Wage Gain Research Articles

Migration and the Environment: Policy Reform in a Polluted Open Economy

AbstractPrevious literature on labour migration has paid little attention to the influence of environmental attributes. This paper attempts to remedy this void by developing a simple, two‐region general equilibrium model with amenities playing a key role in affecting migration flows. Specifically, we argue that in the presence of an environmental externality, interregional labour migration depends not only on wages but also on amenities. People may leave a region offering higher wages, if the resulting utility loss from worsened amenities exceeds the gain in wages. Policies should be adopted by regions or nations to regulate the environment to provide for the quality of living. To attain this goal, regional or international policy cooperation on tradable pollution permits can be superior to pollution permits supplied independently by each region or nation while non‐tradable between them.

Pathway from Nutrition Intake to Wage Among Elementary Workers in India

Despite the consistent effort to reduce hunger and poverty, a sizeable proportion of the population in India is living below the poverty line (22% 2011-12) and 36% women and 34% men were underweight. Malnutrition and poverty form a vicious circle of poverty which needs to be removed through government intervention. In the context, using data from national representative “employment and unemployment” (and 61st round 2004-05 and 68th round 2011-12) of the National Sample Survey Organisation (NSSO) we have tried to establish the association between nutrition status and wage in India. In order to take into account the heterogeneous effect of the calorie intake across the income distribution and endogeneity of the calorie consumption, we have applied instrumental variable quantile regression. Regression result confirms the heterogeneous impact of per-capita calorie intake across household income distribution. Result shows that the marginal effect of per consumer unit calorie intake on wage decrease with the increase in wage. Calorie intake elasticity of wage gain increases from 0.76 at the lowest 10th quantile to the 1.11 at the highest 90th quantile of the wage distribution in 2004-05. In 2011-12 calorie-wage elasticity decreased to 0.42 and 0.79 respectively at the 10th and 90th quantile of the wage distribution. Study clearly shows the urgent need of public nutritional supplementation at the low of the wage distribution for the maximization of wage gain from the marginal public nutritional expenditure.

Doubly Robust Estimation of Causal Effects with Multivalued Treatments

This paper provides doubly robust estimators for treatment effect parameters which are defined in multivalued treatment effect framework. We apply this method on a unique data set of British Cohort Study (BCS) to estimate returns to different levels of schooling. Average returns are estimated for entire population, as well as conditional on having a specific educational achievement. The analysis is carried out for female and male samples separately to capture possible gender differences. The results indicate that, on average, the percentage wage gain due to higher education versus any other lower educational attainment is higher for highly educated females than highly educated males.

Who Benefits from a Job Change

ABSTRACTIn this paper, we use panel data from the UK and Germany to investigate the effect of employer changes and in-firm job changes on year-to-year wage mobility of male full-time workers. Following segmentation theories and the job search theory, we study whether this effect differs for the low- and high-wage workers. As wage growth is endogenous to the decision of changing jobs, a two-stage Heckman selection approach is used. Specifically, we first estimate a random-effects multinomial logit model for the selection into a job transition and then a fixed-effects panel regression model for the wage growth. The findings suggest that both external and in-firm job changes result into substantial wage gains for the low-paid workers but not for the medium- or high-paid workers. However, the wage gain of low-paid workers due to an in-firm job change is only observed in the UK and is less pronounced than their gain by an external job change. In the German labour market, the later effect is insignificant. The results indicate that low-paid workers profit more from a voluntary change of employer in the coordinated German labour market and from a voluntary in-firm change in the liberal British labour market.

Import, Offshoring and Wages: Rent Sharing or Composition?

Offshoring firms are found to pay higher average wages than purely domestic firms. We provide a unifying empirical approach by capturing the different channels through which offshoring may explain this wage difference: due to change in the composition of workers (skill composition effect) because all existing workers get higher pay (rent sharing effect). Using Danish worker-firm data we explain how much each channel contributes to higher wages. To estimate the causal effect of offshoring on wages we use China's accession to the WTO in December 2001 - and the soon after boom in Chinese exports - as positive exogenous shocks to the incentive to offshore to China. Both skill composition and rent sharing effects are found to be important in explaining the resultant gain in wages. We also show that the firm's timing in the offshoring process determines the relative importance of a channel. For firms offshoring to China in 2002 but not in 1999, only rent sharing explains the gain in wages. For firms offshoring to China both before and after China's WTO accession the wage increase is explained mostly by the skill composition effect. Moreover, these patterns are not discernible from the measures of skill composition and rent sharing available in typical firm level datasets - like ratio of educated to uneducated workers and sales per employee.

Geographical Mobility and Potential Wage Gain of Immigrants within Spain

Ruiz A. C. Geographical mobility and potential wage gain of immigrants within Spain, Regional Studies. Geographical mobility of workers within countries can be a means of equilibrating regional economic disparities. Within this context, a relevant topic is the mobility of foreign workers in the destination country. The Spanish case is interesting, because Spain has one of Europe's fastest-growing immigration rates. This paper is aimed, first, at studying the determinants of interregional geographical mobility of immigrants in Spain and, second, at obtaining consistent estimates of an individual's opportunity wage as a mover or a stayer. Findings show that an expected wage gain exerts a positive influence on mobility and leads to a better allocation of resources.

The Value of an Employment-Based Green Card

The need for and role of highly skilled immigrant workers in the U.S. economy is fiercely debated. Proponents and opponents agree that temporary foreign workers are paid a lower wage than are natives. This lower wage partly originates from the restricted mobility of workers while on a temporary visa. In this article, we estimate the wage gain to employment-based immigrants from acquiring permanent U.S. residency. We use data from the New Immigrant Survey (2003) and implement a difference-in-difference propensity score matching estimator. We find that for employer-sponsored immigrants, the acquisition of a green card leads to an annual wage gain of about $11,860.

Occupational Mobility Within and Between Skill Clusters: An Empirical Analysis Based on the Skill-Weights Approach

Mobility and flexibility is increasingly demanded as structural change challenges established educational systems and traditional occupational demarcations. We use Lazear’s skill-weights approach (2003) first to operationalize the degree of specificity of skill combinations in an innovative manner and second to derive hypotheses about the effects of occupation-specific skill combinations. In our empirical section, we find that the more specific an occupation, the smaller is the probability of an occupational change, as expected. Furthermore, we are able to identify different clusters of occupations that are characterized by similar skill combinations within a given cluster and different skill combinations between clusters. We find that employees in very specific occupations have a comparatively higher probability of changing their occupation within than between skill clusters. Moreover, occupational mobility within a skill cluster is accompanied by wage gains, while mobility between skill clusters results in wage losses. Not surprisingly, the more specific the former occupation is, either the higher is the resulting wage loss or the smaller is the resulting wage gain depending on whether the move is between or within skill clusters, respectively. Therefore, the acquired skill combination rather than the occupation per se crucially determines the mobility of an employee.

The Effect of Legalization on Wages and Health Insurance: Evidence from the National Agricultural Workers Survey

AbstractWe estimate the effect of legalization on the wages and benefits of foreign‐born agricultural workers. Using data from the National Agricultural Workers Survey, we employ propensity score matching techniques to compare legal permanent residents in the United States with an appropriate control group of undocumented workers. Consistent with previous findings, we show that becoming a legal permanent resident results in a modest wage gain of about 5%. Further, we provide novel evidence that, in addition to higher wages, legalization leads to a significantly higher likelihood of receiving some other form of compensation, such as employer‐sponsored health insurance or a monetary bonus.

Lose weight for a raise only if overweight: Marginal integration for semi‐linear panel models

SUMMARYSome studies have shown that body mass index (BMI), weight (kg)/height (m)2, has a negative (or no) effect on wage. But BMI representing obesity is a tightly specified function of weight and height, and there is a room for weight given height (i.e. obesity given height) to better explain wage when the tight specification gets relaxed. In this paper, we address the question of weight effect on wage given height, employing two‐wave panel data for white females and adopting a semi‐linear model consisting of a nonparametric function of weight and height and a linear function of the other regressors. We find that there is no weight effect on wage up to the average weight, beyond which a large negative effect kicks in. Linear BMI models give the incorrect impression of the presence of a ‘wage gain’ by becoming slimmer than the average and of a ‘wage loss’ that is less than what it actually is when going above the average. Copyright © 2010 John Wiley & Sons, Ltd.

Determinants of Employer-sponsored Training Participation for Young Workers during Economic Downturns: Evidence from the Past

This study is devoted to learning from the past and understanding the determinants of training participation for young workers during recessionary periods. Evidence is found that the post-training wage growth expected over a few years after training, rather than an immediate wage gain upon completion of training, was a significant motive for young individuals to invest in training in the midst of the post-Black Monday recession. An immediate wage gain due to training, in contrast, provides no statistically significant evidence. These results indicate that young workers’ decision to invest in skill acquisition was made reasonably based on a stretched span of wage profile even during the period of economic slowdown rather than based on a myopic view as is often believed to be typical behaviour of young individuals. An important implication of this study is that the human capital of young workers continues to accumulate even in recessionary periods if an employer plans workers’ career development and earnings growth potentials beyond the time of economic hardship.

Looking for a “Better” Job: Job Characteristics and On-the-Job Search among the Employed in the Metropolitan Labor Market

As the gap between “good” and “bad” jobs widens, the opportunity for upward mobility from entry-level to well-paying career jobs declines. On-the-job search is particularly important as a mobility strategy to those with undesirable jobs. This paper examines the effects of low pay, lack of fringe benefits, and other job-related attributes on the likelihood of job search among the employed in the metropolitan labor market. The data come from the 1997–1999 Current Population Survey Contingent Work Supplements. Findings from logistic regression analyses suggest that undesirable job characteristics, rather than expected wage gain, are the major factors motivating on-the-job search. These characteristics include nonstandard, nonunionized, low-skilled, and low paying jobs, and lack of fringe benefits. Jobs with low wages and few benefits are typically associated with nonstandard, nonunionized, and low-skilled work. This paper concludes with a discussion of the policy implications of these findings for workforce development and career advancement.

The Importance of Worker, Firm and Match Fixed Effects in the Formation of Wages

This paper estimates a Mincerian wage equation with worker, firm, and match specific fixed effects and thereby complements the growing empirical literature started by the seminal paper of Abowd, Kramarz and Margolis (1999). The analysis takes advantage of the extensive Danish IDA data, which provides wage information on the whole working population for a 24-year period. We find that the major part of wage dispersion in the Danish labor market can be explained by differences in worker characteristics. However, the relative contribution of the three components varies across subgroups of workers. The match effect contributes a non-neglible part to the overall wage dispersion and, furthermore, corrects the estimated returns to experience. An analysis of inter-industry wage differentials shows that firm characteristics are more important at the industry level than at the worker level. Likewise, we find evidence of high wage workers sorting into high wage industries but not into high wage firms within industries. The mobility pattern of workers is related to the quality of the firm and the match, and we find that the wage gain from job mobility depends on worker characteristics.

Search Costs and Re-Employment Wage Gains for Displaced Workers

Involuntary job separation generally leads to lower re-employment wages. However, 20–30 percent of displaced workers experience re-employment wage gains. Theoretically, workers with higher search costs accept jobs when the marginal benefit of search is relatively high. When displaced, these workers experience wage gains because they are forced into additional search. Using data from the Displaced Worker Survey, we find that higher search costs (measured as the wage residual from the predisplacement job) are associated with higher re-employment wages.

“It's not that I'm a racist, it's that they are Roma”

PurposeThis paper uses a unique survey of Roma and non‐Roma in South Eastern Europe with the aim of evaluating competing explanations for the poor performance of Roma in the labour market.Design/methodology/approachFollowing a descriptive analysis, econometric models are employed to identify the determinants of educational achievement, employment and wages for Roma and non‐Roma. Limited information maximum likelihood (LIML) methods are employed to control for endogenous schooling and two sources of sample selection bias in the estimates. Non‐linear and linear decomposition techniques are applied in order to identify the extent of discrimination.FindingsThe key results are that: the employment returns to education are lower for Roma than for non‐Roma whilst the wage returns are broadly similar for the two groups; the similar wage gains translate into a smaller absolute wage gain for Roma than for non‐Roma given their lower average wages; the marginal absolute gains from education for Roma are only a little over one‐third of the marginal absolute gains to education for majority populations; and, there is evidence to support the idea that a substantial part of the differential in labour market outcomes is due to discrimination.Research limitations/implicationsThe survey data employed do not include information on hours worked. In order to partially control for this, the analysis of wages is limited to employee wages excluding the self‐employed.Practical implicationsExplanations of why Roma fare so badly tend to fall into one of two camps: the “low education” and the “discrimination” schools. The analysis suggests that both of these explanations have some basis in fact. Moreover, a direct implication of the lower absolute returns to education accruing to Roma is that their lower educational participation is, at least in part, due to rational economic calculus. Consequently, policy needs to address both low educational participation and labour market discrimination contemporaneously.Originality/valueThis is the first paper to attempt to econometrically distinguish between discrimination and educational explanations of Roma disadvantage in the labour market in Central and Eastern Europe. The survey data employed are unique and appropriate for the task. Unusually for analyses dealing with returns to education, the LIML econometric approach employed controls for both endogenous schooling and two sources of sample selection bias.

'It's Not that I'm a Racist', it's that They are Roma: Roma Discrimination and Returns to Education in South Eastern Europe

This paper uses a unique survey of Roma and non-Roma in South Eastern Europe to evaluate competing explanations for the poor performance of Roma in the labour market. The analysis seeks to identify the determinants of educational achievement, employment and wages for Roma and non-Roma. LIML methods are employed to control for endogenous schooling and two sources of sample selection bias in the estimates. Nonlinear and linear decomposition techniques are applied in order to identify the extent of discrimination. The key results are that: the employment returns to education are lower for Roma than for non-Roma whilst the wage returns are broadly similar for the two groups; the similar wage gains translate into a smaller absolute wage gain for Roma than for non-Roma given their lower average wages; the marginal absolute gains from education for Roma are only a little over one-third of the marginal absolute gains to education for majority populations; and, there is evidence to support the idea that a substantial part of the differential in labour market outcomes is due to discrimination. Explanations of why Roma fare so badly tend to fall into one of two camps: 'low education' vs. 'discrimination'. The analysis suggests that both of these explanations have some basis in fact. Moreover, a direct implication of the lower absolute returns to education accruing to Roma is that their lower educational participation is, at least partially, due to rational economic calculus. Consequently, policy needs to address both low educational participation and labour market discrimination contemporaneously.

JOB SEPARATION OUTCOMES OF WELFARE HIRES: INSIGHT FROM LINKED PERSONNEL AND STATE ADMINISTRATIVE DATA

1. INTRODUCTION AND BACKGROUND There is a voluminous literature documenting transitions of welfare recipients to the labor market and the success of those transitions. Welfare-to-work transitions are often found to be plagued by low pay. high turnover rates and welfare recidivism (e.g., Acs and Loprest, 2004; Holzer, Stoll. Wissoker, 2004; Hoynes, 2000; Lane and Stevens, 1995). Much of this literature is limited in that it includes only welfare recipients in the analyses. (1) The absence of similarly skilled nonwelfare recipients in an analysis of labor market outcomes introduces the potential of confounding the behavior of welfare recipients with the behavior of low-skilled workers in general. The purpose of the analysis in this article was to quantify the job separation experience of members of welfare families and to compare that experience to other similarly low-skilled workers. (2) Identifying similarities and differences in labor market outcomes between welfare and nonwelfare hires will allow us to identify what part of that experience is unique to former welfare recipients and what part is common among all low-skilled workers. If similar outcomes are identified, then policies aimed at improving labor market outcomes among welfare hires might be more effectively targeted at all low-skilled workers. To the degree that behavior or outcomes of welfare recipients differ from those of other low-skilled nonwelfare recipients, conclusions drawn from an analysis without the benefit of a control group may inaccurately ascribe those outcomes to the experience of welfare rather than to other characteristics that welfare recipients share with other low-skilled workers. One might expect former welfare recipients (or members of a family exposed to welfare) to have different separation outcomes because they may have different costs for different choices. Former welfare recipients may also face unique constraints such as transportation or childcare problems. However, if both welfare and nonwelfare recipients find another job after separating from practically identical employment experiences, it is not clear a priori that the quality (in terms of wages) of those jobs should be different. This article follows low-skilled workers (some of whom were members of welfare families) who separated from a single firm in the late 1990s. Personnel data from the firm provide demographic and job information for each worker. The personnel records are linked to administrative data from the Georgia Department of Labor (DOL) and the Georgia Department of Human Resources (DHR) to assess the postseparation outcome for each worker and, if employed, the relative quality of that outcome. II. MODELING POSTSEPARATION OUTCOMES The determination of the importance of having been on welfare for postseparation outcomes will be investigated through two analyses. The first analysis involves estimating a multinomial probit (MNP) model for three mutually exclusive outcomes dependent on having separated from the same firm. The outcomes are welfare, and The second analysis is the main focus of the article and will model the wage gain among those who found a job after separating, controlling for the probability of separating, to determine how welfare hires fare compared to nonwelfare hires in their next job after separating from the same firm. We might expect that the type of outcome (welfare, no job, and job) might differ between welfare and nonwelfare hires since former welfare recipients might face lower costs of welfare as a postseparation outcome. The lower costs may result from having previous experience maneuvering within the system and from being desensitized to the stigma associated with welfare. Controlling for human capital, demographic, and labor market characteristics, however, it is not clear that wage gains between welfare and nonwelfare hires having been employed by the same firm, doing the same job. …

The Place Premium: Wage Differences for Identical Workers Across the U.S. Border

We estimate the premium-the wage gain that accrues to foreign workers who arrive to work in the United States. First, we estimate the predicted, purchasing-power adjusted wages of people inside and outside the United States who are otherwise observably identical-with the same country of birth, country of education, years of education, work experience, sex, and rural or urban residence. We use new and uniquely rich micro-data on the wages and characteristics of over two million individual formal-sector wage-earners in 43 countries (including the US). Second, we examine the extent to which these wage ratios for observably equivalent workers may overstate the gains to a marginal mover because movers may be positively selected on unobservable productivity in their home country. New evidence for nine of the countries, combined with a range of existing evidence, suggests that this overstatement can be significant, but is typically modest in magnitude. Third, we estimate the degree to which policy barriers to labor movement in and of themselves sustain the place premium, by bounding the premium observed under self-selected migration alone. Finally, we show that the policy-induced portion of the place premium in wages represents one of the largest remaining price distortions in any global market; is much larger than wage discrimination in spatially integrated markets; and makes labor mobility capable of reducing households' poverty at the margin by much more than any known in situ intervention.

The Dissipation of Minimum Wage Gains for Workers through Labor‐Labor Substitution: Evidence from the Los Angeles Living Wage Ordinance

This paper utilizes worker‐firm matched data on city contract establishments affected by the Los Angeles Living Wage Ordinance to explore the extent of labor‐labor substitution following establishment of a minimum wage. We are able to test for substitution on observable and unobservable skill and demographic features and to measure the extent to which such substitution dissipates the benefits of a wage minimum for workers in affected firms. The results suggest substitution toward male, Latino, and black workers and workers possessing prior formal training. All are characteristics that generate a wage premium in this segment of the low‐wage labor market in Los Angeles. Evidence for substitution based on unobservables is presented as well. The latter is revealed by the finding that the “before” wages of workers who are new to city contract work following the ordinance are significantly higher, conditional on observable characteristics, than the “before” wages of city contract workers who were hired preceding the ordinance. We estimate that the initial wage gain for workers is dissipated by roughly 27% through labor‐labor substitution.

Wage Growth and Job Mobility in the United Kingdom and Germany

Using data from the British Household Panel Survey for 1991–99 and the German Socio-Economic Panel for 1984–99, the authors investigate job mobility and estimate the returns to tenure and experience. Job mobility was higher in the United Kingdom than in Germany. Returns to experience also seem to have been substantially higher in the United Kingdom, where the wage gain associated with ten years of labor market experience was around 80%, compared to 35% in Germany. The low returns to labor market experience in Germany appear to have been accountable to one group of workers: those with apprenticeship training, who tended to receive fairly high starting wages but to experience relatively low wage growth thereafter. Wage growth due to labor market experience was similar between the two countries for the other skill groups. Returns to tenure were close to zero in both countries.