North and Mountain West. We document that this would, in fact, be a continuation of a historical pattern: Over the past four decades the relationship between population growth and hot climates across the United States has turned from strongly positive to slightly negative. We present a spatial equilibrium model to interpret the results, highlighting the impacts of climate change on amenities and productivity, and find significant roles for both channels in accounting for our empirical findings.

Branch Profitability in Microfinance Institutions

Microfinance institutions has important roles for developing country economic. In Indonesia 98.67% of business units are on micro segment and it absorbs 89.04% working labors. Profitability has been main issue for microfinance institutions since it will impact to their market source of funding. PT Ibu Berdaya Fintek (Ibu Berdaya) as peer-to-peer lending company connects urban lenders with micro women entrepreneurs in rural area. Branch profitability is crucial for Ibu Berdaya because more than 80% of its revenue coming from the branch operation. The purpose of this research is to identify variables that influence the profitability of branch in microfinance institutions and provide some proposals to improve the branch’s profit margin. Total twenty-one variables analysed in this study, both branch’s internal performance variables and external variables. Multiple linear regression utilized to analyze correlation between all variables with branch profit margin used as dependent variable. Average monthly disbursement (both for new and subsequent loans), branch age, and number of account officers all have positive and substantial effects on branches in microfinance institutions. However, the overall amount of past-due loans outstanding, the average amount of new loans outstanding, and the local minimum wage have a negative impact on branch profit. This research concluded that it’s important for microfinance institutions to keep ratio of sequence and new loan, ratio borrowers per account officer and implement better credit risk mitigation strategy.

ANALISIS SISTEM PENGGAJIAN TENAGA KONTRAK UIN SUNAN KALIJAGA YOGYAKARTA

UIN (Universitas Islam Negeri) Sunan Kalijaga is an Islamic State University that previously named IAIN SunanKalijaga. It was established in 26 September 1951 and it was one of the oldest university that established by the Ministry of Religious Affairs. As for the human resources whose working in the university, there are public servants who appointed to work there by the National Administrative system and also contract workers. The contract workers are the employee of UIN SunanKalijaga that legally being appointed by the Rector of the University through a decree signed by the Rector itself. The contract system will be renewed annually, started in the beginning of the year. Within the contract, there are terms such as rights and obligations including the amount of the salary. And, the amount of the salary will be changed every 3 years. There basic calculations for the salary system by referring the current national’s public servant salary system and minimum local wage system. Therefore, based on the issue above, this thesis would like to highlight some questions in order to answer some questions; what factors affecting the change of the salary system for the contract workers in UIN SunanKalijaga, Why to factors becoming push factors in the changing of salary system of contract workers and how the current reality of contract workers salary system at UIN Sunan Kalijaga. The aim of the research will be to identify what factors causing the changing of salary system at UIN SunanKalijaga, and to analyse the push factors as well to evaluate the salary system of contract workers at UIN SunanKalijaga. Meanwhile the theoretical framework being employed on this research will be the Salary Theory and Compensation theory. And, as for the method of research, there will be descriptive qualitative and the data will be gathered through primary and secondary data. Documents will be used as source of information and respondents will interviewed to gain some insights of the policy.

Does The Foreign Direct Investment Affect Economic Growth in Jordan in Light of Commercial Openness

Purpose: This paper aims to examine the effect of foreign direct investment on economic growth in Jordan in light of the trade openness, during the period from 1999 to 2019. Theoretical Framework: This paper discusses how Jordan, as a developing country, has worked over the years to attract foreign investment by creating an environment of incentives, benefits, and legislation that encourages such investments; taking advantage of low local labor wages, high administrative costs, and great commercial openness. Design/methodology/approach: To achieve the objectives of the study and to construct the statistical model the study used analytical methodology. The following statistical methods were applied; Hausman, Wald Test, F-Test Statistic, Granger, Multicollinearity test, Normality Test, Lagrange Test, Multiplier Test, and Causality Test. Findings: After conducting the analysis tests, the results showed a statistically significant impact of open trade direct investment on economic growth, Moreover, findings showed a positive impact on the degree of economic growth, whenever the degree of trade openness and the flow of foreign investment increase. Research, Practical & Social implications: The independent variables in the study model were measured by the ratio of foreign direct investment from the nominal GDP. The variable (the degree of trade openness) was expressed as the ratio of exports and imports to trade volume. The generalized Method of Moments (GMM) was used in this study. Originality/value: In light of Jordan's extensive commercial openness, This investigation looked at the impact of FDI on economic expansion. The study's findings are in line with theoretical research and other studies that hold that a country's level of economic growth is not adversely affected by significant trade openness because foreign investments are not less effective.

Customized predictions of the installed cost of behind-the-meter battery energy storage systems

Behind-the-meter (BTM) battery energy storage systems (BESS) are undergoing rapid deployment. Simple equations to estimate the installed cost of BTM BESS are often necessary when a rigorous, bottom-up cost estimate is not available or not appropriate, in applications such as energy system modeling, informing a BESS sizing decision, and cost benchmarking. Drawing on project-level data from California, I estimate several predictive regression models of the installed cost of a BTM BESS as a function of energy capacity and power capacity. The models are evaluated for in-sample goodness-of-fit and out-of-sample predictive accuracy. The results of these analyses indicate stronger empirical support for models with natural log transformations of installed cost, energy, and power as compared against widely-used models that posit a linear relationship among the untransformed versions of these variables. Building on these results, I present a logarithmic model that can predict installed cost conditional on energy capacity, power capacity, AC or DC coupling with distributed generation, customer sector, and local wages for electricians. I document how the model can be easily extrapolated to future years, either with forecasts from other sources or by re-estimating the parameters with the latest data.

The Local Labor Market Effects of Modern Manufacturing Capital: Evidence from France

Using an event study methodology and comprehensive micro data from the French manufacturing sector, we analyze the local labor market effects of investments in modern manufacturing capital, including modern automation technologies. We estimate that commuting zones with higher investments in modern manufacturing capital and automation benefit from higher labor demand, with an increase in both local employment and wages. Our findings are consistent with a task-based model where the productivity effects of modern capital investments and automation outweigh their displacement effect.

Federal government wage indexes

For nearly 50 years, the Employment Cost Index (ECI) has been providing the public with estimates of the change in employer labor costs. We explore the practicality of constructing federal wage indexes, in the spirit of the ECI, using Office of Personnel Management (OPM) salary data. To accomplish this task, we aggregate OPM records into occupation and industry groups. Although these salary data have a crosswalk for mapping OPM occupation codes into the Standard Occupational Classification system, no corresponding crosswalk exists for industries. A key hurdle, therefore, involves creating a crosswalk that assigns industry codes to OPM establishments. We create this crosswalk by developing an algorithm that uses Quarterly Census of Employment and Wages data and machine-learning tools to match agencies with a unique industry. With this agency-North American Industry Classification System crosswalk, we calculate annual Laspeyres, Paasche, and Fisher wage indexes for several aggregations. The resulting wage inflation rates are plausible and do not deviate substantially from the corresponding private industry and state and local wage inflation rates.

The demand for interns

We describe the demand for interns in the U.S. using ads from an internship-specific website. We find that internships are more likely to be paid when more closely associated with a specific occupation, when the local labor market has lower unemployment, and when the local and federal minimum wage are the same. A résumé audit study with about 11,000 applications reveals that employers are more likely to respond positively when internship applicants have previous internship experience. Particularly for unpaid internships, employers are also less likely to respond to applicants with black-sounding names and when the applicant is more distant from the firm.

Economic aspects of urban greenness along a dryland rainfall gradient: A time-series analysis

Studies at the global scale show that urban greenness is not equally distributed across and within cities. Yet, quantification of urban greening trends in drylands is still lacking. We have modeled urban greenness dynamics and its determinants, using Landsat-based time-series analyses of NDVI and census data, of 23 localities along a dryland climatic gradient in southern Israel, between 1997 and 2019. NDVI trends and their associated temporal changes in local average wages, age of locality, and average annual rainfall were analyzed by exploiting a panel structure and model parameters estimation with fixed effects to control for unobserved differences between localities, and to strengthen causal interpretation. Results show positive NDVI trends in all localities—indicating that urban construction increases greenness in drylands. However, the localities varied greatly in the slopes of their respective linear NDVI trends (0.05 <α < 0.161). Specifically, we found that, ceteris paribus, the differences in average wages between localities is the most important factor in explaining spatio-temporal differences between the respective NDVI of localities. Given the well-known high correlation between individuals’ wages and other characteristic such as education and income (all important determinants of the Socio-Economic classification of local authorities), this leads us to conclude that residents’ economic characteristics are an important predictor of the level of greenness. Harlin’s Granger causality test for wages and NDVI panel data indicate that wage is a Granger cause of urban greenness (p < 0.001)—however, greenness was not found to be the driving force of wage.

Why is farming important for rural livelihood security in the global south? COVID-19 and changing rural livelihoods in Nepal's mid-hills

Over the last three decades, Nepal has experienced a rapid transition in rural livelihoods, from largely subsistence farming to more diversified off-farm employment and remittances. Despite this, subsistence farming continues to be a central part of rural production. Why does farming persist in the face of other, more remunerative, off-farm employment options? In this article we argue that subsistence food production continues to be important for rural livelihood security by providing food needs from farming, thus helping households to cope with uncertainties in off-farm employment and international labor migration. Taking the COVID-19 pandemic as an example of a high level of livelihood stress, the paper provides insights and further explanations on the logic of maintaining subsistence food production as part of rural households' livelihood security. Drawing on in-depth qualitative study, complemented with a quantitative survey from eight villages in rural Nepal, we examine the impact of the pandemic on farming and off-farm activities and explore the reasons behind peoples' choice of livelihood strategies and how these vary between different social groups. We show that there was only limited impact of the dramatic disruptions caused by the global pandemic on subsistence farming, however it brought substantial challenges for emerging semi-commercial farming and off-farm incomes, including both local and migratory wage labor. During the pandemic, people increased their reliance on locally produced food, and subsistence farming served as a critical safety net. Our analysis underscores the continued importance of subsistence production amidst contemporary shifts toward off-farm employment among rural households. We also find a growing interest in semi-commercial farming among farmers with better access to land who seek state support to develop such production. This suggests that it is important for agricultural development policy to recognize and support subsistence farming alongside emerging commercial agriculture production as an integral foundation of future farming and rural livelihood security.

An Explicit Spatial Approach to the Value of Local Social Amenities in Metro and Non-Metro Counties in the U.S.: Implications for Comprehensive Wealth Measurement

This study extends and reinterprets Roback’s general spatial equilibrium model by casting it within the comprehensive wealth framework. Considering the explicit spatial effects among regions, the analysis refines estimates of the contribution of natural, built, social, cultural, and human capital to residents’ wealth. We develop an empirical model and apply it to secondary data from 3109 counties in the United States. Our analysis provides a means of partitioning the sources of wealth in traditionally measured financial wealth and various types of amenities, while avoiding double counting the values of natural and publicly provided assets. Our findings indicate that rising property values are not simply an outcome of limited supply but are often an indicator of rising demand for improving amenities, suggesting different strategies for property and income taxation policy. There are apparently differences between the value of amenities in metro and non-metro counties. Our model explicitly estimates the spatial spillover and feedback effects of policy changes on local land values and wages. It also measures the differences in determinants of asset values and wages in metro from non-metro counties in the U.S.

Poverty alleviation and firm productivity: Evidence from China's minimum wage system

The reduction of income inequality is important for poverty alleviation. We manually collect the data of the local minimum wage standard of the 254 prefectural cities of 31 provinces in China. The results show that higher minimum wage attributes to the rise of firm productivity. Minimum wage hikes force the enterprises to optimize internal production, reduce redundant employees, and develop innovations. Moreover, the enterprises with higher sensitivity in labor cost, less governmental support, and stronger financial pressures are more intensive to higher minimum wage. It is robust when choosing alternative measurements, an IV strategy, and a DID analysis. It is implicated that an appropriate minimum wage system plays a positive role in achieving balance between poverty alleviation and economic growth, and the improvement in compensation can stimulate high-quality development in practice.

Spatial structure and influencing factors of regional city supply networks in manufacturing: A case study of Shandong, China

COVID-19 has driven the formation of regional supply chains. In addition, cities became the basic units of intra-regional supply chain organization under urban administrative economies. Based on the data mining of the buyer-supplier relationship of listed manufacturing firms, this study explores the spatial characteristics of city supply networks within Shandong by the indexes of degree centrality, closeness centrality, betweenness centrality, eigenvector centrality, and a community detection algorithm using the social network analysis (SNA) method and ArcGIS software. It investigates the influencing factors of city supply networks by the correlation and regression of the quadratic assignment procedure (QAP). The results show the following: 1) Shandong has formed a multi-center city supply network with Jinan, Qingdao, Yantai-Weihai, and the distribution pattern of city centrality measured by different centrality indicators shows differences. 2) Cities belonging to the same network community show a coexistence of spatial proximity and “enclave” distribution. 3) Geographic proximity, convenient transportation links, administrative district economy, similarity of business environments represented by development zones, export-oriented or domestic market-oriented division of labor between cities, value chain division of labor between cities, and land price differences between cities promote the formation of regional city supply networks. Conversely, differences in local market size and wage levels between cities hinder the formation of city supply networks. This study attempts to apply the analysis results to regional planning from the perspective of regional industrial synergy development. Additionally, as it is based on typical Chinese provinces, it can provide policy references for national administrative regions and countries/regions at similar spatial scales for manufacturing supply chains, as well as for regional spatial layout decisions of manufacturing enterprises.

The minimum wage and the locations of new business entries in China: Estimates based on a refined border approach

This paper studies how the local adjustments of minimum wage levels in China affect the locations of new business entries. We use a refined border approach to address the endogeneity concerns regarding local minimum wage levels and examine whether differential changes in minimum wage levels on both sides of a county border result in abrupt changes in business entries within short distances from the border. Our results suggest that a 10% increase in the minimum wage levels decreases business entries by 2.69%. This effect is magnified for industries that pay lower average salaries or employ a larger share of unskilled workers. The entry-discouraging effects of high minimum wage levels are stronger when closer to the border where the identification assumption of the border approach is the most likely to hold and gradually decrease as we expand the widths of the border areas. Moreover, although we expect businesses could move across county borders at relatively low costs to avoid high minimum wage levels, we find that business relocation is rare and does not significantly respond to changes in the cross-county difference in minimum wage levels.

Special regime “Territory of Advanced Development” in mono-profile municipal entities

Today, performance efficiency of the territories with a special regime of conducting entrepreneurial activities is assessed by comparing planned targets with actual indicators in terms of the number of recruited residents, new workplaces created, the resident’s actual investment. Another efficiency indicator is the ratio of public budgetary funds per one ruble’s worth of private investments. However, these indices do not gauge the need itself for the territories to be granted the special territory status. The article compares performance results during 2016–2020 registered by mono-profile municipal entities, which have acquired the status of priority development territories, with the indicators achieved by similar company cities without any special status. For pair-to-pair comparison, a selection was made of company cities in the Ural region of Russia with approximately similar population and belonging to the same category in terms of the level of the socio-economic situation. Analysis was made of such indicators as population, investments in property, plant and equipment, revenues of the local budget, wages and salaries. The results of the above comparative analysis allow us to conclude that in the short-term perspective, the key indices of special company cities and company cities without status do not differ much.

‘I do enjoy the work, but I think the wages in the jails are shocking’: Analysing prisoner wages as a pain of imprisonment using Foucault's artifice

Until now, wages in prison and the meanings associated with them have been relatively overlooked within penology. This study analyses findings from a research project conducted between 2019 and 2021 that explores multiple meanings attached to prisoner wages. Through the analysis of 29 semi-structured interviews were conducted with a cohort of purposely selected people in custody across three prisons in Scotland, this study provides unique and rich insights into prison wages. Themes analysed include comments relating to wage rates and what emerges as a particularly tenuous link between wages within and outside prison. Receiving a weekly wage close to the hourly UK minimum wage was seen as an integral part of the life in prison and compounded feelings of detachment to life outside of prison. Our findings also indicate that sentiments associated with prison wages are significantly shaped by pre-prison experience of wages. The impact of imprisonment in relation to prison wages are stratified by income, given the differences in experience related to pre-prison employment and wage levels. Our paper also situates prison wages within a wider context through engaging with Foucault's notion of ‘artifice’ which served to develop an understanding of the logic behind the low levels of remuneration for prison work. Our study has relevance in all prison jurisdictions where people in custody receive wages significantly less than local minimum wage legislation or sectoral tariffs would normally dictate.

Unions, Tripartite Competition and Innovation

We present theoretical and empirical evidence challenging results from early studies that found unions were detrimental to workplace innovation. Under our theoretical model, which extends the Cournot duopoly innovation model, local union wage bargaining is more conducive to innovation - particularly product innovation - than competitive pay setting. We test the theory with workplace data for Britain and Norway. Results are consistent with the theory: local union bargaining is positively associated with product innovations in both countries. In Norway, local union bargaining is also positively associated with process innovation.