Monetary Wage Research Articles

Minimum or Living Wage? Framing Effects on Preferences and Expectations

ABSTRACTLiving wage campaigns are widely studied, yet less is known about how the frame differs from the minimum wage regarding public opinion and preferences. Such framing effects hold policy implications, as in 2016, UK Government changed the name of the regulatory wage floor to a living wage, concurrent with calls for welfare benefits cuts. This study explores how using the frame of ‘living’ rather than ‘minimum’ wage changes public socioeconomic expectations and preferences, and examines how a proposed wage increase, ranging from 50p to £6, comparatively influences public support for welfare spending. Methodologically, a sample from the United Kingdom's general population was recruited to participate in a series of online survey experiments. Treatment frames were randomly administered, followed by questions regarding the regulatory wage floor, and socioeconomic and redistributive preferences. Findings suggest introducing the term ‘living wage’ results in (1) higher expected real wages and unemployment effects; (2) raises the preferred wage floor for the United Kingdom and London; (3) greater desire for separate regional wage floors and (4) modest evidence suggesting that a living wage frame increases support for welfare spending. Interestingly, a proposed monetary wage floor increase had a null effect on welfare preferences when calling for a low or modest increase. However, a substantial proposed increase of over 50% led to a sharp reduction in support for benefits spending.

The Modernity of Keynesian Thinking on Economic Policy from an Institutional Perspective

The objective of the paper concerns the analysis of Keynesian thinking on economic policy from an institutional perspective, since Keynes ignores both institutions and the possibility that a modification of them might change the way expectations are formed. Specifically, the relationship between expectations and economic activity will be examined, taking into consideration the concept of an agent formulating expectations. It will be emphasised how an institutional orientation can help the application of Keynesian economic policies by setting aside individualistic and psychological principles, on which Keynesian thinking is based, and incorporating an institutional and historical examination of political and economic institutions into expectations. This represents an attempt to incorporate the institutional dimension into Keynesian doctrine to strengthen it, without placing the individual at the core of the analysis. For example, the issue of the rigidity of monetary wages highlighted by Keynes in chapter seventeen of the General Theory will be interpreted from an institutional perspective. Indeed, rigidities and customary practices are important in reducing uncertainty and promoting efficient decision-making. It is precisely on uncertainty that individuals acquire knowledge based on their involvement in social practices and observation of the habits that form the structure of social and economic life.

Verification of technical change and cost and productivity criteria: An empirical study using the World Input–Output Database

AbstractThis study examines the different types of technical change, as categorized by the productivity and cost criteria proposed by previous theoretical studies using data from the World Input–Output Database. The results confirm that in some sectors, the cost criteria are satisfied, but the productivity criteria are not. These technological changes are due to the very large labor input of imported intermediates and the higher monetary wage rate of the recipient country than that of the country supplying the imported intermediates. This study is a valid objection to previous theoretical studies.

Salary scale and the diversity of wage systems

In any society or group, the behavior and manner of acting that are highly rated can be estimated based on the level of appreciation given by the group to that level of behavior. This reward system will be studied to show the kinds of behavior group members are expected to get by the group and the kinds of behavior that - through the reward system - will be strengthened and perpetuated in the group. The study of the wage and incentive systems of Japanese factories revealed very well the differences between Western industry and modern Japanese industry. The study also showed both the types and magnitude of the differences that underlie attitudes and behaviors that distinguish modern industry in Japan from that in the United States. In the following discussion, the wage system in one factory will be examined in detail to illustrate the particular central trend that appears in all studied factories. Since the monetary wage system for work performed is only a part of the entire wage system, it will also examine the general pattern of non-monetary benefits, welfare efforts, incentive programs for workers, using specific plans and costs of a particular factory.

The effect of settler farming on indigenous agriculture: Evidence from Italian Libya

AbstractWhat effect did the settlement of European farmers have on the indigenous agricultural sector during the colonial period? On the one hand, European immigrants imported skills and capital but, on the other, they took control of local resources. By looking at the short‐term effect of Italian farming in colonial Libya, I shed new light on this question. Through regression analysis on a novel village dataset covering the entire country, I show that, in 1939, proximity to Italian farms was associated with significantly lower land productivity relative to distant locations. Lower yields can be explained by the adoption of land‐extensive cultivation techniques, implemented by indigenous farmers to counteract a labour drain operated by Italian farms through factor markets. The combined mitigating effect of monetary wages and land‐extensive farming only partially compensated for the fall in income linked to reduced land productivity.

Monetary Reform of G.Ya. Sokolnikov

The article covers the transformations in the sphere of commodity-money relations during establishment of Soviet power. The period under review starts from the chaotic monetary policy in the first post-revolutionary years with attempts to abandon money exchange to the period of creating stable money circulation in the country. NEP brings positive changes, when trade resumes, monetary wages are required, and a for-profit model (khozraschyot) is established. Theoretically, the advantage of a fixed equivalent of value is proved, and stable money is needed, the basis of which is gold. The State Bank is restored. It becomes possible to issue a bank card backed by gold. Under the People's Commissariat of Finance, a Currency Department is created. G. Ya. Sokolnikov is appointed to the post of People's Commissar, a group of specialists is selected, among them N. Kutler, L. Yurovsky, V. Tarnovsky. The reform begins with the implementation of two denominations that have eliminated many varieties of banknotes and reduced their number. The chervonets becomes the main monetary unit, which has a gold content and security. In 1924, the reform is completed. The Soviet Union is able to restore the national economy. The article states that the reform proved the viability of the Soviet currency, as well as the high qualification and theoretical training of its performers. Being in more difficult conditions than other countries participating in the First World War, the Soviet Union carried out monetary reform before them and with a higher result.

Salary scale and the diversity of wage systems

In any society or group, the behavior and manner of acting that are highly rated can be estimated based on the level of appreciation given by the group to that level of behavior. This reward system will be studied to show the kinds of behavior group members are expected to get by the group and the kinds of behavior that - through the reward system - will be strengthened and perpetuated in the group. The study of the wage and incentive systems of Japanese factories revealed very well the differences between Western industry and modern Japanese industry. The study also showed both the types and magnitude of the differences that underlie attitudes and behaviors that distinguish modern industry in Japan from that in the United States. In the following discussion, the wage system in one factory will be examined in detail to illustrate the particular central trend that appears in all studied factories. Since the monetary wage system for work performed is only a part of the entire wage system, it will also examine the general pattern of non-monetary benefits, welfare efforts, incentive programs for workers, using specific plans and costs of a particular factory.

Excess perks in SOEs: evidence from China

In investigating the relationship between economic directors (EDs) and excess perks in state‐owned enterprises (SOEs) in China, we find a U‐shaped relationship between the share of EDs on boards and excess perks, especially in SOEs controlled by local governments and with greater managerial power—as well as in regions with poor legal systems. The share of EDs on boards may have three benefits with respect to reducing the use of excess perks in SOEs: (1) replacing excess perks with monetary wages more aligned with the value of managers; (2) reducing the increase in excessive perks caused by the availability of free cash flow; and (3) reducing the use of excess employees to drive excess perks.

La politique économique des œufs dans les années 1960

In spring 1962, many rural citizens complained to Soviet central authorities about curious payment practices in local village stores. Nothing could be bought for rubles anymore, only eggs were purchasing anything. Although this phenomenon might seem minor, the author shows that this shift from rubles to eggs had serious implications and consequences. Although the introduction of monetary wages in kolkhozy and the monetization of the Soviet countryside were heralded in official channels as an improvement in living conditions, the rural population too often experienced the ruble not as an improvement but as an impediment to better living. For the population, this substitution of the ruble with eggs added to the existing mistrust of both the ruble and trade more broadly. The egg-story shifts our understanding of the fate of the economic reforms in the 1960s. Furthermore, it allows us to zoom into rural everyday life and village economies; it illuminates the many material dependencies among those living in the Soviet countryside.

COST NATURE OF WAGE

The article is devoted to the theoretical study of the wage's nature value. Without touching upon the problem of the substance of value in the article the following questions are considered and the relevant conclusions are drawn.
 The value nature of wages has nominal (monetary) and real (natural) values.
 The starting and final point of the circuit of nominal (monetary) wages are money, or rather money as capital. Real (natural) wages in this movement is only a moment. The purpose of this circuit is to recover from the cash proceeds of the advanced monetary wage Fund.
 On the contrary, the source and end point of reproduction of the labor commodity form is its commodity-natural form. Money, more precisely, money capital is only a passing moment. The purpose of this cycle is the reproduction of the labor force in its natural and commercial form.
 The article shows that the purchase and sale of goods labor and its use has two forms of advance funds.
 On the part of the employer there is an advance of cash wages (prepayment), that is employees need an advance for the normal reproduction of the labor force before the end of the reproduction cycle of finished goods. On the part of the employee can observe the advance of labor before the end of the work specified in the employment contract.
 In General, the two-way advance of funds allows us to say that from the position of property rights, there is both the rent of labor and the rent of capital.
 Value as a substantive basis of wage date and wage labor has three forms of existence: 1) cash existence of money; 2) non-cash existence of cash prices and 3) the estimated value of goods.

Monetary Policy, Capital Mobility, Inflation, and Wages in Eastern European Economies: Selected Papers from the International Conference “Economic Turmoil in Contemporary Europe III”

The four papers in this issue of Eastern European Economics relate to the third international conference “Economic Turmoil in Contemporary Europe” organized by the Department of Econometrics at Laz...

Endogenous business cycles and Harrodian instability in an agent-based model

The article presents an original stock-flow consistent macroeconomic agent-based model with the aim to reexamine Harrod’s instability principle as an explanatory element of macroeconomic dynamics. The main findings are that bottom-up economic models can be subject to Harrodian instability and can produce endogenous cycles without introducing innovation waves, monetary wage spirals, or financial instability. Upward instability is stopped by the ceiling of full employment, and downward instability can be tamed by introducing an autonomous expenditure that feeds aggregate demand.

Who benefits from benefits? Empirical research on tangible incentives

Although a broad field of literature on incentive theory exists, economic research on employer-provided tangible goods (hereafter called benefits) is still in its infancy. The empirical study by Oyer (Res Labor Econ 28:429–467, 2008) is one of few exceptions focusing empirically on the dispersion of tangible incentives. In our study, we test some of his findings by drawing on a German data set. We use two waves of the German Socio-Economic Panel data (2006, 2008) to analyze the occurrence of benefits and their effects on employees’ satisfaction. Our results provide evidence for economic as well as psychological explanations. Looking at differences in firms’ and employees’ characteristics we find that cost efficiency concerns, the purpose to signal good working conditions and the aim to ease employees’ effort costs are evident reasons to provide benefits. Furthermore, analyzing the impact of tangible and monetary incentives on satisfaction and employees’ feeling of being acknowledged by employers, we find different motivational effects. Our results support the psychological explanation that benefits are evaluated separately from other monetary wage components and are more likely to express employers’ concern for their employees and recognition of their performance.

Inflation in China Increasingly Driven by Domestic Factors

The article investigates the determinants of consumer price inflation in China. While inflation has been entirely driven by international factors, such as food and energy prices, in the period preceeding the financial crisis, domestic drivers like monetary developments and nominal wages have become increasingly important since then. Due to tight trade linkages and the presence of Chinese firms in international production chains, the changing pattern is also relevant to other countries.

Who Benefits from Benefits? Empirical Research on Tangible Incentives

Although a broad field of literature on incentive theory exists, employer-provided tangible goods (hereafter called benefits) have so far been neglected by economic research. A remarkable exception is an empirical study by Oyer (2008). In our study, we test some of his findings by drawing on a German data set. We use two waves of the GSOEP data (2006, 2008) to analyze the occurrence of benefits and their effects on employees' satisfaction. Our results provide evidence for economic as well as psychological explanations. Looking at differences in firms' and employees' characteristics we find that cost efficiency concerns, the purpose to signal good working conditions and the aim to ease employees' effort costs are evident reasons to provide benefits. Furthermore, analyzing the impact of tangible and monetary incentives on satisfaction and employees' feeling of being acknowledged by employers, we find different motivational effects. Our results support the psychological explanation that benefits are evaluated separately from other monetary wage components and are more likely to express employers' concern for their employees and recognition of their performance.

Health insurance provision and labor contracts for small firms

Healthcare reform in the USA requires all Americans to buy health insurance and businesses above a certain size to offer healthcare coverage to their employees by 2014. Understanding why some entrepreneurs do not provide employer-based health insurance is important and might help to solve future health insurance problems. Using two unique features which have not yet been discussed in the literature, namely, efficiency–wage theory and a compensation package of monetary wage and health insurance coverage, we provide here a theoretical foundation to why small firms are less likely to offer health insurance and are more likely to have employees with only a weak preference for acquiring health insurance. To reach the goal of health insurance coverage for all, one feasible solution is to allow small firms or individuals to pool together and pay a lower insurance premium.

Flexibilidad de precios y estabilidad de la producción: punto de vista de un antiguo keynesiano

En este trabajo James Tobin discute la validez de las principales tesis que diferencian la macroeconomía keynesiana de la macroeconomía neoclásica. Su discusión la dirige a la nueva teoría macroeconómica –que busca dar una fundamentación microeconómica al “viejo” pensamiento de Keynes- y J. Tobin rechaza su tesis según la cual la deficiencia en la demanda agregada no podría darse sin “rigidez absoluta” de los precios y de los salarios monetarios. Al contrario, demuestra que la producción y el empleo pueden estar restringidos por la demanda agregada si los mercados no se vacían de manera instantánea y continua. Comenta algunas de las explicaciones que sustentan la “rigidez” de los precios y los salarios nominales. Precisa la distinción existente entre el desempleo keynesiano –involuntario y cíclico- y el desempleo friccional y estructural –no remediable por la sola expansión de la demanda agregada-. Finalmente, muestra el alcance y las limitaciones de los mecanismos de ajuste clásico que supuestamente restaurarían el pleno empleo: ajuste de la tasa de interés y flexibilidad de los salarios nominales y de los precios –“efecto Keynes”, “efecto Pigou-Patinkin” y “efecto Fisher de la redistribución de la riqueza”-.

Marx in the matrix, ovvero Marx tra il "circuito monetario" e Sraffa. Un commento a Passarella

This paper shows that it is possible to develop Marx’s categories of new value and surplus value in a consistent model of competitive prices such as Sraffa’s model. In particular, Marx’s theory is interpreted according Price of Net Product-Unallocated Purchasing Power Labour Theory of Value (PNN-UPN LVT) proposed by Duncan Foley and Gerard Dumenil. In this framework Marx’s value theory does not lead to inconsistent results. The meaning of this theory, however, cannot rely only on considerations about formal characteristics of model. From one hand, some aspects of this meaning can ensue, from a comparison with theory of the monetary circuit, because of role that PNN-UPN LTV attributes to money and to ‘the monetary expression of labor time’ and of role played by monetary wages in circuit. From other hand, it is important a comparison with path Sraffa followed in developing his model of prices. In particular it is relevant Sraffa’s choice of units of measure of labor and prices in consequence of ‘transformation’ of wage rate from a determined basket of commodity to a share of net product. It is possible to suggest a line of research aiming at integrating Sraffa’s model of prices and theory of monetary circuit via Marx, or interpretation of Marx’s theory put forward by Duncan Foley and Gerard Dumenil.

The effect of non-pecuniary motivations on labor supply

People value work not only as a means of earning income to satisfy their consumption needs but also as a direct source of satisfaction for its socio-psychological effects (non-pecuniary benefits). I show that once non-pecuniary effects of working time are incorporated in the standard labor-supply model: (i) the wage rate under-estimates ( over-estimates ) the true opportunity cost of non-work/leisure time when working time has non-pecuniary benefits (costs), (ii) non-pecuniary work motivations can substitute for monetary wages as work incentives, (iii) at very low wage rates, work can become a net source of utility , and (iv) the implied shape of labor-supply curve differs starkly from those implied by standard theory. I identify conditions under which a greater non-pecuniary work motivation induces a larger supply of labor, and examine the effects of non-wage income on supplies of paid work and voluntary work when there are non-pecuniary benefits associated with both types of work.

Acumulación y regulación en la economía mexicana (1975-2000)

En el presente trabajo se analiza la configuración de un nuevo régimen de acumulación y modo de regulación en la economía mexicana. El trabajo consta de una parte teórico-metodológica en la cual se explican los conceptos anteriores, y una segunda donde se extiende la exposición hacia las formas institucionales de mayor relevancia, en particular la gestión monetaria y la relación salarial. De acuerdo con las nuevas formas de gestión monetaria y el relativo predominio del capital financiero sobre el productivo (financiarización), así como la mayor flexibilización de la fuerza de trabajo en el campo laboral, se concluye que los cambios acontecidos han sido de carácter desestructurante, sin que hayan podido establecerse aún las bases de una coherencia dinámica de la acumulación en el largo plazo.