Decline In Wages Research Articles

Trade and Wage Inequality in Developing Countries

In this article we provide a theoretical analysis of the possible impact of trade and fragmentation on the skilled–unskilled wage gap in a small developing economy. In particular, we illustrate the possibility of a decline in the relative wage of the unskilled labor following an improvement in the terms of trade. (JEL F1, F11, F12)

Recording California's Carceral Landscapes

The California prison boom that began in the early 1980s coincided with the ascent of economic neoliberalism and corporate globalization. The late twentieth-century wave of economic restructuring dismantled the welfare state, deregulated corporate trade and financing, and produced a continuing decline in real wages. Since the economic crisis of the 1970s, the local, national, and global economies have created a world that is increasingly bifurcated between the haves and have-nots.

The relationship between changes in equipment technology and wages in the US construction industry

The US construction industry has witnessed a drop in real wages since 1970. The decline in real wages may be attributed to a combination of socio‐economic factors like migrant labourers, fringe benefits, safety procedures, union membership and worker skills. Another factor that may be impacting construction real wages is technological changes over the past couple of decades, including technological changes in construction equipment. This paper examines the relationship between changes in equipment technology and changes in construction wages with the help of five factors of equipment technology change: control, energy, ergonomics, functionality and information processing. Furthermore, data from the US Bureau of Labor Statistics' Current Population Survey is used to examine the effects of computer usage on wages among US hourly workers in construction. The research findings show significant relations exist between changes in equipment control, functionality and information processing with wages among non‐supervisory workers. Another finding indicated that although non‐supervisory construction workers who use computers at work earn higher hourly wages, there was no added wage benefit after controlling for the effects of experience, education and age.

An Examination of Takeovers, Job Loss and the Wage Decline within UK Industry

Abstract This paper investigates the effects of takeovers on workers’ employment prospects and wages in the UK for the years 1987–1995. We address directly the idea that takeovers involve a ‘breach of trust’ with employees. Our results provide no support for the breach of trust hypothesis and rather suggest shareholders and workers in the post‐acquisition joint entity are locked in a form of ‘equal misery’ following the execution of the takeover. There already an exist a wide range of event studies documenting the effect of takeovers on shareholders and a smaller number of studies discussing the impact of takeovers on employees. The contribution of the present study is to relate the separate effects of acquisition on these two groups to each other. By doing so we seek to test directly the proposition that takeovers reallocate rents from workers to target shareholders, via the bid‐premia paid on acquisition.

High Inflation and Real Wages

Empirical data show that real wages fall sharply during periods of high inflation. This paper suggests a simple general equilibrium explanation, without relying on nominal rigidities. It presents an intertemporal two-sector model with a cash-in-advance constraint. In this setting, inflation reduces real wages through (1) a decline of the capital stock, and (2) a shift in relative prices. The two effects are additive and make the decline in real wages exceed the decline in per-capita GDP. This mechanism may contribute to rising poverty during periods of high inflation.

Development of the Slovak agriculture and agricultural policies during the transition period

The economic importance of agricultural sector in Slovakia declined during transition period. There are several reasons for this: declining terms of agricultural trade, extreme weather, transformation of agricultural sector, unclear property rights in transition period, short-run privatization distortions, transformation of up and downstream sectors, world market fluctuation, decline of real wages, low stability of agricultural policy and other. The development in economic market was paralleled by activity in political market. After initial liberalization, agricultural protection subsequently increased. The EU accession influences both levels of protection as well as instruments of agricultural policy.

Labor Market Dynamics and Wage Losses of Displaced Workers in France and the United States

The objective of this paper is to provide a comparative assessment of the consequences of worker displacement in France and the United States. I estimate wage losses of displaced workers in the two countries and examine the relative contribution of two important sources of post-displacement wage adjustments. The first one relates to the loss of seniority-accumulated firm-specific earnings potential. The second one arises from match heterogeneity. Identification of the relative contribution of these two sources can be achieved given separate estimates of returns to seniority. I show that, while the order of magnitude of total wage losses are comparable in the two economies (10 to 15%), the sources of wage adjustments differ strongly: all of the wage decline in France seems to be due to the loss of accumulated firm-specific earnings potential, while in the US, more than half of measured wage losses arise from a downgrading of displaced workers into lower quality job matches.

Whither Lula's Brazil? Neoliberalism and ‘Third Way’ Ideology

This article critically examines the strategy and policies of President Luiz Inacio ‘Lula’ da Silva's regime in Brazil. A combination of economic liberalization, political ‘redemocratization’, and ‘Third Way’ ideology, his theoretical framework serves to justify a market-led and imperial-centred model of capital accumulation. Lula's embrace of the free market-IMF structural adjustment policies has led to the evisceration of agrarian reform policies, a decline in employment and real wages, the slashing of pension benefits and negative per capita economic growth - the worst socio-economic performance of any civilian regime since the military dictatorship. Agrarian policy at the centre of this model consists for the most part of the jailing (or worse) of rural activists, and the promotion of the agribusiness sector as part of the export strategy.

Cut-Flower Exports, Female Labor, and Community Participation in Highland Ecuador

In the 1980s and 1990s Latin American economies and societies underwent a profound transformation caused by the advent of economic neoliberalism. Upon the recommendation of the International Monetary Fund, the World Bank, and bilateral donors, most Latin American governments implemented structural adjustment programs as a cure for the ills of import-substitution industrialization and burgeoning foreign debt. Along with short-term stabilization measures, these programs included broader reforms designed to reduce state economic intervention and increase national integration with global markets. At the regional level, they reduced inflation rates and triggered a rapid growth of exports and foreign direct investment (Mortimer, 2000; Macario, 2000). They failed, however, to produce a significant positive effect on national economic growth and employment. Indeed, urban unemployment rates increased in the 1990s (Economic Commission for Latin America and the Caribbean, cited in Stark, 2001: Table 4). Moreover, structural adjustment led to a decline in real minimum wages and cuts in government social services. The result was an increase in income inequalities

Reálná konvergence - předpoklad plynulé integrace do Evropské unie

The economies of Central and Eastern Europe are acceding to the EU with economic levels well behind those of current Member States. Combining countries with different economic standards does give rise to certain risks. Where the convergence of the price level is too fast and is not underpinned by labour productivity growth above the level of growth in EU and by the related balancing of wage income, it could pose a threat to the standard of living due to the decline in real wages. If wage pressures are too strong, and force a rise in wages that is incommensurate to labour productivity, the competitiveness of the business sphere would decline, economic growth would slow down, and unemployment would ultimately rise. A key requirement for the smooth progression of integration is a robust economic growth on the basis of labour productivity and its harmonization with wage level and price level developments.

DOES FOREIGN DIRECT INVESTMENT CAUSE A RACE TO THE BOTTOM?

In the current debate on globalization, a central concern is that foreign direct investment (FDI) may relocate jobs from high-income countries to labor-abundant economies forcing a competitive downward decline in real wages all around, known as 'race to the bottom' (RTB). The core of the RTB hypothesis is that FDI inflows increase the elasticity of demand for labor. This is a necessary condition for pushing wages downward toward minimum or subsistence levels in the global labor market. This paper provides empirical evidence from four Asian economies (China, the Philippines, Singapore, and Thailand) that support the RTB argument.

Why do “Women’s jobs” have low pay for their educational level?

Jobs held largely by women have low pay for the amount of education they require. Why is this? One hypothesis is that employers prefer to hire men, and all workers prefer better jobs, so that women can get in only when a job's rewards (relative to its skill requirements) are low enough that men no longer want the job. Thus, wages affect sex composition. Others see the causal arrow to run the other way. In this view, the sex composition of jobs affects the wage that employers offer; employers' biased perceptions lead them to see jobs as less important and less payworthy if they are filled largely by women. These explanations are not mutually exclusive; the causal arrow may run both ways (or neither way). In this paper we use CPS data from 1984 to 1991 and a cross-lag panel model to examine these effects. Jobs are defined with a detailed occupational category within a specific broad industry category. We find that jobs with a higher percentage of females at one point have slower wage growth (or steeper wage decline) for both men and women in the ensuing years. But we find no effect of earlier wage rate on later sex composition. For those interested in reducing gender inequality in earnings, these findings suggest the utility of “comparable worth” policies.

Measuring Union and Nonunion Wage Growth: Puzzles in Search of Solutions

This paper presents conflicting evidence on trends in private sector union and nonunion wages. The BLS quarterly Employment Cost Index (ECI), constructed from establishment surveys, uses fixed weights applied to wage changes among matched job quotes. The ECI shows a substantial decrease in wage growth for union relative to nonunion workers. The annual Employer Costs for Employee Compensation (ECEC), drawn from the same survey data as the ECI, provides wage level estimates constructed from the full sample of job quotes using current sector weights. Surprisingly, the ECEC shows no trend in relative union-nonunion wages. Household evidence from the Current Population Survey (CPS) can potentially reconcile the conflicting ECI/ECEC evidence, but it is first necessary to account for Census earnings imputation procedures that bias the level and trend in the CPS union gap. CPS wage data absent controls, which should provide results similar to that from the ECEC, instead displays a steep decline in relative union wages, similar to that seen in the ECI. Regression estimates using the CPS, similar in spirit to the ECI, indicate a union premium that declines modestly over time. Union and nonunion wage growth is next calculated from the CPS using methods roughly consistent with the ECI and ECEC. These results shed rather dim light on the sources of ECI/ECEC differences. The contribution of the paper is its unearthing of puzzling and apparently contradictory evidence on union and nonunion wage trends (as well as on economy-wide wage growth). Although our analysis helps account for specific elements of this puzzle, a comprehensive solution remains elusive. We conclude that there has been closing in the union-nonunion wage gap since the mid-1980s, but the magnitude of the closing is anything but clear.

Labour markets in Finland during the great twentieth centuty1

The study compares the great depressions of the twentieth century in Finland from the perspective of labour market adjustment channels. The increase in employment was much more rapid during the rebound from the great depression of the 1930s compared with the recovery from the great slump of the 1990s. There was a moderate decline in real wages in manufacturing industries during the early 1990s, However, the slump of the 1930s brought a severe fall in real wages. The nominal wage adjustment of the Finnish labour markets was entirely dissimilar in these two depressions. During the 1990s nominal wages in the manufacturing industries did not decline at all. This pattern is in sharp contrast to the deep cuts in nominal wages during the 1930s. There was an increase in the level of labour productivity during the great depressions of the twentieth century which is linked to restructuring during the times of economic slowdown.

The Impact of International Trade on Wages

Since the early 1980s, the U.S. economy has experienced a growing wage differential: high-skilled workers have claimed an increasing share of available income, while low-skilled workers have seen an absolute decline in real wages. How and why this disparity has arisen is a matter of ongoing debate among policymakers and economists. Two competing theories have emerged to explain this phenomenon, one focusing on international trade and labor market globalization as the driving force behind the devaluation of low-skill jobs, and the other focusing on the role of technological change as a catalyst for the escalation of high-skill wages. This collection brings together innovative new ideas and data sources in order to provide more satisfying alternatives to the trade versus technology debate and to assess directly the specific impact of international trade on U.S. wages. This timely volume offers a thorough appraisal of the wage distribution predicament, examining the continued effects of technology and globalization on the labor market.

The Earnings and Employment of Nurses in an Era of Cost Containment

Previous research has shown that from the 1980s through the early 1990s, nurses enjoyed substantial wage and employment gains that stemmed, to some extent, from increased labor demand. Using individual data for 1988–98 to compare nurses' fortunes with those of college-educated women and other workers in the health care industry, the author documents that nurses experienced a decline in real wages beginning in the early 1990s, at the same time that the skill premium for RNs, as reflected by the return to education and experience, was increasing. Changes in measured characteristics and their returns explain very little of the decline, consistent with the theory that the relative wage decrease was driven by a decline in the demand for RNs and increased cost constraints. The effects of HMO penetration are found to explain only a small part of the variation in wages across metropolitan statistical areas and across time.

Did Nixon's wage and price controls set in motion the post-1970s decline in real wages?

This paper argues that President Nixon's wage and price controls, in affect from August 1971 to April 1974, laid the groundwork for the post-1973 decline in U.S. production worker real wages.

The Mexican Crisis and the Maquiladora Boom A Paradox of Development or the Logic of Neoliberalism?

Despite all the warning signs, the world of finance was caught off guard by the collapse of the Mexican peso in December 1994. The ensuing devaluation was followed by the largest bailout by the International Monetary Fund (IMF) until then, and by early 1995 Mexico was in its most serious depression since the 1930s (Barkin and Rosen, 1997: 24). Through 1995, Mexico endured significant negative rates of growth and waves of bankruptcies. In addition, the population experienced a decline of real wages, which dropped by 27 percent between 1994 and 1996 (EPI, 1997: 14). This led to a significant increase in poverty: an estimated 75 percent of Mexican families could not afford the basic goods required to raise them above the official poverty line (Barkin and Rosen, 1997: 24). Local manufacturing was also severely affected, as was evidenced by the increase of bankruptcies in the manufacturing sector. In stark contrast to the -6.2 percent growth rate for the overall Mexican economy, the maquiladora industryl expanded by 30 percent in 1995 (IMF, 1998; INEGI, 1997). In fact, the sector grew from 2,200 plants with 550,000 workers at the end of 1994 to over 3,000 plants employing over 800,000 workers in 1996 (INEGI, 1997).2 The stakes for Mexico in the success of the maquiladora industry are high, as the foreign exchange generated by the sector has become the largest source of foreign revenues, surpassing oil in 1999. This helps to explain Mexico's

The Effects of Deregulation, De-Unionization, Technology, and Human Capital on the Work and Work Lives of Truck Drivers

The earnings of truck drivers fell by 21% between 1973 and 1995. Using Current Population Survey data, the authors find that deregulation accounted for one-third of the decline in drivers' wages, with a larger negative effect for non-union workers. Economic forces that broadly affected the blue-collar economy, proxied by the manufacturing wage, accounted for more than two-thirds of the decline. Finally, using unique survey data, the authors explore the effects of factors frequently cited as sources of blue-collar wage decline. This analysis indicates that only one new technology, satellite communication systems, had meaningful effects on drivers' earnings, which rose as a consequence of superior efficiency and work intensification. Union membership remains an important determinant of wages, with members earning 18% to 21% more than their non-union counterparts. The authors conclude that the primary sources of wage decline and increased wage inequality have been deregulation, de-unionization, and a declining manufacturing wage.

The Effects of Deregulation, De-Unionization, Technology, and Human Capital on the Work and Work Lives of Truck Drivers

The earnings of truck drivers fell by 21% between 1973 and 1995. Using Current Population Survey data, the authors find that deregulation accounted for one-third of the decline in drivers' wages, with a larger negative effect for non-union workers. Economic forces that broadly affected the blue-collar economy, proxied by the manufacturing wage, accounted for more than two-thirds of the decline. Finally, using unique survey data, the authors explore the effects of factors frequently cited as sources of blue-collar wage decline. This analysis indicates that only one new technology, satellite communication systems, had meaningful effects on drivers' earnings, which rose as a consequence of superior efficiency and work intensification. Union membership remains an important determinant of wages, with members earning 18% to 21% more than their non-union counterparts. The authors conclude that the primary sources of wage decline and increased wage inequality have been deregulation, de-unionization, and a declining manufacturing wage.