Waged Research Articles

Free or Enslaved Labor

Abstract Slavery was a dominant institution in labor markets for thousands of years. While nowadays illegal around the world, modern slavery still exists in various forms. This paper is an attempt to understand why slavery has been such a persistent institution. The model outlined is based on the theory of reservation wages, and proposes that slavery is an institution resorted to in contexts where the reservation wages for engaging free workers are high. Factors that contribute to such a scenario include the outside opportunities available to free workers, and the disamenities associated with the particular tasks to be undertaken. This paper argues that all key predictions from the model fit well with what is known about historical slavery, and for many of the dominant forms of modern slavery. The model can also be used to generate policy recommendations to better combat surviving forms of modern slavery.

Commercialism and Inter‐Industry Pay Differentials in the US Nonprofit Sector

ABSTRACTWhile the wage dispersion across industries persists for long, it has yet to be adequately explained. Focusing on the nonprofit sector, this study examines the effect of commercialism on pay at the industry level with nationally representative data from the perspective of institutional theory and management. I first constructed a factor to measure commercialism at the industry level with data from IRS Form 990. Then I modeled the net effect of commercialism on pay by using cross‐classified multilevel modeling to control effects at occupation, state, and individual levels. The findings show that commercialism increases pay at the industry level and widens pay gaps between managers and nonmanagerial staff. With multilevel modeling, the study closes the gap of the micro–macro divide in pay studies, provides an additional interpretation of compensating wage theory, and supplements empirical evidence to the debate about the impact of nonprofit commercialism.

Pay As You Go (PAYG) Pension Scheme and Employee Performance in Anambra State Local Government System (2012 - 2021)

This Study examined the relationship between the Pay As You Go Pension scheme and employee performance in Anambra state local government system from 2012 to 2021. The motivation for the study arose from the need to ascertain how the availability of retirement benefits inspires employee’s performance and commitment to the organization while still in service. In line with the specific objectives of the study, three research questions and hypotheses were formulated and tested for the study. The study was anchored on the Deferred Wage Theory. The methodology adopted was survey design. Primary and secondary sources of data were used. A structured questionnaire instrument was administered to the respondents and the data obtained was presented using tables and mean scores and analyzed using Pearson correlation. The major findings from the study, among others are that the pay as you go pension scheme has a relationship with employees’ performance in the Anambra state local government system. On the basis of the findings from this study, the study recommended, among others, that government should make adequate budgetary allocations for prompt payment of pensions and pension arrears. They should demonstrate strong support to ensure necessary political and economic support for the scheme.

Non-optimality of intellectual capital inputs: a new avenue for research

PurposeThis paper aims to initiate new avenues of research by examining optimal intellectual capital (IC) inputs, introducing three theories into the discussion: diminishing returns to scale, transaction costs economics and efficiency wage theory. In the second part, it advocates for demonstrating the existence of such non-optimality through empirical tests.Design/methodology/approachThis paper is divided into two parts. The first part provides a theoretical justification for the necessity of observing nonlinear relationships between IC inputs and firm performance. In the empirical section, the research design follows a four-step process, each progressively building on insights gained from the preceding phase: (1) establishing a baseline linear regression model; (2) introducing the logarithm of the IC inputs; (3) incorporating the square terms of the IC inputs and (4) investigating the phenomena of over- and under-input in IC.FindingsThe background theories and the obtained results highlight the necessity for firms to adopt a strategic approach to IC, acknowledging the diverse effects of IC components on different outcomes. They emphasize the nonlinear nature of IC returns, underscoring the importance of investing up to an optimal level to maximize benefits.Practical implicationsThe study’s discovery of optimal levels for the components of IC highlights the importance for practitioners to identify and invest up to these optimal levels. This ensures that IC initiatives are strategically aligned to maximize their positive impact on firm performance.Originality/valueThe integration of theories such as diminishing returns to scale, transaction costs economics and efficiency wage theory, alongside traditional frameworks like the resource-based view, the theory of dynamic capabilities and the knowledge-based theory of the firm, opens up new avenues for research on IC. The proposed methodology and measures – from financial reports – provide opportunities for replicating this type of study.

Nineteenth-Century French Liberal Economists and Women's Work: The Dark Side of Industrialization

This article reconstructs the debates on the woman question in which nineteenth-century French liberal economists participated: it aims at showing that their analysis contradicted their conviction that, in Bastiat's words, “men's interests, when left to themselves, tend to . . . work together for progress and the general good.” Indeed, French liberals are usually labeled optimistic: they denounced the pessimistic and fatalist character of the “English school of economics” based on Ricardo's rent theory and Malthus's law of population. On the contrary, they attempted to prove that economic development improved the situation of all, especially that of workers. However, their optimism did not extend to their analysis of the situation of women: most of them recognized that women were not benefiting from the general improvement in terms of wages, labor conditions, and social mobility. The article then shows that the reasons they gave to explain the bad situation of women present many challenges, linked respectively to the issue of state intervention and wage theory. Moreover, it is unlikely that the only solution they proposed for improving it, that is, the promotion of female education, could have worked.

Higher official wages reduce petty not grand corruption: Evidence from China

Empirical studies have yielded conflicting findings regarding the impact of official wages on corruption. Based on Efficiency Wage Theory and Public Value Theory, this study posits that one contributing factor to such conflict is the failure to discern between petty and grand corruption. This study expands these theories from two perspectives. Firstly, we contend that increasing official wages leads to decreased petty corruption but not grand corruption. Secondly, we propose that the impact of higher official wages weakens when officials earn more than those employed in the private sector. The two hypotheses are validated on our original Chinese corruption dataset via instrumental variable estimations. This study implies that attempting to reduce grand corruption through increasing official wages would incur significant costs with low returns. However, enhancing public sector wages to match those in the private sector could be a strategy to mitigate petty corruption.

Wage Regulation of Outsourced Workers After the Omnibus Law of the Labor Cluster Based on Wage Theory

This research investigates the effects of the enactment of the Job Creation Law (Law Number 11 of 2020) in Indonesia on labor regulations, specifically focusing on wage regulation for outsourced workers and its implications for human rights. Employing a normative juridical approach, the study examines legal materials such as laws, regulations, court decisions, and expert opinions. Through qualitative analysis techniques, the pre- and post-Job Creation Law regulations concerning outsourced workers' wages are explored. The findings uncover significant changes in wage provisions, including the elimination of sectoral minimum wage regulations and the reduction in types of wages for outsourced workers. Moreover, the research reveals discrepancies between the Job Creation Law and international conventions' indicators of freedom, availability, accessibility, and suitability. Concerns are raised regarding the adequacy of workers' rights protection, accessibility to fair wages, and the inclusivity of vulnerable groups within the legal framework. This study contributes to understanding the Job Creation Law's implications for labor and human rights in Indonesia, highlighting areas where the law may fail to ensure equitable treatment and fair compensation for outsourced workers. Policy recommendations aimed at upholding human rights standards in labor regulations are proposed based on the study's findings.

From the Other Side: Supervisor Perspectives on Paid Versus Unpaid Sport Management Internships

Internships help position college students to succeed in the sport industry but have historically been unpaid. In response to a call from Walker et al. for more research on the impacts of unpaid internships, this study interviewed internship supervisors regarding their perspectives on unpaid internships. Data analysis was framed by institutional theory, exploitation theory, and efficiency wage theory. Results showed that supervisors use several narratives to justify unpaid internships and organizations are often slow to change without a pressing reason. While the supervisors believed that higher pay would attract better candidates and produce higher quality work, they also believed that some organizations are not capable of paying their interns and sport organizations are popular enough to attract many applicants without paying.

Analisis Pengupahan Terhadap Sistem Upah Kerja Borongan Buruh Bangunan Berdasarkan Fatwa DSN MUI Nomor 09/DSN-MUI/VI/2000 dan Peraturan Pemerintah Nomor 36 Tahun 2021

Wages are an important component of the relationship between companies and their workers. Researchers analyzed wage practices carried out by PT. Raytama Bintang Arbani where the company is one of the companies in the construction sector that uses the services of workers/laborers who work according to what the company expects. The rampant remuneration is arbitrary because it is caused by the ignorance of both parties about the wage system. Researchers use the theories of wages that exist in the Fatwa regarding ijarah, and Government Regulations regarding wages. The purpose of this study is to find out and explain the practice of giving wages to construction workers at PT. Raytama Bintang Arbani. Second, to find out and explain the analysis of Islamic law on the practice of wages for construction workers at PT. Raytama Bintang Arbani. The researcher analyzed using Fatwa No. 09 of 2000 concerning ijarah contracts and also Government Regulation Number 36 of 2021 concerning Wages. The method used in this research is qualitative research, a type of research that describes systematically what is happening in the field. The data collection techniques used in this study are observation, interviews, and documentation. Based on the results of research in the field, it is true that at PT. Raytama Bintang Arbani under this contract labor wage system, the standard wages given to workers are not the same value as the same work because wages are also based on the length of work of workers/laborers at PT. Raytama Bintang Arbani. The amount of wages, which also has a value, has been determined by the company, so workers cannot negotiate, for fear of losing their jobs. The average worker in this company has a low level of education, so they don't understand regulations. Companies should be wiser and understand wage regulations.

Technology adoption and jobs: The effects of self-service kiosks in restaurants on labor outcomes

This study explores how technology adoption affects labor. I investigate the effect of restaurants' adoption of self-service kiosks on labor outcomes, using survey data from Korea. I find that businesses’ adoption of self-service kiosks had little impact on their number of full-time or part-time workers. However, restaurants with a self-service kiosk decreased both the wages of their part-time workers and the number of unpaid family members they employed. The results are driven by franchise restaurants. Independently owned restaurants that adopted kiosks increased the wages of their full-time workers. These findings provide support for the efficiency wage theory as well as the skill-biased technological change theory. The results suggest that when businesses adopt new technologies, these technologies do not replace unskilled labor, but rather raise the relative wages of skilled workers.

Labor Productivity, Real Wages, and Employment in OECD Economies

This work investigates the relationship between labor productivity (LP), real wage (RW), and employment (EMP). The paper's main goal is to test competing theories of growth and income distribution. Standard theory predicts that RW should increase following increases in LP. Alternative theories and efficiency wage theories suggest that the distribution causes changes in LP. Theory delivers ambiguous predictions regarding the ultimate effects on EMP, which can be either negative if factor substitution prevails or positive if higher RW and LP generate additional aggregate demand and, therefore, EMP. I study a panel of 25 OECD economies by performing single and multi-equation approaches. My first key result is a positive two-way association between LP and RW, supporting the induced technical change and efficiency wages theories over the marginal productivity theory. My second relevant finding is that EMP is weakly exogenous, suggesting that OECD countries have been labor-constrained for the period under analysis.

District attorney compensation and performance

We attempt to identify the causal effect of wages on a prosecutor’s effort by studying an exogenous salary increase in New York. We measure the performance by the likelihood that a conviction is upheld when appealed. If the efficiency wage theory explains behavior, then the exogenous wage shock should entice better performance. Alternatively, if individuals who hold office are motivated primarily by an intrinsic motivations rather than strictly financial compensation, then their performance would be unrelated to changes in their salary. We mostly find, inconsistent with efficiency wage theory, that a pay increase has a null effect on prosecutor performance.

Impact of relative compensation to executive directors with marketing experience on marketing performance: toward an integrative framework

PurposeThis paper aims to combine the agency theory and efficiency wage theory to explore the effects of relative compensation for executive directors with marketing experience on two marketing outcomes (marketing efficiency and market share) and the moderating roles of ownership type (private vs state-owned enterprises) and market concentration in this process.Design/methodology/approachA total of 2,753 firm-year observations from Chinese listed companies (from 2010 to 2014) were retrieved from China Stock Market and Accounting Research database and analyzed using firm random-effects with industry, year and region fixed effects.FindingsRelative compensation has a positive effect on both marketing efficiency and market share, and these effects are moderated by ownership type and market concentration. Specifically, the positive effect of relative compensation on marketing efficiency and market share are stronger for central state-owned enterprises (SOEs) compared to local SOEs and private-owned enterprises but the results are mixed for market concentration.Research limitations/implicationsThis study shows that paying higher compensation to the executive directors with marketing experience can enhance marketing performance, but the data does not allow identification of the actual actions taken by these directors for this.Practical implicationsThis study highlights the importance of appropriate compensation for directors with marketing experience to motivate them to make better marketing decisions to overcome the challenges posed by market concentration and agency conflicts.Originality/valueThis paper points out the importance of having directors with marketing experience and paying them suitable compensation to motivate them to be more effective.

Development of economic views in the field of remuneration and the modern approaches to its accounting

Subject. This article analyzes the development of economic views on the theory of remuneration, and it also considers the methodological aspects of accounting processes for the formation and disclosure of information on remuneration to employees in reporting. Objectives. The article aims to consider changes in the views of society on the wages of employees, and justify the need to develop and adopt the Federal Accounting Standard FSBU – Employee Benefits in accordance with international standards. Methods. For the study, we used analysis and synthesis, comparison, logical generalization, and the systems approach. Results. The article systematizes the main theoretical approaches to the study of issues in the field of remuneration, identifying the main differences and common features of the theories of remuneration. The article also presents a comparative description of Russian and international standards on the accounting of remuneration to employees and justifies the need to develop and adopt the FSBU – Employee Benefits in accordance with international standards. Conclusions and Relevance. The theories of wages outlined in the article characterize the order of development of economic theory in the field of remuneration, as well as changes in the judgments of society that influenced the nature of the development of relations between the employee and the employer. The results of the study can be used for the theoretical study of the issue, as well as in the practical activities of an economic entity in the context of sustainable business development.

The effects of health conditions on financial sector development

The relationship between the financial sector and health sector has been under investigated in the literature. Based on the efficiency wage theory, one can conjecture that a healthy worker, unlike the unhealthy one, can work, save, and contribute more to widening the financial sector. Using panel data over the period 1995–2016, we examine whether improvements in health conditions can help explain the expansion of the financial system in Sub-Saharan Africa. The results indicate that better health conditions contribute to financial development. Specifically, higher life expectancy, lower infant mortality, higher health expenditure, and lower out-of-pocket expenditure significantly contribute to financial sector development. These results suggest that better health conditions increase domestic savings and foster financial development. The study, therefore, enhances the importance of health status and spending on health infrastructure in economic development and calls on policymakers to invest in human health.

Labour market and wage inequalities between permanent rural migrants and urban-born residents in China

ABSTRACT This study provides some of the first empirical evidence on the role of the labour market in determining individual-level wages and the consequent wage inequalities. Unlike traditional earnings equations that focus on human capital factors, this study follows recent wage theory, the Nash bargaining model, and finds that not only human capital but also the labour market are important factors in determining individual-level wages. Further, this study examines wage inequalities between urban-born workers and permanent rural migrant workers, who constitute a sizable part of all rural migrants in urban China but have been ignored in previous academic studies. Different from temporary rural migrants examined in previous studies, permanent rural migrants share the same citizenship rights and social welfare as urban-born workers. However, we still find that these permanent migrants (classified as talent, land, and ‘supported’ migrants) face disadvantages in acquiring high wages. Using a developed version of the two-fold Blinder–Oaxaca decomposition based on our theoretical model, we find that the wage inequalities between permanent rural migrants and urban residents are caused by both the workers’ education and labour market tightness, as well as the father’s employment status, housing prices, and other factors.

Minsky’s Theory of Inflation and its Theoretical and Empirical Relevance to Credit-Driven Economies

This article examines Minsky’s theory of inflation, as distinct from a monetary theory of inflation and a productivity-adjusted wage theory of inflation. Minsky’s view on money and banking will be elucidated in contrast to orthodox banking theories, drawing a causal relation from bank credit creation to aggregate demand, profits, and inflation. This article claims that his theory is particularly relevant to modern economies in which the globalization of the production process and the decline in the power of unions have mitigated wage-led inflation while financialization has amplified the business cycle and the movement in inflation over the previous forty years. In other words, excessive bank lending has underpinned aggregate spending, which created too much “claim” on consumer goods, thus precipitating profit-led inflation. By contrast, an unavoidable financial crisis and attempts, especially by households to pay off outstanding debt, dampened aggregate demand, thus causing a slowdown in profits and inflation.

Translations of W. S. Jevons in China in the Late Qing Dynasty

The paper examines the history of Chinese translations of the works of the British economistW. S. Jevons in the late nineteenth - early twentieth centuries as part of the process of introduction of Western scientific knowledge to China. The attention is focused on the translations of Jevons’s Primer of Political Economy and his book The State in Relation to Labor . The terminological features of Chinese translations of these works are analyzed, including the searches for equivalents of modern scientific vocabulary in the heritage of Chinese culture. Jevons’s textbook was translated by Joseph Edkins and Yan Fu, who proposed their methods of adapting the text to the perception of the Chinese reader. The paper demonstrates that Edkins’s translation faithfully followed the original and used Chinese terminology available at that time. The clarity of Jevons’s textbook contributed to the dissemination of elementary knowledge of Western economics in China. The Policy to Enrich the Nation and Support the People served in China as one of the earliest sources of information about Adam Smith, his concept of division of labor, the theory of exchange, the theory of wages, and the principles of taxation. Multiple versions of hieroglyphic transliteration of Jevons’s name obstructed the formation of comprehensive vision of his legacyin China, therefore one of the objectives of the paper was to collect all available information about Chinese translations of the economic works of the British scholar. Jevons’s theory of the impact of natural factors on economic cycles influenced Liang Qichao, who compared it with ancient Chinese ideas about the relationship of famine and natural disasters with location of celestial bodies. After the translation of the Primer of Political Economy the focus of attention shifted to Jevons’s works in industrial legislation and finances.

The Cyclical Behavior of Unemployment and Wages under Information Frictions

I propose a new mechanism for sluggish wages based on workers’ noisy information about the state of the economy. Wages do not respond immediately to a positive aggregate shock because workers do not (yet) have enough information to demand higher wages. The model is robust to two major criticisms of existing theories of sluggish wages and volatile unemployment, namely, that wages are flexible for new hires and the flow opportunity cost of employment (FOCE) is pro-cyclicality. The model generates volatility in the labor market as well as wage and FOCE elasticities with respect to productivity, consistent with the data. (JEL E24, E32, J24, J31, J63)

Teoria płacy wydajnościowej przed Harveyem Leibensteinem

Objective: The article analyses the idea of efficiency wage before H. Leibenstein’s work from 1957 as an example of specific cognitive bias. The bias centers around the rejecting or neglecting of empirical data not in accordance with theories of mainstream economics.Research Design & Methods: The method used was comparative analysis of economics texts.Findings: The article shows that the concept of the efficiency wage was often neglected and marginalized, supposedly because it could have paved the way to unorthodox economic theory, and away from the dominant laissez-faire thinking of most ecomomists. H. Leibenstein shows a case in which higher wages implicate higher efficiency. This is the special case of low-paid workers, who in consequence are better nourished, thus gaining strengthen and vitality, which in turn makes them better labourers. Another factor in H. Leibenstein’s analysis was the motivating function of higher wages. Efficiency wage effects were known to economists as well as managers long before H. Leibenstein. Practitioners of efficiency wages have included R. Owen, Cadbury brothers and H. Ford, while more theoretical-oriented economists have included authors from A. Smith to A. Marshall.Implications / Recommendations: Efficiency wage theory was revealed and forgotten many times before H. Leibenstein. This phenomenon is an example of a well-known cognitive bias: neglecting evident facts that are incompatible with established theories and are thus treated as irrelevant anomalies.Contribution: Part of the analysis done for this article may become a part of a research programme showing ways economists make theoretical choices. This article will contribute to such a programme.