Slower Wage Growth Research Articles

Job Upgrading and Earnings Growth for Non-college Workers

Workers without a college degree have faced slow wage growth for nearly four decades. Some employers organize work in ways associated with higher pay for these workers, by implementing job enrichment, high-performance work systems, or structured management practices. However, these job upgrading strategies can be biased toward higher-skill workers and in some cases actually reduce employment opportunities for workers without a college degree. We clarify this trade-off by specifying several pathways through which job upgrading can affect pay, some of which are more or less skill-biased. We then test these ideas by matching restricted-use linked employer-employee data to the near-universe of online job postings. This allows us to assess shifting worker selection and to compare among different types of job upgrading. We show that jobs listing more valuable tasks pay more, but that around half of this premium is due to more positive worker selection. We then show that jobs that specifically involve higher discretion and more tasks involving on-the-job learning have higher starting pay.

New digital technologies and heterogeneous wage and employment dynamics in the United States: Evidence from individual-level data

We analyze heterogeneous effects of new digital technologies on individual-level wage and employment dynamics in the United States from 2011-2018. To this end, we employ four digital technology measures from recent literature: computerization probabilities of occupations, occupational impacts of artificial intelligence, and the suitability of tasks for machine learning and their within-occupation variance. Based on CPS and ASEC panel data, the results indicate that labor-displacing digital technologies are associated with slower wage growth and higher probabilities of switching one's occupation and becoming non-employed. In contrast, labor-reinstating digital technologies improve individual labor market outcomes. Workers with high levels of formal education are most affected by the new generation of digital technologies.

Overcoming the consequences of financial crisis on the example of Island and Ireland


 Will Ireland share the fate of Iceland? Is this open, small economy with a debt-to-GDP ratio of above 130% on the verge of bankruptcy? Economists argue that if public debt is greater than national income, then smaller economies, heavily involved in the international division of labor are at risk of becoming insolvent. The bankruptcy of Ireland, whose prosperity is based on its reputation for being a good place to do business, could be a catastrophy. Contrary to the countries of southern Europe, the economy of the Green Island has never had problems with paying its liabilities and with solvency. While Greece has gone bankrupt five times since gaining independence in 1826 and Spain as many as thirteen in the past two centuries, Ireland's history in this area is impeccable (Reinhard, Rogoff, 2009, p. 3-6). Since the beginning of the 21st century Ireland's economic development has been based mainly on construction industry and not exports, as it used to be in the 1990s when the country was nicknamed the Celtic Tiger. The boom resulted in a budget surplus and a positive balance in current settlements. But it also resulted in higher prices - the Irish no longer had to accept slow wage growth to stay internationally competitive - which, combined with the low nominal interest rate of the European Central Bank, provided fertile ground for the build-up of the real estate bubble. The aim of the article is to identify the factors that led Ireland to the brink of bankruptcy and to try to answer the question whether the action of recapitalization of failing banks by the government and international financial institutions will bring the expected results in the form of healing the financial system and returning Green Island to the path of economic growth.

Real wage growth in the U.S. health workforce and the narrowing of the gender pay gap

BackgroundHealthcare has been identified as a job engine during recent recessions in the U.S. Whether the healthcare sector provides better than average pay remains a question. This study investigates if wages grew with the expanding demand for healthcare workers between 2001 and 2017. Wage growth in the (1) physicians and surgeons, (2) nurse, (3) healthcare practitioner and technical, (4) healthcare support, and (5) direct patient care jobs are examined. The gender pay gap in each occupation is investigated.MethodsThe American Community Survey (ACS) public use microdata sample (PUMS) for 2001, 2004, 2008, 2013, and 2017 were used to derive hourly wages for full-time, full-year workers aged 18–75. The cumulative percent change in unadjusted, median hourly wages between 2001 and 2017 was calculated for each occupation. Quantile regression estimates predicted a median hourly wage for men and women by year and job after adjusting for differences in demographics, industry, and hours worked.ResultsUnadjusted median wage growth was 9.92% for nurses, 5.68% for healthcare practitioners, and 37.6% for physicians between 2001 and 2017. These rates are roughly above the estimated national rate of wage growth at the 50th wage percentile. In healthcare support and direct patient care occupations, workers experienced either stagnant or negative wage growth. Women had lower occupational wages than men.ConclusionThe slow or negative median wage growth in all but the physician occupation between 2004–2008 and 2008–2013 confirms that healthcare wages in the U.S. are not recession-proof, unlike healthcare employment. Generally, women's earnings grew at rates that were higher or less negative than rates for men. This trend contributed to narrowing the gender pay gap in every occupation except for nurse.

Stagnant services and the gradual disinflation of advanced economies

In advanced economies, nominal wage growth and inflation have been falling in secular terms since the early 1980s. Drawing on debates on industrial composition and industrial dualism, I argue that a key driver of falling wage growth and inflation has been the growing share of employment in “stagnant services”: those with limited productivity growth, competitive product markets, and thin profit margins. In these services, it is difficult to raise wages and prices. I use these insights to revisit Baumol's cost disease theory, arguing that weak wage growth in stagnant services has spilled over to other sectors with more room for wage growth, resulting in the gradual disinflation observed in recent decades. Using graphical plots and error correction models of nominal wage growth and inflation in 21 advanced economies from 1972-2009, the analysis shows that employment growth in stagnant services over this period was associated with a reduction of nominal wage growth and inflation by more than half. Without deep changes in stagnant services, slow wage and price growth are here to stay.

Internal devaluation and economic inequality in Portugal: challenges to industrial relations in times of crisis and recovery

Internal devaluation policies imposed in southern European countries since 2010 have weakened labour market institutions and intensified wage inequality and the falling wage share. The debate in the wake of the financial and economic crisis raised concerns about slow wage growth and persistent economic inequality. This article attempts to shed light on this debate, scrutinising the case of Portugal in the period 2010–2017. Mapping the broad developments at the national level, the article examines four sectors, looking in particular at the impact of minimum wages and collective bargaining on wage trends vis-à-vis wage inequality and wage share trajectories. We conclude that both minimum wage increases and the slight recovery of collective bargaining had a positive effect on wage outcomes and were important in reducing wage inequality. The extent of this reduction was limited, however, by uneven sectoral recovery dynamics and the persistent effects of precarious work, combined with critical liberalisation reforms.

Wage of employees in the agricultural sector: modern socio-economic and accounting aspects

Introduction. Many socio-economic problems are characteristic of the agricultural sector, the main of which are: mi-gration of rural population, low income and quality of life of rural residents, lack of social infrastructure of the village, re-ducing the prestige of agricultural work for young professionals. Increasing the level of remuneration and income of the hired personnel of agrarian business entities is a prerequisite for solving such modern problems. The purpose of the research is identification and analysis of modern socio-economic trends and problems of account-ing and analytical support in the field of remuneration of personnel of agrarian enterprises. Results. A wage is one of the most important indicators of the level of socio-economic development of industries and regions. In the agrarian sector wage is traditionally one of the lowest among all sectors of the national economy. The share of wages of agricultural personnel is about 68% of the national average (UAH 7166). The range of wages in the industry by region is significant: the highest is in Ivano-Frankivsk and Kyiv and the lowest is in Odessa and Zaporizhye region. In the structure of agricultural production costs, the share of labor costs does not exceed 5-8%. The minimum wage in Ukraine is 58% of the lowest in the European Union. The main problematic aspects of modern payroll accounting are: the practice of accounting for costs associated with agri-social responsibility programs, the lack of common practice of actuarial valuation methods, discounting the cost of future personnel costs, the imperfection of accounting policies, the order of accounting of the costs associated with the effec-tive mechanisms of agrarian labor stimulation, the limited forms of financial and statistical reporting financial indicators of employment. Conclusions. Implementation of the results showed that the time required to pay the most hired to the personnel of the agrarian sector of Ukraine is significantly lower than the other types of economic practice and foreign practice. The main problematic socio-economic aspects of wages in the industry were identified: tendencies of regional agrarian labor markets, low social standards, low share of wage costs in their general structure, limited size of enterprises slow wage growth in the industry, lack of mechanisms incentives for work in most small agribusinesses. Further improvement of payroll accounting should occur as an informational and analytical supplement to agronomy management in the context of the implementation of modern value management concepts with a focus on human capital. Keywords: wages, salaries, staff, agriculture, cost accounting, calculations with employees, analytical support, agri-cultural enterprises.

Growth and diffusion dynamics of tractor in Punjab

Over the last few decades, India has seen an incessant increase of tractor use as well as expansion in its domestic tractor manufacturing industry, in spite of comparatively slow wage growth and a slow decline in the employment share of the agricultural sector. If the present situation is to be accounted, arguably as much as 90% of the country’s farm area may be prepared by tractors. Monomolecular nonlinear growth model methodology was applied to Punjab’s tractor density time-series data to capture the diffusion of tractor. Levenberg-Marquardt iterative method was applied with the help of SAS by using PROC NLIN statement and the obtained results show that the model is a good fit for the data under consideration. Further, Compound annual growth rate (CAGR) of tractor density was also calculated to infer about the changes in tractor density over the time (1982–2015 ) and found that CAGR was high during 80s and 90s than 2000s. Despite of low growth in last decade, Punjab is expected to have more adopters of tractor in coming years. From this empirical study, we also infer that 90 per cent tractor penetration will be achieved by 2032 in Punjab.

Understanding the Critical Aspects of South Asian Labor Market: Implications and Policy Responses

Objectives: This paper attempts to explore the critical insights into the labor markets of South Asian countries taking ILO’s Key Indicators of the Labor Market (KILM) as an example for illustrations. In addition, the paper puts its lens on addressing adequate policies and program responses at country level, especially for Bangladesh. Methodology: This is basically a policy-focused study focusing on an extensive analysis of existing relevant documents and literature. The paper has therefore adopted three steps methodological approach: collecting, scrutinizing and analyzing. The required data were collected from secondary sources including strategic papers, technical notes, conference proceedings, statistical reports, research articles, relevant books and e-materials of reputed international organizations such as ILO and World Bank. Findings: A critical review of the existing facts and documents has revealed that despite geo-political and ethnical differences, South Asian labor economies are characterized with homogonous labor market characteristics including low labor force participation rate, gender gap in employment and wages, notable labor dependency ratio, working poor, sluggish wage growth, low labor productivity, excessive working hours, high NEET rate, and a state of labor underutilization. In addition, countries differ in terms of policy issues, implementation levels, data availability and compliance to ILO’s decent work agenda to a large extent. Recommendations: An integrated labor policy incorporating the lessons and experiences of developed countries, opinions of stakeholders and labor specialists, balanced and diversified development programs, compliance to ILO’s decent work agenda, and collaborative works with national and international labor organizations are supposed to contribute to better functioning of labor markets. Implications: Although this region of the world is blessed with abundant labor force, a critical analysis has revealed several implications at both national and regional level. The current scenario of lower labor force participation rate and higher time-related underemployment indicate the absence of policies for the fullest utilization of this golden human resource. In addition, slow or negative wage growth and poor wages badly affect the living standards of workers. Despite the consecutive growth in industry and service sector, still the employment in this region is predominantly agricultural which in turn is largely responsible for informal employment. Value/Originality: This study is one of very few labor market studies focusing on the critical aspects of South Asian labor markets. The paper is therefore expected to add value to the existing field of regional labor market research. Academics, researchers, policymakers and stakeholders are largely be benefited from this study.

Queensland January to June, 2018

The first half of 2018 continued some well‐worn Queensland narratives as mixed economic fortunes still plagued the freshly re‐elected Palaszczuk Labor government. While a mammoth infrastructure budget and booming mining royalties offered rosy prospects, stubbornly high unemployment and slow wage growth drew a different picture for households. Despite these challenges, and others created by a Labor minister and a Labor backbencher, the Palaszczuk government continued to dominate the Liberal‐National Party (LNP) Opposition both in the parliament and in the polls.

Market Power, Finance Wages and Inequality

Increasing industry concentration has raised concerns that declining competition among firms for labor has led to slow wage growth. However, the financial sector has been an exception. I find that finance wages have increased by almost three times the increase in non-finance wages, despite similar trends in market concentration. Using administrative data from the U.S. Census, I construct measures of firm-specific market power and show that higher market power is associated with significantly higher wages in finance than in non-finance. I provide evidence that rent-sharing plays an essential role in driving the more pronounced effect of market power on finance wages for two reasons. First, financial firms with higher market power can extract relatively higher rents to share. Second, financial firms give a relatively higher share of rents to workers, especially high-skill workers, due to relatively higher worker bargaining power. As rents are disproportionally distributed to high-skill workers, financial firms with higher market power are associated with relatively higher within-firm inequality.

Chile

This 2016 Article IV Consultation highlights that GDP growth in Chile has been weak, with activity slowing in October. However, conditions are in place for the economy to recover. After expanding by a moderate 1.7 percent in 2016, growth is forecast to increase to 2 percent in 2017. Faster growth in main regional partners and more stable copper prices are expected to lift exports and investment. The recovery is, however, projected to be gradual, held back by slow wage and job growth and still low business confidence. The financial sector appears healthy. Banks’ profitability is declining, but capital buffers are adequate and nonperforming loan rates are low.

Policy Solutions to the Productivity Growth Crisis

In the past decade, economic growth, wage growth, business investment and productivity growth have declined dramatically. Economists have discovered that productivity growth alone explains the dramatic development of industrial economies. Yet, the causes of productivity growth are unclear, with capital, labor and technological contributions.Economists offer a number of theories involving exogenous growth theory, endogenous growth theory and evolutionary growth theory to explain the phenomenon of productivity growth and its centrality to economic development.The essential ingredient of productivity growth is total factor productivity (TFP), which represents an intangible collection of intellectual human attributes that we designate as technology innovation. Macroeconomic theories, however, fail to adequately represent the source and mechanisms of the decline in productivity growth and in TFP in recent years.The present article suggests that there are two main sources of the dramatic declines in productivity growth and TFP in the past decade. First, the U.S. patent system has been substantially degraded. Second, the competitive configuration of the technology industry has become highly concentrated. The combination of the reduced competition from the oligopolous configuration of technology incumbents with reduced patent rights for market entrants shows a mechanism for the decline in investment in innovative R&D that has been the engine for economic growth for hundreds of years. The patent system has been attacked by radicals on the left and the right. On the right, incumbents seek to protect monopoly profits. On the left, progressives attack the property right in a patent in order to seek a public interest benefit to innovation research. As these critiques have influenced patent policy, patent law has been cabined into a narrow scope which only benefits wealthy companies through dramatic increases in enforcement transaction costs.In a weak patent regime, there is limited enforcement of patent rights. For instance, large technology incumbents may engage in efficient infringement in which they infringe others’ technologies until they are caught, typically many years later, and then only pay a nominal fee that they otherwise would pay if they negotiated a license. Without strong patent enforcement, there is no incentive to invest in innovation, either by incumbents that can infringe with impunity or by market entrants that cannot reasonably enforce their patent rights.The weak patent system, combined with the oligopolous technology market configuration, explains the declining investment in technology R&D even as technology incumbents realize record profits and enjoy historic cash hoards.These policy factors explain the recent dramatic drop in productivity growth, the slowest economic recovery in about a hundred years, slow wage growth, weak business investment and the general discontent that is shaping politics.If the causes of weak productivity growth involve government policies – patent policy and competition policy – we can modify the policies to restore growth. In many cases, these policy prescriptions are simple to implement and may provide dramatic catalyst for economic growth.

What the American Elite Won over the Past 35 Years and What All Other Americans Lost

Sometimes we have to step back and take a comprehensive look at the state of our society. The authors do just this in a thorough piece about not only rising inequality and slow wage growth but also social values we hold dear.

Industrialization and labour in Malaysia

Although increasing globalizations spurred rapid industrialization in Malaysia, this article shows that the lack of significant technological upgrading and structural change has caused the premature plateauing of manufacturing, stemming from failures to coordinate policies, enforce standards, sustain high productivity growth and stimulate transition to higher value-added activities. Manufacturing as a whole has registered slow wage growth since the late 1990s, with labour markets characterized by heavy presence of low-skilled foreign workers, increased contract labour and outsourcing and declining worker organization. The focus on perspiration-based low-skilled foreign labour rather than on expanding professional and skilled labour has driven Malaysia down the low industrialization road. The Malaysian experience reflects a case of manufacturing's importance and direct contribution to the economy contracting before recording high levels of value added and sustained productivity growth, and with labour market practices constraining instead of facilitating positive change.

Legal Status and Wage Disparities for Mexican Immigrants.

This paper employs a unique method of imputing the legal status of Mexican immigrants in the 1996-1999 and 2001-2003 panels of the Survey of Income and Program Participation to provide new evidence of the role of legal authorization in the U.S. on workers' wages. Using growth curve techniques, we estimate wage trajectories for four groups: documented Mexican immigrants, undocumented Mexican immigrants, U.S-born Mexican Americans, and native non-Latino whites. Our estimates reveal a 17 percent wage disparity between documented and undocumented Mexican immigrant men, and a 9 percent documented-undocumented wage disparity for Mexican immigrant women. We also find that in comparison to authorized Mexicans, undocumented Mexican immigrants have lower returns to human capital and slower wage growth.

Recent spatial growth dynamics in wages and housing costs: Proximity to urban production externalities and consumer amenities

Despite numerous technological advances, remoteness within the United States has been increasingly associated with relatively slower economic growth. Using a spatial hedonic pricing approach, this paper assesses the relative importance of proximity to urban consumer amenities and production spillovers in explaining growth differentials in wages and housing costs across the U.S. urban hierarchy. We find that the dominant force for lower wage growth in remote nonmetropolitan and small metropolitan-area counties is increasing relative productivity disadvantages. Yet, for medium-to-large metropolitan areas, increased attractiveness to households of remoteness from even larger metropolitan areas generally contributed the most to relatively slower wage growth.

Productivity Rewards and Pay Illusions Caused by Health and Retirement Benefit Cost Increases

In summer 2009, health care reform seems almost within reach. President Barack Obama is urging the Congress to pass bills, and both the House and Senate are trying to deliver. Everyone agrees on the necessity of reform, but that’s where the agreement ends. Most of the ongoing discussions about who should pay for health care legislation have proposed employer coverage mandates, limitations on health benefit tax preferences, taxation of health insurers and 'play-or-pay' provisions, all of which would distribute the costs of expanded coverage among employers and, through them, to their workers in the form of slower wage growth. An important - but often overlooked - point in these discussions is that health costs paid by employers are part of the compensation paid to workers. Compensation includes wages, employer contributions to Social Security and Medicare, the cost of any health insurance coverage for workers and their dependents, and contributions to any pension plans, 401(k) plans and other capital accumulation programs. While many of the proposals for health reform are looking to employers to fund much of the cost, there has been little focus on the links among wages, compensation and the cost of employer-sponsored health and retirement benefits. No one has talked much about how higher health benefit costs to employers would affect the paychecks workers bring home. The analysis in this report projects five scenarios that illustrate the importance of controlling health costs. In our baseline scenario, we manage to cut health benefit cost inflation rates roughly in half and do not expand health insurance coverage. In that scenario, wage growth rates are projected to be roughly equivalent to those of the 1990s for the next couple of decades. Under an assumption that we control health cost inflation but expand coverage by means of an employer play-or-pay mandate, the effect on wage growth patterns would be negative at the bottom of the earnings distribution and mildly negative in the middle of the earnings distribution for a while. But after 2015, wage growth rates would return to the healthier levels of the 1990s. Bringing health costs under control allows more resources for expanded coverage. If we expanded health insurance coverage but our current health cost inflation rate continued unabated, the higher overall costs would result in falling wages at the bottom of the earnings spectrum and very slow wage growth on up the earnings distribution. These dismal wage outcomes would persist over at least the next couple of decades, possibly longer. The next scenario considers the real possibility that health inflation increases as a result of expanded insurance coverage offered under reform. Looking back at the implementation of Medicare, this is exactly what happened. This scenario combines expanded health care coverage with accelerated health inflation rates. In this case, the higher costs would drive disposable wages downward across most of the earnings spectrum, although the declines would be steepest for lower-earning workers. These depressed conditions would persist over the entire projection period. Fixing what is broken in our health care system is about more than expanding health insurance coverage or deciding whether taxing employer-sponsored health benefits is good or bad policy. No matter how health care reform is financed - whether by employers, who pass the costs on to workers, or taxpayers - the bill will be unaffordable unless costs are brought under control. Our current health care system is embedded with incentives that encourage providers to dispense an ever-expanding menu of treatments and medications, even where there is little evidence of their efficacy. Our health care system already costs 40 percent to 100 percent more than its counterparts in other developed countries and is growing twice as fast.

Russian Industrial Restructuring: Trends in Productivity, Competitiveness and Comparative Advantage

This article investigates issues related to industrial restructuring in Russia. Based on extensive sectoral data it examines, more particularly, levels and changes in labour productivity, unit labour costs and revealed comparative advantages for a large number of Russian industrial sectors. The main findings are the following. First, impressive increases in labour productivity have been achieved since 1997, especially during the post-crisis period. Secondly, this has been true for all major sectors, with the exception of those which are still predominantly state controlled or which suffer from strong state interference. Thirdly, there have been significant relative adjustments within the industrial sector, as labour productivity increased more in less productive sectors. Since the crisis, relative unit labour costs have also adjusted considerably, as less competitive sectors experienced relatively slower wage growth and larger labour force reductions. Fourthly, international competitiveness - as measured by revealed comparative advantage - remains limited to a small number of sectors that mainly produce primary commodities (particularly hydrocarbons) and energy intensive basic goods. And, finally, there has been a tendency for further specialisation in resource based exports in recent years.

Gender Earnings and Part‐Time Pay in Australia, 1990–1998

AbstractThis paper studies the effects of enterprise bargaining on the pay position of women and other target equity groups. Contrary to a priori expectations the paper shows a convergence in full‐time and part‐time gross gender pay gaps following the adoption of decentralized wage bargaining. Convergence in the latter reflects compositional (human capital) effects: the entry of less qualified and less experienced males into part‐time employment. Overall the results show a deterioration in the pay position of men employed full‐time relative to women and part‐timers (men and women) brought about by slower wage growth amongst men in full‐time employment.