Local Wage Research Articles

Impact of Retirement Populations on Local Jobs and Wages

Prior research has suggested that attracting retirement communities to local areas results in job and wage growth. This article examines whether significant growth in local retirement-age populations has led to such job and wage growth. The results suggest that general retirement population growth does create job growth. However, the average wage growth results are mixed. Understanding these economic implications of attracting retirees is necessary for communities to determine how to manage the benefits yet control for the costs of increases in retirement populations.

Media Capture and Local Government Accountability

This paper mainly discusses the effects of media capture on local government accountability in undemocratic countries. Firstly, we construct the models with and without media capture from the perspective of incentive theory. Secondly, we conduct a comparative analysis between the outcomes with and without media capture. The analysis shows that no media capture decreases the local official's equilibrium efficiency wage under whatever conditions, and at the same time makes the central government's constraint to incentivize the local official to exert effort easier to be satisfied under some conditions, while harder to be satisfied under other conditions.

Rural Households Decisions Towards Income Diversification: Evidence from a Township in Northern China

Economic reforms in rural China have brought opportunities to diversify both within-farm activities and off-farm activities. Participation in these activities plays an important role in increasing rural households’ income. This paper analyzes the factors that drive rural households and individuals in their income-source diversification choices for ten villages in Northern China. At the household level, we distinguish three types of diversification as opposed to grain production only: within farm (non-grain production) activities, local off-farm activities, and migration. At the individual level, we analyze the determinants of participation in three different types of jobs as compared to agricultural work: local off-farm employment, local self-employment and migration. At the household level, we find that land and labor availability stimulates on-farm diversification. Local off-farm activities are mostly driven by household wealth and credit constraints, while migration decisions strongly depend on the household age and composition. At the individual level, we find a clear gender and age bias in access to off-farm activities that are mostly undertaken by male and by young people. More surprisingly, education is found to play a role for accessing local wage employment but not in migration decision. As at the household level, the household assets position is found to strongly affect participation in any off-farm activity.

Crisis in Latin America

Infrastructure investment is a central part of the stimulus plans of the Latin American and the Caribbean (LAC) region as it confronts the growing financial crisis. This article estimates the potential effects on direct, indirect and induced employment for different types of infrastructure projects with LAC-specific variables. The analysis finds that the direct and indirect short-term employment generation potential of infrastructure capital investment projects may be considerable—averaging around 40,000 annual jobs per US$ 1billion in LAC, depending upon such variables as the mix of sub-sectors in the investment programme; the technologies deployed; local wages for skilled and unskilled labour; and the degrees of leakages to imported inputs. While these numbers do not account for a substitution effect, they are built around an assumed ‘basket’ of investments that crosses infrastructure sectors most of which are not employment-maximising. Albeit limited in scope, rural road maintenance projects may employ 200,000 to 500,000 annualised direct jobs for every US$ 1billion spent. The article also describes the potential risks to effective infrastructure investment in an environment of crisis including sorting and planning contradictions, delayed implementation and impact, affordability and corruption.

Age of entry and the high school performance of immigrant youth

In 2005, immigrants exceeded 12% of the US population, with the highest concentrations in large metropolitan areas. While considerable research has focused on how immigrants affect local wages and housing prices, less research has asked how immigrants fare in US urban public schools. Previous studies find that foreign-born students outperform native-born students in their elementary and middle school years, but urban policymakers and practitioners continue to raise concerns about educational outcomes of immigrants arriving in their high school years. We use data on a large cohort of New York City (NYC) public high school students to examine how the performance of students who immigrate during high school (teen immigrants) differs from that of students who immigrate during middle school (tween immigrants) or elementary school (child immigrants), relative to otherwise similar native-born students. Contrary to prior studies, our difference-in-difference estimates suggest that, ceteris paribus, teen immigrants do well compared to native-born migrants, and that the foreign-born advantage is relatively large among the teen (im)migrants. That said, our findings provide cause for concern about the performance of limited English proficient students, blacks and Hispanics and, importantly, teen migrants. In particular, switching school districts in the high school years – that is, student mobility across school districts – may be more detrimental than immigration per se. Results are robust to alternative specifications and cohorts, including a cohort of Miami students.

Mobile Capital, Local Economic Regulation, and the Democratic City

This Article examines local efforts to regulate mobile capital. Despite the conventional wisdom that sub-national governments cannot effectively control or redistribute capital, cities have increasingly sought to do just that. This Article describes these efforts, which include putting conditions on the entry of development dollars through contract, excluding capital through anti-chain and anti-big box store laws, and redistributing from capital to labor through local minimum wage laws and other labor-friendly legislation. The Article describes the economic and political factors that have given rise to these local efforts and assesses their viability. In the course of doing so, I argue that the mobility of capital drives a set of local political pathologies, all of which revolve around the governmental promotion of, participation in, and subsidization of private commercial enterprise. Geographically fixed cities are both inclined to give too much away in trying to attract mobile capital and to extract too much from capital once it has become fixed in place. These two political problems - giveaways and exploitation - explain the historical development of local government law as well as current approaches to the division of labor among levels of government - city, state, and federal. The new regulatory localism challenges the proposition that industrial policy, redistribution, and other responses to global economic restructuring must be addressed at the national level. It also challenges the proposition that local economic development policies must necessarily be biased in favor of corporate capital.

CONSUMER SEARCH, PRICE DISPERSION, AND INTERNATIONAL RELATIVE PRICE FLUCTUATIONS*

This article develops a model of consumer search consistent with the evidence of substantial price dispersion and time spent shopping within countries to study international deviations from the law of one price (LOP) and relative price fluctuations. Search frictions lead firms to price discriminate across markets based on the opportunity cost of search, which depends on the local wage. With productivity and taste shocks estimated from the data, deviations from the LOP are as volatile and persistent as in the data. Fluctuations in relative wages, real exchange rates, and the terms of trade are also consistent with the data.

International portfolios, capital accumulation and foreign assets dynamics

Despite the liberalization of capital flows among OECD countries, equity home bias remains sizable. We depart from the two familiar explanations of equity home bias: transaction costs that impede international diversification, and terms of trade responses to supply shocks that provide risk sharing, so that there is little incentive to hold diversified portfolios. We show that the interaction of the following ingredients generates a realistic equity home bias: capital accumulation and international trade in stocks and bonds. In our model, domestic stocks are used to hedge fluctuations in local wage income. Terms of trade risk is hedged using bonds denominated in local goods and in foreign goods. In contrast to related models, the low level of international diversification does not depend on strongly countercyclical terms of trade. The model also reproduces the cyclical dynamics of foreign asset positions and of international capital flows.

Reinventing the Skilled Region: Human Capital Externalities and Industrial Change

Bridging the gap between the literatures on industrial change and human capital externalities we investigate whether a broad regional skill base and dynamic labor markets are complementary determinants of local productivity and wages. On the level of regional industries in Germany we find strong evidence for such complementarity. In fact, a high average level of education turns out to be crucial for productivity enhancing industrial change, while human capital externalities arise first and foremost in dynamic labor markets. On the firm level, we find human capital externalities to accrue predominantly to growing firms which benefit from a large supply of highly qualified workers in skilled, dynamic labor markets. Despite the joint impact of human capital and industrial change on productivity, we find only weak evidence that inter-industry differences in job turnover shape the geography of industry location across regions.

Under pressure to guarantee labour rights

REPORT□ CHINA Under pressure to guarantee labour rights Official statistics estimatedthat morethan20 millionmigrant workersbecame jobless duringthe crisis DR KAN WANG isLecturer at the China Institute of Industrial Relations, Beijing, China The labour uncertainty Global interest for economic labour representation. rights crisis protection brings Actually, further and uncertainty forlabourrights protection and labour interestrepresentation. Actually, longbeforetheglobaleconomiccrisisin 2008, theofficial Chinesetradeunion,whichoperates under the national umbrella of All China Federation of Trade Union (ACFTU),is under pressure for change, andtheunionisseekinginitiatives forimproving itscapacity oflabourrepresentation and labourrights safeguarding. Theinstitutional arrangement inChinarequires the tradeunion to represent the interests and demandsofboththeruling Communist Party of China(CPC) and the workers.In thiscontext, Chinesetradeunionsalwaysneed to play the roleas a bridging actorconciliating theinterest differenceand strengthening the common ground betweentheStateand labour.Before the start of theeconomiccrisisin thelate of 2008, continuous economicgrowth didnotbring much difficulty to theunion,sinceeconomicdevelopmentcreateda steadyincreaseofjobs forworkers ,alongwithtaxation revenuesfortheState. However,the global economic crisispressed downtheChineseeconomy withunemployment rateriseand taxationrevenueshrink, so as to exposetheChineselabouranduniontoa different environment.Some serious challenges emergeand theunionhas to respondquickly. Pressure on the Implementation ofChinese Labour Laws and Regulations Justbeforethe global economiccrisis,several labourlawsand labourregulations wereenacted andlabourstandards wereincreased accordingly. For example,the LabourContract Law restricts theflexibility ofcorporate humanresource management and aims at establishinglong-term employment relationsbetween the employers andworkers. Meanwhile, theRegulation ofStaffs and Workers Paid AnnualVacationexpandsthe duration ofpaidleavefor labourandrequires the employers topayhighcompensation iftheworkersfailtotaketheleaves .A psychological impact is thencreated amongemployers, who complain on theincreaseoflabourcostsand arelobbying heavily forderegulation. Within tenmonths oftheimplementation ofthe labouracts,a financial crisis happenedintheUS, whichis thelargest buyeroftheChineseproducts .Weakdemandofglobaland domestic markets lowersthe profits of mostcompaniesin China.Thecompanies introduce largelay-off and redundancyplans. China Academic of Social Sciences, the governmentthink-tank, did a national survey and foundtheurbanunemploymentratein 2008 had reachedto 9.4 percent, twicemorethantheofficial number. Thankstotheshrinking ofoverseasorders and thecutting of jobs, ruralmigrant workers, who usuallyworkin labour-intensive exportsectors, lost theirincomesand had to eitherreturn to theirhometowns, or wanderaroundbig cities and manufacturing centreslooking for new opportunities. Official statistics from theMinistry ofHumanResources andSocialSecurity ofChina estimated thatover 20 millionmigrant workers becamejoblessduring thecrisis, whilethereal situation can be moreserious. Localgovernments are thenundergreatpressure . In orderto encourageemployment and reduce redundancy, some local governments issued theirinterpretations about the national lawsand regulations, sincethenational lawsare alwaysquitegeneraland requirelocal governments towrite localimplementation guidelines to enforce thelawsandregulations. InthePearland YangtzeRiverDeltas,whichare thetwolargest manufacturing hubs in China,thelocal governmentsnegotiate withthelocal and international chambers ofcommerce forstabilising thelabour market. Companiesagreeto suspendlayoff and redundancy plan,inreturn fordeferred payment of social security fortheworkers. Moreover, in some regions,local governments permitlarge local companiesto negotiateminimum wage rates with theauthority, so that unprofitable firms will not cut jobs, althoughthe workersmay receivediscounted salariescompared tothenormaltime .In Guangdong Province, theProvincial People's HighCourtissueda noticeand asked thepolicetobe cautiousinarresting theowners offirms hiring morethanone thousand workers, forthefearofinterrupting factory operation and causingunemployment. The courtnoticesays that iftheownerdoes notviolate thecriminal act, thenthispersondoes notneedtobe arrested, so thatthebusinessoperation can go as usual. ACFTUand itslowerunionshave paid attentiontothesituation and reactions from thebusiness and local governments. The union issues severaldocuments toexpressitsconcern abouta possiblederegulation in thefieldoflabourrelations .The union emphasisesthatlabourstandardscannotbe compromised underanycircumstances .ACFTUis againstthe idea of lowering labour protectionfor keeping jobs. Instead, ACFTUproposesto conductcollective negotiationanddialoguewith theemployers tosolvethe current corporate difficulty. In severalindustrial provinceslike Zhejiang Province,local trade unionshavesuccessfully reacheddealswith local employers, with theunionspromising tomobilise workers forhigher productivity and temporarily freezingwage increase.In return, employers agreedto keep thejobs and did notlowerthe existing benefits forworkers. INTERNATIONAL union rights Page 30 Volume 16Issue 4 2009 EscalationofLabour Disputes and Union's Role inRepresentingLabour Although the union triesits best to maintain employment stability, expansionof the global economiccrisis leads to closureand bankruptcy of manycompanies, whose bosses usuallyflee andleavetheworkers uncompensated. Riotscan happen if a factory closes and workersare unableto findthe employer forclearingtheir unpaidwagesandovertime compensations. Actually, the numberof labourdisputeshas beenescalating sincelate2008.Inthefirst halfof 2009,labourdisputes intheYangtzeRiver Delta increased aboutfour-fold comparedto thesame periodlastyear.The labourdisputeresolution teamis seriously shorthanded withone labour dispute arbitration orjudgehaving tohandleover 200 cases in a year.Lack of capacityto solve labourdisputecases further contributes to the riseofunofficial labouractions. Localtradeunionsintheindustrial areashave realised this challenge andaredoingtheir bestto providelegalaid forworkers. The local unions also use their positions to lobbythelocal governments foroffering fasttrackserviceforrural migrant workers under labour disputes. Mediationis always emphasisedby the trade unionas a wayto assistlabourrights and interests .Unionshaveestablished mediation services atthefactory and community levels.Community mediation serviceis more effective, since the community legalaid centres of thetradeunion stayawayfrom theintervention and harassment oftheemployers. In HubeiProvince, one ofthe largestautomobilemanufacturing centres in China,theprovincial tradeunionpublisheslaw education booklets forworkers and actively represents...

Local Human Capital Externalities and Wages at the Firm Level: The Case of Italian Manufacturing

We use a unique firm-level data set merging administrative information on average wages paid by firms by skill level (blue collars and white collars), Population Census information on the local stock of human capital available to firms and survey information on firm characteristics to investigate the existence and magnitude of local human capital externalities in Italian Manufacturing. The latter represents an interesting case study due to the prevalence of small family business and a technological lag with respect to the US, to which most evidence supporting local human capital spillovers refers. Our estimates show that in Italy, like in the US, firms located in geographical areas with a higher stock of human capital pay higher wages. This evidence is robust to many variants of the econometric specification and to addressing potential endogeneity issues using instrumental variables estimation and instruments based on the lagged expansion of the Italian higher education system and the lagged demographic structure.

Cultural Diversity and Local Labour Markets

During the last decade there have been marked changes in the composition of the non-native workforce in the German labour market. In particular there has been a notable increase in the diversity of nationalities of which the foreign workforce is composed. In this paper we investigate the effects of this diversity for native employees. Our analysis is conducted at the local level and uses a panel of 326 Western German regions over the time period 1995-2006. When considering high-skilled foreign workers, we find that both the size of this group and the diversification into different nationalities raise local wages and employment for native employees. For low-skilled foreign workers we find negative size effects. However, these negative effects can be partly offset if the group of low-skilled foreigners is culturally diversified. Our results imply that diversity raises productivity at the local level, but that it is important to distinguish the skill composition of the foreign workforce. These findings remain robust in a variety of robustness checks that take into account omitted variable bias, self-selection of foreigners into particular regions, and spatial autocorrelation.

International Portfolios, Capital Accumulation and Foreign Assets Dynamics

Despite the liberalization of capital flows among OECD countries, equity home bias remains sizable. We depart from the two familiar explanations of equity home bias: transaction costs that impede international diversification, and terms of trade responses to supply shocks that provide risk sharing, so that there is little incentive to hold diversified portfolios. We show that the interaction of the following ingredients generates a realistic equity home bias: capital accumulation and international trade in stocks and bonds. In our model, domestic stocks are used to hedge fluctuations in local wage income. Terms of trade risk is hedged using bonds denominated in local goods and in foreign goods. In contrast to related models, the low level of international diversification does not depend on strongly countercyclical terms of trade. The model also reproduces the cyclical dynamics of foreign asset positions and of international capital flows.

Less frequent dosing of erythropoiesis stimulating agents in patients undergoing dialysis: a European multicentre cost study

Objective: To calculate the variable costs involved with the process of delivering erythropoiesis stimulating agents (ESA) in European dialysis practices.Methods: A conceptual model was developed to classify the processes and sub-processes followed in the pharmacy (ordering from supplier, receiving/storing/delivering ESA to the dialysis unit), dialysis unit (dose determination, ordering, receipt, registration, storage, administration, registration) and waste disposal unit. Time and material costs were recorded. Labour costs were derived from actual local wages while material costs came from the facilities’ accounting records. Activities associated with ESA administration were listed and each activity evaluated to determine if dosing frequency affected the amount of resources required.Results: A total of 21 centres in 8 European countries supplied data for 142 patients (mean) per hospital (range 42–648). Patients received various ESA regimens (thrice-weekly, twice-weekly, once-weekly, once every 2 weeks and once-monthly). Administering ESA every 2 weeks, the mean costs per patient per year for each process and the estimates of the percentage reduction in costs obtainable, respectively, were: pharmacy labour (€10.1, 39%); dialysis unit labour (€66.0, 65%); dialysis unit materials (€4.11, 61%) and waste unit materials (€0.43, 49%).Limitation: Impact on financial costs was not measured.Conclusion: ESA administration has quantifiable labour and material costs which are affected by dosing frequency.

The impact of remittance income on rural households in China

PurposeThe objective of this paper is to evaluate the impact of remittance income on rural households in China.Design/methodology/approachUsing data from a large survey of farming households in three Chinese provinces, the impacts of remittances and other types of income on consumption, production expenditures is evaluated. The econometric models used in this study include logit, tobit and ordinary least squares models.FindingsIt is found that remittances increase nondurable consumption, but not as much as local wages and that there is no difference in the impact on agricultural production spending between remittance and local wages. The large majority of remittances are reported by the households of non‐permanent migrants, suggesting that the fear of losing land allocations has a strong impact on migration decision.Originality/valueThe paper uses a large data set from three distinct provinces of China and is among the first to investigate the different types of remittance and their impacts on both consumption and production activities of Chinese rural households.

Joy Lawn: saving newborn babies' lives

This interview with the author reflects on her experience as a neonatal epidemiology and Senior Policy and Research Advisor for Saving Newborn Lives/Save the Children-US. She uses her personal story to illustrate the overwhelming but impersonal newborn mortality statistics as she offers insights to preventing maternal and newborn deaths.

Recovering the Good Earth: China’s Growing Organic Market

People whose impressions of Chinese food exports are colored by reports of contaminated pet food or pesticide-laced dumplings might not expect China to have much of an organic market. They would be wrong. According to “The Greening of China’s Food: Green Food, Organic Food, and Eco-labelling,” a paper presented at the May 2008 Sustainable Consumption and Alternative Agri-Food Systems Conference, 28% of China’s arable land—just over 34 million hectares—is devoted to “eco-foods,” a designation that includes organic certification as well as China’s unique “green” and “hazard-free” categories of food. In an increasingly global food market, unexpected opportunities for farmers around the world are opening in unlikely places, such as China’s experiments with organic food. The world market for organic foods has soared, with sales growing by more than US$5 billion annually and doubling between 2000 and 2006, according to the International Federation of Organic Agriculture Movements (IFOAM), an umbrella organization based in Bonn, Germany. That international trend explains why China and other countries—despite relatively little domestic demand for organic food—have become big players in the organic market. Organic farming in China is largely an export-oriented industry, with the main products for both export and import being cereals, soybeans, and tea, followed by some vegetables, fruits and meat. Yet, although China has instituted several eco-food certification systems, reports of lax inspections persist. “Regulation is an imperfect substitute for the accountability, and trust, built into a market in which food producers meet the gaze of eaters and vice versa,” author Michael Pollan writes in his 2008 book In Defense of Food: An Eater’s Manifesto. In situations where farmers and consumers can’t meet face-to-face at the farmer’s market, however, some form of inspection is all that’s left to serve the interest of public health. How, then, is China adapting to secure the safety of its exports and the health of its own citizens?

Placing Progress: Contextual Inequality and Immigrant Incorporation in the United States

This article contributes to the growing body of research on the economic incorporation of immigrants by considering the relative wages of immigrants, the adult children of immigrants, and the U.S.-born children of U.S. parentage. By disaggregating these three groups racially, comparing entire wage distributions, and comparing the immigrant cities of New York and Los Angeles with the United States overall, it presents a perspective on the complicated contexts of the intergenerational progress of immigrants. In addition to comparing the groups’ relative positions in 1990 and 2000, the article decomposes relative wages such that differences in the educational composition of groups can be isolated from residual wage inequality. This research is of interest because consideration of the U.S.-born or educated children of immigrants invokes questions of social mobility and the persistence of ethnic inequality more generally. The article also contributes to a theoretical debate over place and immigrants’ progress by examining the second generation, for whom residence in immigrant cities is often theorized as detrimental to economic incorporation. Finally, it introduces a substantial analysis of local wage structures to questions of immigrants’ intergenerational economic progress to a much greater extent than has previously been the case. The results suggest that prospects for immigrants’ economic incorporation are geographically specific and should be assessed across multiple generations as a result of the continuing contexts of racial wage inequality

Is Fair Trade-Organic Coffee Sustainable in the Face of Migration? Evidence from a Oaxacan Community

Mexican coffee growers have been negatively affected by low world coffee prices coupled with reduced government support. One response by coffee farmers has been increasing migration to the US. Another response by some cooperatives has been to differentiate their coffee by certifying it as environmentally sustainable, organic, and/or Fair Trade. This paper examines the links among low coffee prices, migration, and certified coffee production and trade, drawing on a 2004 case study conducted in Oaxaca, Mexico. Although remittances from migrants help finance coffee production, increased migration drains human capital out of the region, which raises the opportunity cost of labor and hence local wages. In this sense, coffee growers who migrate to the US, partly to provide operating capital for coffee, undermine coffee production by raising its costs. The findings raise doubts about the sustainability of the Fair Trade-organic coffee model in the face of migration opportunities. A Chinese version of this article's abstract is available online at: www.informaworld.com/rglo

Links between the Local Trade in Natural Products, Livelihoods and Poverty Alleviation in a Semi-arid Region of South Africa

Can the local commercialization of natural products contribute to reduced poverty and vulnerability? Commentary on this issue is mixed, with some observers being quite optimistic, while others hold a counterview. This paper explores the poverty alleviation potential of four products traded in Bushbuckridge, South Africa—traditional brooms, reed mats, woodcraft, and “marula” beer. While key in enhancing the livelihood security of the poorest households, these products were unlikely to provide a route out of poverty for most, although there were exceptions. Incomes often surpassed local wage rates, and some producers obtained returns equivalent to the minimum wage. Non-financial benefits such as the opportunity to work from home were highly rated, and the trade was found to represent a range of livelihood strategies both within and across products.