Wage Determination Research Articles

Wage Variations Across Sectors and Types of Employment in India

Wage determination depends on a number of factors, including policy initiatives and the presence/absence of labor market institutions. Some of these unobserved variables may be captured in terms of the sector and/or the nature of employment itself. This study tries to focus on the sector of choice or employment type as an important determinant of wages/earnings, after including the important controls. However, a serious endogeneity issue is encountered as the sector/type of employment itself is a decision based on several reasons. After estimating the occupational choice function through a multinomial logit model and correcting for endogeneity, findings still confirm that wages vary across sectors and types of employment. Among the other determinants, human capital, caste-specific disadvantages, age effect, and possible gender differentials cannot be ignored. But even after considering the impact of the important controls, the sensitivity of wages/earnings to the sector/type of employment cannot be ignored. This has important policy implications: sector or type of employment with gross disadvantages needs a great deal of state support. With the same human capital endowment, caste background, and other characteristics, workers face disadvantages in certain types of jobs or sectors of employment, which could be related to recruitment practices, employment clauses, possibilities of exploitation by the contractors, low levels of productivity, and the lack of institutional support.

Minimum Wage Effects on Gender Wage Gap in Türkiye

This paper aims to investigate the impact of the increases in minimum wages on gender wage gap in Türkiye. We use the individual level micro data of the HLFS provided by the Turkish Statistical Institute for the years 2004-2023. At first, the disparities in wage determination between genders with the use of a Heckman-type wage equation with selection is conducted. Second, the gender wage gap for each year using the Blinder-Oaxaca decomposition method is calculated. Finally, the wage gap is computed from the microdata serves as the dependent variable, while the explanatory variables include the share of women in employment, real minimum wage increases, and the proportion of individuals earning at or below the minimum wage by an OLS model. The results of Heckman wage equations show that education emerges as one of the most significant factors in both the wage and selection equations. The OLS regression results suggest that a one percent increase in the minimum wage correlates with a 2.4 percent reduction in the wage gap, and a one percent rise in the proportion of employees earning at or below the minimum wage leads to a 9.4 percent decrease in the wage gap.

Unpacking the gender wage gap in the U.S.: The impact of rural employment, age, and occupation

AbstractThis paper examines three dimensions influencing the gender wage gap: rural employment, type of occupation, and workers' career stage. The findings suggest that (1) rural workplaces are associated with lower wages; (2) women face a higher wage penalty than men in rural, low‐paying jobs; (3) wage determinants differ between low‐ and high‐paying jobs, leading to variable impacts on the gender wage gap; (4) gender wage gaps are significantly narrower for early‐career workers than for older workers; and (5) even minor annual wage disparities contribute to significant wealth gaps by the end of the working life.

Real Wage Growth in Papua New Guinea Over Three Decades

ABSTRACTAs a key determinant of household welfare, workersʼ real wages matter. Limited by small and infrequent surveys, the study of real wages in Papua New Guinea (PNG) has until now been constrained by a paucity of data. Using a novel dataset, we construct the first longitudinal series of wages for (to a close approximation) the population of formal private sector workers in PNG over a 3 decades span from 1999 to 2018. We examine real wage growth for the formal private sector in PNG over a 20‐year period using panel regression. Among the main findings are that conditional real wage growth has averaged about 4.5%. Also, real wage developments closely mirror the bust‐boom‐bust episodes of the macroeconomic cycle. Further, conditional real wage growth in the agricultural sector lagged that in services, industry, and mining with agriculture hardest hit during busts and lagging during the boom and mining the winner. Men experience higher conditional real wage growth during booms but also bear the majority of the decrease during busts. Finally, we establish the strong co‐movement of the real exchange rate (RER) and the conditional real wage, providing support for the RER as an important determinant of real wages in PNG.

Club convergence of real wages in the European union

This study analyzes real wage convergence within the European Union, scrutinizing it on both regional and national scales. It questions the prevalent notion that open labor movement within the EU naturally leads to wage parity. Using a flexible log t regression and clustering algorithm, the research uncovers a lack of real wage convergence across all EU countries and regions. Instead, it identifies distinct convergence clubs based on real wages, delineated as core versus peripheral countries, and further divided into four regional categories. These findings suggest the existence of significant differences between the core and peripheral countries, hindering wage equalization. Clubs converge to different steady states which yield substantially different average real wages. At the national level, the formation of these wage-based clubs is influenced by the output gap and unemployment benefits, competitiveness and labor productivity, trade integration, and partly by human capital and development level. This study's results are robust and consistent with economic theories concerning real wage determinants. On the regional front, the analysis reveals a complex interplay of multiple variables affecting club formation, with no significant distinctions between certain club pairings. The findings highlight the complex dynamics of wage convergence in the EU, influenced by both economic and non-economic factors. The differences between core and peripheral EU countries are still strong and affect labor market outcomes and real wage convergence.

Skill bias in the labour market: Evidence from Iran

Purpose ― Most global economies are dealing with the issue of skill bias. In developing and underdeveloped countries, skill bias poses a problem by preventing the educated from participating in the economy's production function, especially in the long run. This paper expands on the skill-wage relationship and investigates this issue in the case of Iran from 1981 to 2021.Methods- Applying Impulse Responses from VECM and the Structural VAR model separates the relationship between skill and wage into short- and long-term effects. The structural wage model was estimated using the structural vector auto-regression model.Findings ― The results show that skill played a significant role in wage determination only for three periods in the short run, and the effect was neutral in the long run. This means that skill accumulation through advancement in graduate and postgraduate study is unlikely to increase wages in the long run.Implication ― According to the findings, skill bias implies that education attainment in the Iranian labour market can only improve wages to a minimum extent. This also proves that factors other than education determine wage growth in the economy. Originality ― The skill-wage relationship has not been a focus of studies in education outcome fields. Moreover, in the case of Iran, this investigation is novel, and there is a lack of studies on the relationship between compensation and skill.

Is There Really Unequal Pay for Equal Work Between Men and Women in the Czech Republic? Problems with the Decomposition of Wage Determinants

Is There Really Unequal Pay for Equal Work Between Men and Women in the Czech Republic? Problems with the Decomposition of Wage Determinants

An Analysis of Wage Determinants and Gender Wage Inequality in the Daily Labor Market of Bangladesh: A Quantile Regression Approach

An Analysis of Wage Determinants and Gender Wage Inequality in the Daily Labor Market of Bangladesh: A Quantile Regression Approach

Assessing Labor Wage Systems in Companies from an Islamic Legal Perspective

This study aims to examine the wage system at CV Bregas, located in Desa Maen Likupang Timur, and assess its compliance with Islamic economic law principles. This field research, conducted at IAIN Manado, employs a qualitative approach grounded in juridical legal methods to study natural objects. Data was collected through interviews, observations, and documentation, and analyzed using an interactive model that includes data reduction, data presentation, and conclusion drawing. The findings reveal that CV Bregas, owned by Mr. Karmin, implements a wage system with variations in daily, weekly, and monthly wages. Monthly and daily wages exceed the UMP of North Sulawesi Province and the UMK of the relevant regency/city, while weekly wages fall below these standards. The wage mechanism is based on agreements between workers and company management. The wage system at CV Bregas is deemed compliant with Islamic economic law, as wage determination is based on mutual consent, payments are made after work completion, and disputes are resolved primarily through deliberation.

Decomposing the Gender Wage Gap in the Urban Labor Market in Kenya

Abstract Legislation and regulation have been effective in reducing the gender wage gap in developed countries; however, the gap still exists globally, and progress towards narrowing the gap has been unacceptably slow even in regions where it is improving. This study presents the analysis of gender wage gap in Kenya’s urban labor market by using the World Bank Skills Towards Employability and Productivity Survey (WBSTEPS). This study employed Mincer earnings regressions with Heckman selection correction and the Blinder-Oaxaca and Neumark decomposition procedures to answer the research questions. The results of the wage determination and participation in the labor market show that there is no selectivity-bias problem. Personal characteristics such as education and age, as well as work-related characteristics, are important factors in determining earnings. The magnitude of the gender wage gap varies across the wage distribution, and the results of the wage decomposition reveal that women in urban Kenya earn 84.5-to-86% of men’s earnings. The earnings gap is overwhelmingly due to differences in returns to endowments, which account for between 70% and 94.7% of the total earnings gap. Admittedly, the study found evidence of discrimination against women in the returns to endowments, but also observed pronounced favoritism towards men. However, discrimination against women is more pronounced than favoritism towards men. Addressing the gender wage gap in Kenya requires a multifaceted approach that tackles both systemic biases against women and structural barriers that hinder women from accessing equal opportunities in education, training, and career advancement and government policies that minimize favoritism towards men.

Does women’s higher education reduce wage inequality? Evidence from Palestine using repeated cross-sectional data

Despite the increase of the share of highly-educated women, gender wage gap remains an ongoing issue in developing countries. The increase in women’s education would provide them with more job opportunities resulting in higher employment rate amongst women and, thus, lower gender pay gap. In Palestine, the share of women with high education is 62% while their labor force participation rate is only 18%. This paper examines the effects of gender higher education on wage inequality in the Palestinian context. The study applied the Mincer equation to study the determinants of wage, while the decomposed Gini coefficient is used to measure the contribution of education and other factors to overall wage inequality. The study used data from the labor force survey (LFS) which is conducted by the Palestinian Central Bureau of Statistics (PCBS) covering the period from 2010 to 2020. Results show that those with higher education have relatively higher wages as compared to those with only high education or with school education. Results also show that gender wage inequality has increased during the study period (2010–2020), but the contribution of both gender and education differences to the overall wage inequality has decreased. In general, the gender pay gap remains a crucial issue in the Palestinian context with a persisting decreasing pay gap over time across all education levels. Policymakers shall orient efforts towards investing in women’s education, thus increasing their empowerment in the labor market, which in turn would improve the level of development and economic growth in the country.

The Influence Of Job Evaluation On The Wage Bill In Public Sector Organizations

Public service is the main driver of growth for most developing countries. It is a key component because it facilitates the delivery of services to the citizens. However, despite the efforts to grow the economy and deliver quality services, there are challenges with the costs associated with ever-increasing public sector wages. Although a well-paid public sector could be more efficient, the wage bill should be maintained at fiscally sustainable levels to enable the achievement of development goals. Kenya like other developing countries has been grappling with the management of costs associated with wages in the public sector, which were growing at an alarming rate. This is mainly because of the large number of employees, arbitrary determination of wages and implementation of the Constitution of Kenya, 2010. This study will seek to examine the influence of human resource strategies for managing the public sector wage bill in Kilifi County, Kenya. The study will particularly focus on human resource strategies such as job evaluation, total rewards, and performance-related pay and their influence on the management of the public sector wage bill in public sector organizations within Kilifi County. These public sector organizations are expected to be implementing these strategies although the degree of implementation may be varying. The study will, therefore, seek to find out the extent to which their application influences the management of the wage bill costs to a manageable level. The study will also examine the theories associated with wage management. The theories of equity, efficiency wage, and public sector motivation will be examined to determine their influence on the management of wages in the public sector. Questionnaires will be developed and self-administered to the human resource management professionals in the public sector organizations. This will enable the Researcher to capture perceptions of the application of these strategies in their organizations. Their in-depth understanding of the human resource strategies being studied will be useful to the study. The study design will be a survey of the 52 government organizations within Kilifi County thus the target population for the survey will be a census of the 52 public sector organizations. The sampling method applied will be purposive thus the HR professionals will be the respondents. The data collected will be analyzed using analysis of variance (ANOVA) which will be used to establish the relationship between the independent variables and the dependent variable. The findings of the study will be presented in the form of tables, charts and statistical measures such as an analysis of variance

“The principles of political economy, though often quoted, are little understood.” Fleeming Jenkin on trade unions and the law of supply and demand

The paper proposes a rational reconstruction of Fleeming Jenkin’s 1868 analysis of wage determination in labour markets characterised by the presence of trade unions. Jenkin intended to show that the supply and demand theory of market price determination did not support the thesis sustained by the opponents of trade unions that the latter are unable to permanently achieve a market-clearing wage higher than that which would be obtained in their absence. Starting with a definition of “demand” and “supply” of a given commodity as functions of a few economic variables, Jenkin elaborated a fresh critique of the wages fund theory and highlighted the impact of trade unions on both supply and demand for labour.

Baby Bumps in the Road: The Impact of Parenthood on Job Performance, Human Capital, and Career Advancement

Abstract This paper explores whether and why a maternal “child penalty” to earnings would emerge even without changes in employment and hours worked. Using a matched event study de-sign, we trace monthly changes in determinants of wages (job performance, human capital accumulation, and promotions). Data come from a usefully unusual setting with required multiyear employment and detailed personnel data: the United States Marine Corps. Mothers' job performance initially declines, and gaps in promotion grow through 24 months postbirth. Fathers' physical fitness performance drops somewhat but recovers. These patterns lead mothers to earn relatively lower wages, even absent changes in employment postbirth.

The Dynamics of Pro-Government Labour Mobilisation in Cambodia

Following the 2013 electoral setback and post-election protests, the ruling Cambodian People’s Party has pursued policy concessions to mobilise support from workers in the garment industry. This article examines the role of government-aligned unions in vote mobilisation. It is argued that despite their under-performance in the 2013 election, government-aligned unions retain the trust of the Cambodian People’s Party leadership and continue to play a vital role in facilitating co-optation by communicating public policies and political messages to workers, influencing the minimum wage determination process, and delivering free healthcare services. This article contributes to the growing literature on the Cambodian People’s Party’s post-2013 adaptation and the broader literature which often focuses on labour unions in single-party regimes.

Geographically Weighted Panel Regression (GWPR) and Geographically and Temporally Weighted Regression (GTWR) Methods in the Influence of Factors Affecting the Minimum Wage of Each Province in Indonesia

The study compares the Geographically Weighted Panel Regression (GWPR) method and the Geographically Temporal Weighted Regression (GTWR) method using a spatial and temporal approach in the data. Both of these methods are developments by one of the Geographically Weighted Regression (GWR) methods. GWPR, which is a combination of the GWR model with panel data regression to analyze spatial variations between regions on the influence of the provincial minimum wage determination factor in Indonesia. Meanwhile, GTWR is used to analyze the presence of non-stationarity in its data if there is spatial and temporal simultaneously. In this study, both methods, namely GWPR and GTWR, will show variations in the influence of variables in each location by showing their local parameters with kernel weighting. In selecting the optimum bandwidth of the kernel weight function using cross validation (CV) with the minimum value to be used. After that, when measuring the best model of the two methods, which is GWPR and GTWR, it will be shown by the largest R2 value, RMSE and, AIC with the smallest value. From the results of the study between GWPR and GTWR, namely the GTWR method has an R2 value (93.73%) and the GWPR method has an R2 value (67.32%). Therefore, the R2 value of the GTWR method is greater than the GWPR method. The results of the study indicate that the GTWR method is a better method in handling spatial-temporal.

The Value of Work: The Gendered Outcomes of Organizational Wage Reforms

ABSTRACT This study explores the influence of organizational practices on gender in/equality in a unique setting: the reformed Israeli kibbutz. The transition of the kibbutz from all members receiving an allowance to waged labor provides an opportunity to explore the impact of wage determination systems on gender pay inequality. The study uses a mixed-method approach: descriptive statistics of administrative data, in-depth interviews, and a focus group with kibbutz management. The findings demonstrate that a “market-based logic,” embedded with gendered preconceptions of “women’s work,” can seep into an organization through a shift in the wage determination system, and increase gender inequality. The findings also highlight the lack of organizational awareness about the gendered consequences of this shift, or even their uncritical acceptance of the “value hierarchy” as ordained by the market. The study thus supports the theory positing gender as a hidden but integral aspect of reward systems in contemporary labor markets. HIGHLIGHTS The choice of a wage determination system is critical for gender inequality. “Women’s work” is valued higher by analytical job evaluation systems, which reduce gender biases. Market-based wage determinations introduce biases and increase organizational gender inequality. Management prefers market-based wage determinations due to competition and costs. The “free market” not only obscures gender hierarchies but also legitimizes them.

INTEGRATING ISLAMIC BUSINESS ETHICS IN LABOR PROTECTION AND MINIMUM WAGE DETERMINATION IN INDONESIA

Policies related to the minimum wage are a contentious issue in employment across both developed and developing countries, aiming to meet community needs and benefit families. However, a research gap exists in applying justice and moral principles to wage determination from the perspective of Sharia economic law in Indonesia. This study aims to analyze fair wage components according to Islam and the role of business ethics in protecting workers and determining wages. Employing a literature review method, data were gathered from various sources such as books, journals, and previous research findings, which were reviewed and analyzed using descriptive analysis techniques. The study emphasizes the importance of justice and moral components in Islamic wage determination, rooted in the absolute essence granted by God, essential for morality. Business ethics in work protection and wage determination are crucial to ensure fair treatment and prevent exploitation. Recommended steps include optimal labor protection and wage determination, timely payment of agreed wages, recognition and guarantee of labor, fair wage determination without harm, and providing worker freedom. The study's novelty lies in integrating Islamic principles of justice and morality into minimum wage policies and developing practical business ethics guidelines for labor protection and wage determination under Sharia economic law in Indonesia.

Female wage penalty in Brazil and Colombia: tensions in the work-family reconciliation

The female wage determination differs according to the family composition, mainly associated with the presence of children. Thus, the objective of the article was to analyze how much maternity can be a differential factor that penalizes women's wages in the Colombian and Brazilian labor markets. The Heckman selection model was applied using the Pesquisa Nacional por Amostra de Domicílios Contínua (PNADC) for Brazil and the Gran Encuesta Integrada de Hogares (GEIH) for Colombia, referring to 2012 and 2019. Results show the maternity penalty in Colombia of 5.4% per child in 2012 and 7.9% per child in 2019; already, in the case of Brazil, 10.9% and 12.0%, respectively. So then, despite the continuous incorporation of Colombian and Brazilian women into the labor market, conventional gender social practices in the family make it difficult to reconcile work-family.

Kedudukan dan Fungsi Dewan Pengupahan dalam Rangka Penetapan Upah Minimum Tenaga Kerja di Provinsi Nusa Tenggara Timur

The Wage Council of East Nusa Tenggara Province is a Non-Governmental Institution that is Independent, Self-Reliant, and Tripartite, tasked with recommending the Minimum Wage for Laborers to the Governor of East Nusa Tenggara Province for determination. The determination of the Minimum Wage for laborers in East Nusa Tenggara Province is established based on the Governor's Decree to be implemented by Companies in providing wages for laborers, especially in the Districts/Cities throughout East Nusa Tenggara Province where the Wage Council has not been formed. The Wage Council of East Nusa Tenggara Province as a Non-Structural Institution that is independent and self-reliant, in carrying out its duties and responsibilities, has not been effective when the survey for decent living needs is omitted as regulated in Law Number 13 of 2003 concerning Manpower in conjunction with Government Regulation Number 78 of 2015 concerning Wages. The tasks and responsibilities of the Provincial Wage Council in determining the minimum wage of laborers in East Nusa Tenggara Province are stipulated in Law Number 11 of 2020 concerning Job Creation as a Replacement for Law Number 13 of 2003 which technically eliminates the Decent Living Needs Survey for one (1) person as a benchmark in recommending Minimum Wage Determination to the Governor. The formulation of the problem in this research is: (1) What is the Position and Function of the Wage Council in Determining the Minimum Wage of Laborers in East Nusa Tenggara Province? (2) What are the Prospects of the Wage Council of East Nusa Tenggara Province in the Future? The author conducted normative research supported by empirical research as complementary data. The focus of the research is the Wage Council as a non-governmental, independent, and self-reliant institution that has a position and function in determining the minimum wage since the Decent Living Needs Survey was eliminated and the Prospects of the Provincial Wage Council in the Future. The results of this research indicate that: (1) The Position and Function of the Wage Council as an independent/self-reliant institution in reality are not independent/self-reliant due to the involvement of third parties, namely the Central Bureau of Statistics. (2) The Prospects of the Wage Council in the Future after the Decent Living Needs Survey is abolished.