Wage Research Articles

Factor income shares and pension sustainability: a primer

ABSTRACT In this article we use an overlapping generations model economy to study the quantitative consequences of the decrease in the labour income share of output for the future sustainability of unfunded public pension systems. We find that this negative dynamic worsens the sustainability of these systems in the short and medium term, since the drop in payroll tax collections is bigger than the decrease in pension expenditure due to lower pensions, as the lower earnings are transferred to pensions with a certain time lag. Moreover, we find that longer pensionable earning references used to compute the pension may amplify this financial imbalance. Finally, we also find that the future pension imbalance increases significantly if such labour income share dynamics are also accompanied by a decrease in the capital income share, since the decrease in the wage rate is bigger when both factor income shares decrease simultaneously.

Full Competition and Innovation

Economic science is built on the basis of the concept of competition. Classical School economists have not defined this concept with precision. The “Neoclassic Revolution” defined the concept of perfect competition as an ideal combination of productive resources accessible to all permanently (optimal size). Within this framework, competition ensures that suppliers will cover demand by matching market prices to both average and marginal costs corresponding to the optimal size. Large and persistent differences in profit and wage rates, when interpreted from a perfect competition perspective, will always be considered a sign of the absence of competition. Only an alternative concept of competition can modify such an interpretation. In this context, the objective of this work was to develop an alternative concept of full competition, which is formally formulated, to foster a more sustainable environment for the coexistence of enterprises of different sizes. The full competition definition assumes that firms maximize long-term benefits (fixed-capital amortization period) by trying to ensure full use of productive capacity and achieving relative advantages through innovation instead of merely adjusting prices to maximize short-term benefits. This approach provides a different explanation for inequalities in profit and wage rates, from simple adjustment in prices (perfect competition) to the search for new and better opportunities through innovation (full competition). This could change the meaning and scope of economic policies, which are influenced by both Neoclassical and Keynesian approaches, when addressing the entrepreneurial challenges of sustainable development.

The Effect of Enterprises’ Digital Transformation on Enterprises’ Labor Share—Wage Rate, Labor Productivity and Heterogeneity of Different Enterprises

The Effect of Enterprises’ Digital Transformation on Enterprises’ Labor Share—Wage Rate, Labor Productivity and Heterogeneity of Different Enterprises

Regional and sectoral wage disparities as a reflection of inequality: The case of Kazakhstan

In today’s world, many countries, including Kazakhstan, are facing growing income inequality, poverty, and an increasing polarization of society. These challenges threaten social stability and make it difficult to achieve the Sustainable Development Goals. The purpose of this study is to investigate the size and trends of regional and sectoral wage disparities in Kazakhstan, as well as to create a typology based on the average wage levels in different regions and to provide recommendations for reducing income inequality. The study tested hypotheses about the relationship between the average nominal wage and the level of GRP, level of education, industry specialization, type of ownership, and size of enterprises. The methods of expert survey, correlation, and cluster analysis were used. The study revealed the tendency of increasing inequality of labor income. The largest differences between wages in extractive industries and agriculture were revealed in the Atyrau (11.5) and Mangystau (9.2) regions and Astana (7.2). Differences in average wages between regions were estimated at 1.7 to 7.8 times. The most significant factors affecting the level of average wages are gross regional product per capita and the share of gross value added of the quasi-public sector in the gross regional product. In order to reduce differences in wages, it is recommended to introduce progressive taxation, apply regional increasing coefficients, and calculate the minimum wage based on the hourly wage rate. AcknowledgmentThis work is supported by the Committee of Science Ministry of Science and Higher Education of the Republic of Kazakhstan (Grant BR21882165).

Determinants of Agricultural Land Fallowing in Kerala, India: Insights and Implications

Kerala's land use dynamics have undergone significant transformations, with increasing fallows emerged as a key concern amid changing land utilization patterns. The study explores key factors contributing to the fallowing of agricultural land in Kerala. The research was conducted across three districts selected based on implementation of fallow land development schemes representing the northern, central, and southern regions of the state. A total of 360 farmers were surveyed, comprising 180 farmers with owned fallow land and 180 beneficiaries of fallow land development schemes. Data were collected using a pretested interview schedule, developed through extensive literature review and expert inputs. Factor analysis was employed to identify key determinants. Six major factors with eigenvalues greater than one were extracted, explaining 58.95% of the cumulative variance. These factors include perspectives on fallowing, socio-economic attributes, land use experience, risk contingencies, personal traits, and economic and agro-ecological features. The findings highlight that perspectives on fallowing contribute the largest variance (21.96%), emphasizing the importance of farmers' perception on causes and consequences of fallowing. Socio-economic attributes (11.25%) underline the role of family size, subsidiary enterprises, land value, and wage rate in influencing land use decisions. Land use experience (9.06%) reflects farming experience and preceding crop cultivated. Risk contingencies (6.22%) emphasize challenges like wild animal attacks and distance of farm land from road. Personal traits (5.50%) comprise of age and personal reason for fallowing. Economic and agro-ecological features (4.96%) including income, extreme weather events and land fragmentation, also emerged as critical determinants. The study provides a comprehensive understanding of the multi-dimensional factors driving agricultural land fallowing in Kerala, offering insights for policymakers and stakeholders to design targeted interventions to promote sustainable land use.

Dynamic Asset Allocation and Retirement Decision with Consumption Ratcheting and Effort Choice

This study examines the problem of choosing optimal consumption, investment, early retirement, and effort levels for an economic agent who is unwilling to reduce their consumption over time. The agent’s income depends on a fixed wage rate, and varies proportionally with their level of effort, which incurs disutility due to labor. By applying the dual-martingale method, we reformulate the problem into its dual form, dividing it into two distinct sub-problems: one focuses on selecting a consumption path that does not decrease, while the other determines the optimal timing for early retirement. Using this method, we find optimal strategies in the form of explicit closed-form solutions.

Exploring the Dual Impact of AI on Employment and Wages in Chinese Manufacturing

Purpose- This study investigates AI's impact on employment and wage dynamics within the manufacturing sector.Design/Methodology- Utilizing data from 3,522 manufacturing firms between 2007 and 2021, we analyze the effects of AI adoption on labor markets. Findings- AI adoption correlates with reduced employment numbers yet enhances wage rates, with some employees seeing wage increases as high as 83.86%. Heterogeneity analysis reveals variability in these impacts, dependent on contextual factors. The deployment of artificial intelligence in manufacturing sectors leads to an upgraded wage structure, emphasizing the importance of advancing individual professional skills to capitalize on these wage improvements. Additionally, compared to larger firms in the eastern region, small and medium-sized enterprises in the central and western regions stand to gain more substantially from the integration of artificial intelligence technology.Practical Implications- Policymakers need targeted interventions to address job losses while leveraging wage growth benefits, emphasizing reskilling and inclusive AI integration strategies. The study provides empirical evidence on AI's dual effect on employment and wages, offering nuanced insights into sector-specific AI consequences.

Livelihood Impacts of Micro-Hydro Electricity Project of Rural People of Nepal

Micro-Hydropower (MHP) is generally defined as a decentralized small scale water power plant that generate electricity power up to 100kw and server nearby householders thoughts a local grid for power generation up to 100kw. This study analyzes the livelihood impacts of the micro-hydro electricity projects of the rural people on Taplejung district of Nepal. There are twelve micro hydroelectricity projects constructed as well as they generated and supply the electricity power of the local people without connected in national grid of the NEA. Primary data were used for the study for the information and descriptive statistics were used for data analysis. To measure livelihood impacts of the project, different indicators like housing and sanitation condition, electricity used, industrial situation, agro-product pricing and wage rate of the labour had been used. The completion of the different MHPs in the sample area shows the result that the MHPs had positive impacts upon the surrounding community people’s income and living standard, which shows the positive impacts on their livelihood in the Taplejung district. The result encourages the different stages of governance as well as other investors for the implementation of the micro-hydroelectricity project in the situation of the Nepalese context.

The persistence and expansion of sharecropping in a Javanese village

AbstractIn the Javanese village of Kaliloro, share tenancy in rice cultivation, which was widely predicted to disappear with the Green Revolution, has not declined but expanded since the early 1970s. In this article, building on previous debates on share tenancy, we show how sharecropping has survived and expanded in Kaliloro's generally commoditized agrarian economy. Many share tenancy relationships in Kaliloro link wealthier landowners and landless or near‐landless tenants. But many also occur between households of relatively equal status and between parents and their own children. For both landowners and share tenants, their reasons for reliance on sharecropping over hired labour are complex, going beyond simple comparisons of relative labour costs (to landowners) or labour earnings (to share tenants). The landless and near‐landless are well aware of the exploitative nature of share tenancy, but it remains an important component of their pluriactive livelihoods, even in times of rising farm wage rates, mainly to ensure a supply of rice for domestic consumption. For landowners who are too busy, or unable, to manage cultivation themselves, share tenancy remains the most convenient, effective, and risk‐free labour regime, and mechanism of surplus transfer from direct producer to landowner.

Competition and coordination between traditional and internet hospitals

AbstractMotivated by the recent emergence and rapid growth of online healthcare platforms, this paper investigates its impacts on the healthcare ecosystem by taking into consideration of heterogeneous patients, homogeneous service providers and profit-driven hospitals. A game-theoretical model with a queueing framework is developed, and two healthcare systems are considered, including a monopolistic system with either an offline, traditional hospital, or an online, Internet hospital, and a duopolistic system with both kinds of hospitals. Our study finds that in both systems a large population of patients always increases the healthcare supply and demand and the hospital utilization, which leads to an improvement not only in the hospital profitability, but also in the welfare of both patients and service providers. When considering a monopolistic system only, our study suggests that the monopolistic Internet hospital outperforms its counterpart in hospital utilization only when the wait cost is not high (i.e., patients are less sensitive to wait time), especially when the wait cost is medium and the patient-provider ratio is small. When considering a duopolistic system, this study concludes that the decisions of patients, service providers, and hospital managers of both hospitals are interrelated, and that a large population of service providers increases its hospital’s supply, demand, and wage rate, while decreases its wait times. When comparing the two monopolistic with the duopolistic system, the latter outperforms and improves every entity’s utility (i.e., patients, hospital, and society) when there is abundance of service providers with more being allocated to the Internet hospital, whereas the monopolistic system dominates when the patient population is large, and more providers are allocated to the traditional hospital.

Overcoming Challenges in Scented Geranium Cultivation, Processing, and Marketing: Study from Northern Karnataka, India

Medicinal and aromatic crops play a pivotal role in the socio-cultural, economic, spiritual and health dimensions of India's rural population and have become an integral part of our culture and rituals. Karnataka is a major repository of aromatic and medicinal treasures of the country. The demand for aromatic plants in India surpasses the available supply, prompting the widespread commercial cultivation of major aromatic crops in various regions. Among these, scented geranium emerges as a vital perennial aromatic, cultivated for its leaves imbued with a captivating rose fragrance. The aromatic oil of scented geranium is increasingly replacing traditional rose oil and identified as one of the top 20 essential oils traded globally. The present study aims to identify challenges in cultivation, processing and marketing aspects of scented geranium in Northern Karnataka. Considering the area and concentration of scented geranium in the state, Belagavi district is purposively selected for the study. Primary data was collected through personnel interview of randomly selected geranium growers. The major challenges faced by the farmers in the production, processing and marketing aspects of scented geranium were analysed and prioritized through Garett ranking technique. Analysis of the data revealed that in production, high cost of planting material, lack of high yielding varieties and high wage rates, high cost of inputs and sensitivity of crop to heavy rains were identified as top five constraints. Whereas, in processing, significant hurdles were high working capital requirement, high capital investment in installation distillation unit and insufficient knowledge on operation of distillation units, low oil recovery and lack of efficient processing equipment. In marketing aspects, high price fluctuation, lack of marketing information and lack of competition in the market, non-existence of local market and lack of adequate demand in nearby area were identified as major challenges in the study area. Educating farmers in nursery management and implementing mechanization techniques, particularly for harvesting, are crucial for enhancing productivity and profitability. Additionally, training on proper storage and transportation practices is essential to maintain the quality of volatile essential oils. This comprehensive strategy promotes sustainable and economically viable cultivation of scented geraniums in the region.

Cost per kilogram weight-lost - Lifestyle change program at the Public Health Institute in Croatia

Abstract According to the 2019 European Health Survey, 42% and 23% of the Croatian adult population were affected by overweight or obesity, respectively. Counselling services are available in some Public Health Institutes for free or paid out-of-pocket. The estimated cost per kilogram lost in programs in Europe and the USA ranges from 100-340€, with a justifiable cost estimation for a weight loss intervention being 120-210€. Aim was to demonstrate the cost of losing one kilogram by analysing necessary initial material and human resources, including equipping counselling centres, and estimating the cost of continuous implementation. In the year 2023, 47 participants (31F,10M) with a BMI higher than 30 kg/m2 enrolled in the three-month free Program in the County Public Health Institute in Pozega. The program consisted of personalized assessment, habit change plan, education, counselling and follow-up. An analysis of the minimal required equipment and working hours of physician and a nurse (contracted gross hourly wage rates) was conducted. The main outcome measure was the cost of one kilogram lost by participants at the end of the Program. Program was completed by 41 (22F, 9M) participants (87.2%). Their initial BMI ranged from 30.3 to 47.4 kg/m2. Collectively, they lost 323.2 kg (1.3-24.4kg), with an average of 7.9 kg or 7.4% (1.7-19.8%) of their initial weight lost. The estimated total cost of medical, IT and office equipment, was 9363€. The human resources cost was 9509€, with a specialist and nurse spending 249 and 116 hours, respectively (27.6€/hour and 13€/hour). The initial cost per kilogram lost, including the prerequisites for the work of the counselling centre, was 58.4€. The continuous program cost with equipment already in place is estimated at 27.9€ per kilogram lost. We have shown that the lifestyle management program in the Croatia without extra cost to patients delivers results with a cost of 27.9€ per kilogram weight-lost in continuous implementation. Key messages • The significant impact of obesity on premature mortality and healthcare systems calls for the systematic implementation of effective weight management programs that are available to patients for free. • It is possible to implement effective weight management program in Croatia without extra cost to patients for 27.9 € per kilogram weight-lost.

Playing with fire: Socioeconomic factors and deliberate wildfires in Texas

Deliberately setting fires, also known as arson, is one of the primary causes of human-caused wildfires in the US. Arson fires pose a significant threat, contributing to the human-caused wildfire problem in the southern US. Since more than 90% of wildfires in the South are human-caused, it is particularly important to examine the factors that influence the distribution of arson wildfires in this region. While most research has combined arson fires together with other human-caused wildfires, a smaller body of studies has focussed specifically on fires started by arson. The focus of this study is to understand the key factors associated with the distribution of intentional wildfires in Texas. We examine the relationship between a combination of key socioeconomic factors and environmental factors and, arson wildfires using Negative Binomial models. As expected, our results indicate that road density, unemployment rate, and crime rate are positively associated with arson fires, and the number of law enforcement officers and wage rate are negatively associated with arson wildfire incidences. The higher percentage of forest cover in a county and higher temperature regimes are also positively associated with arson fire occurrences. As such, we conclude that arson wildfires are more likely in areas with high accessibility to wildlands. Similarly, counties with high unemployment rates and consequently high crime rates are more likely to suffer from arson wildfires. Our results clearly show that a higher presence of law enforcement officers in a county deter arsonists. Similarly, financial well-being as indicated by the higher wage rates in a county plays an apparent role in curbing arson wildfire occurrences. Thus, the results from this study provide valuable insights to policymakers, land managers, and fire prevention specialists to develop targeted interventions aimed at reducing arson risk in Texas and beyond.

Earnings Responses to Even Higher Taxes

Abstract We exploit a recent Swedish tax reform, implying higher marginal tax rates for the top 5% of the earnings distribution, to learn about earnings responses to higher taxes. Using a simple and graphical cross sectional method, we estimate an earnings elasticity of 0.16, evaluated four years after the reform. Our analysis indicates that the response is driven by adjustments in wage rates, and not by changes to hours, job switches, or income shifting. We interpret the magnitude and preciseness of the response using a realistically calibrated simulation model in which people face uncertain marginal tax rates due to earnings dynamics.

Indigenous and Non-Indigenous Unemployment, Employment, and Participation Rates Through 2023: Education Remains Critical

Employment, unemployment, participation, and wage rates have been more favourable for the non-Indigenous population than for the Indigenous population. With one exception, this has been the case in every year since 2007, when the data first became available. While wages were higher in 2022 than they were in 2021 for both Indigenous and non-Indigenous populations, the overall employment picture for the Indigenous population was worse in 2023 than in 2022. Their unemployment rate was higher, while their employment and participation rates were lower. In comparison, all three rates were higher for non-Indigenous people in 2023. A critical factor related to each of these three rates is the education level achieved. Higher completed educational levels are directly related to lower unemployment rates and higher employment and participation rates as well as to higher wage levels.

The Minimum Wage in Greece: A Review of Institutional Features, Developments and Effects Between 1975 and 2023

Abstract This paper takes a historical perspective and assesses the evolution of the institutional features in setting the minimum wage in Greece between 1975 and 2023. It also evaluates developments regarding the minimum wage level, its bite and alignment with productivity. The paper reviews the limited available empirical literature on the association of the minimum wage with labour market outcomes (average wages, employment, inequality). It presents new estimates of the elasticity of average wages to the minimum wage. One of the paper’s key points is that the minimum wage setting mechanism has changed over time as the economic environment has changed. Reviewing the evolution of the minimum wage over time to evaluate whether the minimum wage follows productivity developments and whether the minimum wage bites leads to the second and third takeaways of the paper. The minimum wage follows productivity developments over the longer term but not always in the short term. The bite of the minimum wage is high and appears to be higher when government intervention in setting the minimum wage is stronger. As for the impact of the minimum wage on average wages, the new estimates of the elasticity of the average to the minimum wage the paper provides, use more precisely measured wage rates, which show a high elasticity of average to minimum wages. Finally, the review of the existing literature on the employment effects of the minimum wage shows that, as in other countries, the results are mixed with modest negative or no effects.

Reallocation of time after an exogenous reduction in mandatory travel: transport, work, and leisure in Chilean two-worker two-gender households

A two-step model framework is proposed and applied to analyze empirically the impact of a travel time reduction on labor supply in two-worker two-gender households, using a nationwide data set for time use collected in 2015 in Chile. First, a system of structural equations (SSE) is estimated to reveal which activities can be considered as committed, and to unveil the hierarchy of activities by gender undertaken by the household workers to help defining the labor supply model. Then a quadratic formulation including committed time for each individual and committed expenses for the family is applied to the time-use data to estimate a labor supply model, considering the findings with the SSE (hierarchy and committed activities). Results were obtained controlling for household size, region, and age, showing systematically that labor supply diminishes with the wage rates of either working member of the household (a forward falling shape), that committed expenses induces more work, and that diminishing mandatory travel time induces an increase in working hours that varies between 27 and 64 percent of the liberated time, in line with 2023 reports on the reallocation of liberated travel time due to remote working and confirming the theoretical findings by Jara-Diaz and Contreras (2024).

The Healthcare Workforce Shortage of Nurses and Physicians: Practice, Theory, Evidence, and Ways Forward.

The healthcare sector is ubiquitously plagued by workforce shortages in economies around the globe. The fragility of this structural shortage becomes apparent when external shocks, such as the COVID-19 pandemic, exacerbate the lack of workers in clinical practice. In this article, we summarize current trends in healthcare workforce development across the globe, review theoretical concepts of workforce shortages, and discuss policies to address them. In practice, developed countries often address workforce shortages with targeted migration policies. However, targeted workforce migration policies only intensify workforce shortages in low-and middle-income countries. Theoretical macroeconomic models suggest that supply shortages may result from too low wages, supply lagging behind demand, and social perception. Changes in the wage rate cannot sufficiently increase the supply of health professionals as scholars find inelastic wages for physicians and nurses. Nonpecuniary factors such as working conditions, job satisfaction, and intrinsic motivation are at least equally important as financial incentives. In conclusion, increased wages can only be part of a heterogeneous policy plan to address shortages. Migration and retirement levels of health professionals can temporarily mitigate workforce shortages but rarely change the underlying systemic issues. Increasing the number of places available in medical and nursing schools while also improving, both, financial and nonfinancial incentives for employees are long-term structural policy options.

Оценка обеспеченности человеческим капиталом аграрного сектора экономики

Abstract. The formation and use of human capital in the agricultural economy must meet modern economic requirements and the level of development of agricultural production. The assessment of the efficiency of the use of human resources and the quality of products plays a key role in adapting to changing market conditions. Therefore, it is important to constantly strengthen human resources to ensure a prompt response to market challenges. At the same time, agricultural production is currently undergoing changes in all key areas. This article analyzes the availability and efficiency of the use of agricultural enterprises' labor resources, based on statistical data for the Russian Federation. In this regard, the purpose of this scientific study is to analyze the availability of human capital in agriculture. The objectives of the study include carrying out a qualitative and quantitative assessment of labor resources. Methods. The methodological basis is based on the general scientific principles of a systematic approach. The analysis uses logical, factorial, comparative and strategic methods, as well as methods of qualitative research of the main trends in the presence and use of human capital in agriculture. Results. The analysis of the formation and use of human capital in agriculture in its quantitative and qualitative assessment in the Russian Federation is carried out: the dynamics of rural population density and the number of workers, the growth rate of wages of agricultural workers, the grouping of those employed in agriculture by level of education, gender and age is given. Scientific novelty. As a result of the research, new theoretical and practical conclusions were obtained, including: 1) identification and classification of socio-economic conditions that promote or, conversely, hinder the effective use and preservation of human capital in the agricultural sector; 2) comprehensive schemes for the formation of human capital in the agricultural sector are proposed, taking into account internal and external factors; 3) the need for the formation of a comfortable socio-economic environment in rural areas is justified; 4) confirmed the need to provide special support measures to attract highly qualified specialists to rural areas.

Рост заработной платы как фактор повышения эффективности производства в современной России

The work assesses trends in the efficiency of the economy of modern Russia and assesses the impact of wages and accumulated fixed capital on production efficiency. Production efficiency was assessed by return on assets. Factors of production were assessed by the growth rate of wages, their excess over the growth rate of labor productivity, and the growth rate of accumulated fixed capital. Econometric methods were used. It is shown that the main trend in the development of the Russian economy is a decrease in the profitability of assets and, accordingly, production efficiency. An increase in production efficiency by 40% can be achieved through an increase in wages and by 50% through an increase in accumulated fixed capital. Additionally, increased efficiency can be ensured by the rate of growth in wages exceeding the rate of growth in labor productivity.