wage determination in brazil the growth of union bargaining power and informal employment this article examines wage determination in brazilian manufacturing during the 1980s and early 1990s it presents evidence to show that the reduction in state regulation of collective bargaining has led to the development of a system of wage determination which is increasingly characterised by rent sharing and insider trade union bargaining power real wages appear increasingly inflexible with respect to movements in open unemployment with a large informal sector disciplining formal sector wage bargaining and cushioning the impact of broader labour market conditions an important consequence of this is that the employment costs of a successful counter inflationary strategy may be very severe

productivity effects in brazilian wage determination abstract the article investigates the characteristics of industrial wage determination in brazil using time series data for 22 manufacturing sectors for 1985 1993 the idea is to verify whether changes in sectoral productivity are relevant to explain changes in sectoral nominal wages first we present in a descriptive way the results of a statistical investigation of the data a second more encompassing purpose of the article is an attempt to interpret the results by means of a more elaborate econometric analysis the evidence suggests that rent sharing is indeed a pervasive feature of the brazilian industrial labor market

pay setting self employment and the unions one of the important influences that has shaped recent labour market policy is the idea that pay should depend on the employer s financial per formance this is believed both by politicians and by businessmen and comes in various guises it was the subject of long debate in the spring issues of the financial times prime minister john major argued that there should be no such thing as automatic pay increases pay must be linked to

voter turnout in the industrial democracies during the 1980s there are two contending accounts of cross national variation in voter turnout rates one emphasizes the role of institutions and electoral attributes whereas the other stresses cultural and historical factors the authors evaluate the merits of these two arguments they first apply the model developed by r w jackman to turnout rates during the 1980s expanding the sample of industrial states to include three newer democracies with recent authoritarian histories greece portugal and spain they then examine the potential impact of cultural variables on voter turnout rates the authors conclude that the institutional argument outperforms the cultural account of conventional political participation

the low skill trap recently it has become popular to argue that certain workers have fallen into a trap in which they have poor skills few job opportunities and a low return on training while others have not this paper demonstrates how such a trap can occur within a simple matching model with rent sharing rent sharing diminishes the worker s incentive to acquire skills however since firms also benefit from training rent sharing likewise induces job creation the subsequent improved matching prospects may offset the initial disincentive to invest however for this mechanism to be effective firms and workers must coordinate their actions if they do not the trap occurs

the dynamics of monopoly union wages with asymmetric information dunlop s 1994 work on the monopoly union model emphasizes that the primary role of wages is to distribute industry rents this paper extends the model to two periods and it is furthermore assumed that firms are better informed than workers about the size or quality of capital this variable is unchanged over time so the firm s first period action signals information relevant for the second period wage this dynamic relationship tends to lower labour demand in the first period

wage curve analyses of establishment data from western germany using the iab establishment panel which is representative for western germany the authors find that establishment level wages reacted to variations in the regional unemployment rate the elasticity of wages with respect to unemployment they estimate was about 0 1 this responsiveness of the wage to regional variation is close to estimates found by other researchers using individual rather than establishment data for other countries and contradicts the view that germany s labor market largely due to the nature of collective bargaining in that country is relatively inflexible possible explanations for this finding are that the negotiated wage is treated like a minimum wage with firms deviating from it in order to increase work effort bargaining between firms and individual workers or between firms and works councils produces wage differences or collective agreements do not restrict firms to the extent that is often assumed

regional disparities in the unemployment rate the role of the wage setting mechanism in spain 1987 92 bande r fernandez m and montuenga v m 2007 regional disparities in the unemployment rate the role of the wage setting mechanism in spain 1987 92 regional studies 41 the aim of this paper is to show how regional unemployment disparities in spain widen during economic upturns and to provide an explanation of this behaviour the analysis is based on the study of the wage setting mechanism that allows an estimation of the responses of wages to both labour productivity and the general situation of the labour market and an assessment of their impact on the evolution of regional unemployment the results of this estimation at the regional level with manufacturing data confirm the existence of marked differences between industries and between regions these responses these differences can be interpreted as a distinctive wage setting mechanism across industries and regions which may explain the evolution of unemployment rates within the regional labour markets bande r fernandez m et montuenga v

the economics of small business finance the roles of private equity and debt markets in the financial growth cycle abstract this article examines the economics of financing small business in private equity and debt markets firms are viewed through a financial growth cycle paradigm in which different capital structures are optimal at different points in the cycle we show the sources of small business finance and how capital structure varies with firm size and age the interconnectedness of small firm finance is discussed along with the impact of the macroeconomic environment we also analyze a number of research and policy issues review the literature and suggest topics for future research

political scale and electoral turnout evidence from the less industrialized world this article attempts to bring the politics of scale back into the study of comparative politics explicitly focusing on the question of electoral turnout in the less industrialized world it explo

labour quality and aggregate real wage dynamics the real wage plays an important role in many aggregate econometrics studies of the labour market however average wages like any other average quantity can change for two reasons either through an underlying movement in the earnings potential of a unit of labour of given quality or alternatively through compositional changes which alter the relative proportions of different types of labour within the employed labour force using data from the general household survey to estimate earnings functions the paper seeks to examine the contribution of these two factors for britain from 1979 to 1989 it is shown that in periods of rising unemployment compositional changes can have a bigger effect on real earnings growth than any underlying change in reward to labour of give quality this raises the question of what economists actually are measuring when considering the behaviour of the aggregate real wage

the innovative behavior of spanish enterprises and its impact on salaries our aim was to analyze the effects of firms innovative behavior on their employees salaries in the spanish manufacturing industry we found a premium in the wage paid by innovative firms regardless of size however when taking company size into account we found that the effect of innovations was greater in small medium enterprises sme contrary to what was expected the inferences of the models estimated suggest that the higher the market concentration the weaker the appropriability regime especially for smes however at the same time a firm s innovations reduce the impact of market concentration on wages making innovating firms more autonomous than non innovating ones even more to be able to innovate firms have to isolate their employees salaries from the product market these results hold regardless of firm s size but have a greater impact on the small medium group of firms finally our analysis backs the assumption that salaries in both large and small medium firms are generated by two distinct economic regimes supporting the proposition that an sme is not simply a scaled down large firm

a statistical model for multiparty electoral data we propose an internally consistent and comprehensive statistical model for analyzing multiparty district level aggregate election data this model can be used to explain or predict how the geographic distribution of electoral results depends upon economic conditions neighborhood ethnic compositions campaign spending and other features of the election campaign or characteristics of the aggregate areas we also provide several new graphical representations for help in data exploration model evaluation and substantive interpretation although the model applies more generally we use it to help resolve an important controversy over the size of and trend in the electoral advantage of incumbency in great britain contrary to previous analyses which are all based on measures now known to be biased we demonstrate that the incumbency advantage is small but politically meaningful we also find that it differs substantially across the parties about half a percent for the conservatives 1 for the labor party and 3 for the liberal party and its successors also contrary to previous research we show that these effects have not grown in recent years finally we are able to estimate from which party each party s incumbency advantage is predominantly drawn

an investigation into the power of insiders in wage determination abstract this paper is concerned with the role of insider forces in wage determination various union and non union models of wage behaviour are considered and they imply that wages are a convex combination of internal and external factors certain union models also imply a degree of hysteresis data on fourteen british production industries reveal that i insider forces are important ii their importance is directly related to both union power and the degree of monopoly in the product market iii the state of the aggregate labour market is also important and iv hysteresis effects arising from insider power are only significant in a small minority of sectors

oligopsony and the distribution of wages we propose a simple model of wage dispersion arising from oligopsonistic competition in the labor market our model has workers who are equally able but who have heterogeneous preferences for non wage characteristics while employers have heterogeneous productivity characteristics we completely and explicitly solve for the equilibrium wage distribution and show that inside and outside forces interact in wage determination this interaction generates spillover effects of minimum wages in a manner which is consistent with the empirical evidence

who votes in latin america a test of three theoretical perspectives previous studies of electoral participation in latin america have focused on the political and institutional factors that influence country differences in the aggregate level of turnout this article provides a theoretical and empirical examination of the individual level factors that have an impact on citizens propensity to vote we test three theoretical perspectives that have been used to explain electoral participation in industrialized democracies voters resources voters motivations and mobilization networks using a series of logistic and hierarchical models we demonstrate that the demographic characteristics of voters age and education and citizens insertion in mobilizing networks civic organizations and the working place are strong predictors of electoral participation in latin america our analysis also confirms the importance of contextual and institutional variables to explain turnout in the region

imperfectly competitive labour markets and the productivity puzzle abstract we integrate imperfectly competitive labour markets in a dynamic macromodel in accordance with empirical evidence we find that temporary shocks are consistent with little real wage and large employment responsiveness while permanent shocks affect real wages and not employment

firms expectations and employment behaviour evidence from a panel of uk manufacturing firms abstract in this paper we investigate the effect of expectations of future sales on employment adjustment we find that uk manufacturing firms sales expectations have a statistically significant effect on their employment behaviour leading to employment being more sluggish to respond when firms expect sales to rise

firm profitability regional unemployment and human capital in wage determination this paper presents an analysis of wage formation in the norwegian private sector using data for individual workers matched with firm level information and regional unemployment a key issue is to test whether or not firm specific variables affect individual wages after controlling for individual specific factors and working conditions the results imply positive effects of firm specific profitability and firm size the elasticity of wages with respect to value added per worker and firm size is 5 and 3 3 respectively empirical evidence of a downward sloping regional wage curve is also reported while there is no support of the hypothesis of compensating wage differentials since data for three levels of aggregation are used the ols estimates of the standard errors are downward biased therefore results using a random effects model are also reported taking the multi level structure of the data into account

layoffs with payoffs a bargaining model of union wage and severance pay determination popular characterizations of union preferences assume that the income of laid off union members is exogenous there is evidence however of intra union distribution schemes such as severance payments unemployment insurance retraining arrangements and early retirement schemes this paper develops a model of wage and severance pay determination by a trade union and a firm bargaining in a right to manage framework the important point differentiating the model in this paper from the orthodox union model is that it is efficiency improving in the sense that it makes full insurance possible and marginal productivity is equal to the opportunity cost of labour moreover with redundancy pay on the bargaining agenda both the right to manage and the efficient bargaining union models are characterized by the same efficiency conditions this has implications for empirical research which attempts to distinguish between these two models since the outcome of both models is the same finally the union firm bargaining model can also be compared with the outcome of the implicit contract model with redundancy pay there is an important difference between the two approaches however while the result in this paper derives from an imperfectly competitive labour market where unions and firms bargain over wages and redundancy pay the implicit contract result derives from a perfectly competitive labour market in which competitive forces lead to an efficient outcome

the downsian voter meets the ecological fallacy this paper presents evidence that voter participation does not depend on the probability that one vote is decisive an extensive summary of the empirical participation literature is provided which shows that most but not all studies have found that turnout in an electoral district is higher when the race is closer individual level vote regressions for the 1979 and 1980 canadian national elections are estimated using objective measures of closeness as opposed to self reported measures the main finding is that a citizen is no more likely to vote in a close election than in a lands lide election district level turnout regressions for the same elections are also estimated and a significant relation between closeness and turnout is observed this suggests that aggregation bias may generate a spurious closeness turnout relation in district level regressions

interstate migration in mexico variations on the todaro theme abstract this study of migration in mexico is based upon a modified todaro approach and utilizes census data in a simultaneous equations model of 13 variables it is unique in several ways a it introduces proxy variables for employment probability and cost of migration that have not heretofore been found in the literature but for which data are often available b it illustrates that in some important cases census data have advantages not available through surveys and c it finds that in some sense land reform in mexico may have operated perversely finally the study opens a new avenue for the study of informal sector growth

rational choice and turnout turning out to vote is the most common and important act of political participation in any democracy voting is also less well understood and explained empirically than other political acts engaged in regularly by citizens turnout however presents a special problem for rational choice theories of politics for it is taken to be the paradigmatic example of the problem of collective action in which although all may benefit from voting it is rarely in the individual s self interest to vote this paper begins by examining the problem of explaining turnout a basic form of rational choice models of turnout is developed basic in the sense that it is common to all such models this basic model is shown to be incomplete and the two most important models the calculus of voting and the minimax regret model are illustrated as alternative ways to complete this basic model along with mention of game theoretic models their strengths and weaknesses are then assessed the remainder of the paper argues that rational choice accounts of turnout are possible the first step is to argue that turnout is not an especially problematic version of the collective action problem because it is for many a low cost low expected benefit decision a strategic politicians account of turnout and campaigns is examined next a reinterpretation of the intrinsic benefits of voting is then considered and is used to examine the most important substantive problem in the turnout literature its decline these steps i argue make theories of ordinary political decisions at once both more political and more integrated into the politics of the larger system

closeness expenditures and turnout in the 1982 u s house elections students of elections have repeatedly found that the closeness of an election is modestly correlated with turnout this may be due to a direct response of instrumentally motivated voters but recent theoretical work casts doubt on the adequacy of this explanation another possibility is that elite actors respond to closeness with greater effort at mobilization we explore the latter possibility by using fec and state data on campaign expenditures in house senate and gubernatorial races our results indicate that closeness has an effect at both the mass and elite levels we also provide quantitative estimates of the effect of senate and gubernatorial expenditure on house turnout

what affects new and established firms expansion evidence from small firms in russia research on financial constraints of very small firms is scarce because it is difficult to observe and measure their transactions previous studies on small enterprises in post communist countries have focused either on the effect of financing constraints on business growth budina et al 2000 economics of transition8 2 453 475 bratkowski et al 2000 economics of transition8 1 101 116 or on the effect of property rights johnson et al 2002 american economic review92 5 1335 1357 this paper provides evidence on both it turns out that financing constraints and property rights considerations affects investment in firms of different age differently younger firms face higher information costs and their expansion is more dependent on the availability of internal funds than is the expansion of older firms this paper also finds that while the financial sector did not channel funds to the most successful businesses there is evidence that loans were given to firms that had more transparent transactions results also indicate that the security of property rights does not influence investment in young firms which is interpreted to mean that only the most efficient entrepreneurs entered the market in older small firms investment is negatively influenced by the index of security of property rights suggesting that these firms might have secured their property rights by bribes improvements in the security of property rights therefore would help more micro enterprises to be born as well as decrease transaction cost of established enterprises

getting out the vote participation in gubernatorial elections scholarship on electoral turnout has long emphasized two main themes explanations of nonvoting in terms of individual characteristics and in terms of contextual variables these investigations have deeply enriched our understanding of electoral participation but their limitations have also sensitized us to the remaining problems of explanation perusal of the work on american politics exposes a rather striking tendency in studies of participation to ignore or soft pedal the effects of active political mobilization in this article we formulate two models of electoral turnout socioeconomic and political mobilization and apply them to aggregate data on voting in gubernatorial elections of 1978 and 1980 the socioeconomic model of turnout includes such influences as income age and educational attainment to assess the effects of political mobilization we have considered campaign spending partisan competition electoral margin and the presence or absence of a simultaneous race for the united states senate both of the models perform quite well individually producing significant and meaningful coefficients and adequate fits yet in the final analysis we demonstrate that quite apart from major sources of variation in gubernatorial turnout such as region and presidential versus nonpresidential years the mobilizing influences of campaign activism and competitiveness have a strong impact on electoral participation electoral law i e closing date of registration retains a small but significant effect on voting for governor and socioeconomic characteristics included in a fully specified model have little to contribute independently to an explanation of electoral turnout these findings are very much in the same vein as related cross national investigations which emphasize the crucial role of electoral law and political parties and downplay individual characteristics as determinants of electoral participation on the basis of the research reported here we argue that scholars need to pay more attention to political mobilization as an explanation of electoral turnout in the presidential election between cox and harding in 1920 only half of the eligible voters participated this relatively low turnout together with the historically minimal rates of participation in state and local elections created deep concern among those who believed that reasonably high levels of political involvement are crucial in maintaining a healthy democratic politics it was in this atmosphere of worry about low electoral turnout that charles e merriam and harold f gosnell 1924 conducted in the city of chicago the first systematic study of nonvoting subsequently gosnell 1927 went even further and executed the first experimental study in modern political science demonstrating conditions that could stimulate electoral turnout we too worry about low participation in elections today at every level of government and we believe these classic studies

coordination versus flexibility in wage formation a focus on the nominal wage impact of productivity in germany greece ireland portugal spain and the united states wage coordination between countries of the european monetary union emu aims at aligning nominal wage growth with labour productivity growth at the national level we analyse the developments in germany the emu s periphery countries greece ireland portugal and spain along with the united states over the period 1980 to 2010 apart from the contribution of productivity to nominal wages we take into account the contributions of prices unemployment replacement rates and taxes by means of an econometrically estimated nonlinear equation resulting from a wage bargaining model we further study the downward rigidities of nominal wages the findings show that in past times of low productivity price inflation and reductions in unemployment still put significant upward pressure on nominal wage growth the periphery countries are far from aligning nominal wage growth with productivity growth german productivity is a major wage determinant but surely not the only one within the context of a free bargaining

insider forces in wage determination new evidence for norwegian industries using panel data for norwegian industries we establish a significant permanent relation between industry wages and industry profitability the estimated long run insider weight is above 0 2 and stable both over time and across industries industry wages are significantly affected by aggregate unemployment and the preferred wage equation implies a highly convex wage curve

the paradox of voter participation a laboratory study it is widely believed that rational choice theory is grossly inconsistent with empirical observations about voter turnout we report the results of an experiment designed to test the voter turnout predictions of the rational choice palfrey rosenthal model of participation with asymmetric information we find that the three main comparative statics predictions are observed in the data the size effect whereby turnout goes down in larger electorates the competition effect whereby turnout is higher in elections that are expected to be close and the underdog effect whereby voters supporting the less popular alternative have higher turnout rates we also compare the quantitative magnitudes of turnout to the predictions of nash equilibrium we find that there is undervoting for small electorates and overvoting for large electorates relative to nash equilibrium these deviations from nash equilibrium are consistent with the logit version of quantal response equilibrium which provides a good fit to the data and can also account for significant voter turnout in very large elections

land and the transition from a dual to a modern economy tenurial contracts in agriculture can be an initial source of wealth accumulation for dynasties of poor credit constrained individuals the income from such contracts can be invested in education of offspring who then can find work in the formal manufacturing sector this process allows the economy to develop into a modern economy with a large manufacturing sector an excessive number of poor individuals competing for scarce land however drives up the rental price of land which then slows the process of accumulation and forces the economy to converge to a less efficient dual equilibrium in such cases a policy of land redistribution coupled with a temporary education subsidy may be needed to push the economy to a modern equilibrium

native migrant labour substitution by industry and wage effects evidence from the uk unlike previous studies we estimate the native migrant substitution elasticity nme differentiated by sector to do so we employ a straightforward estimation strategy that consists of adding slo

interindustry wage differentials technology adoption and job polarization abstract based on observations that high wage industries in 1980 experienced more evident job polarization between 1980 and 2009 we hypothesize that the persistent structure of interindustry wage differentials leads to heterogeneity in job polarization across industries as the relative price of ict capital declines firms respond to exogenous wage differentials by replacing routine workers with capital our empirical analysis shows that during the last three decades the annualized growth rate of ict capital per worker increased by 0 34 percent and that of routine employment decreased by 0 41 percent in the u s industries that paid 10 percent higher wages in 1980

rent sharing holdup and wages evidence from matched panel data rent sharing by workers can reduce the incentives for investment if some of the returns to sunk capital are captured in higher wages we propose a simple measure of this holdup effect based on the size of the wage offset for firm specific capital accumulation using social security earnings records for workers in the veneto region of italy linked to detailed financial data for their employers we find strong evidence of rent sharing with an elasticity of wages with respect to potential rents per worker of around 4 arising mainly at larger firms with higher price cost margins on the other hand we find little evidence that bargaining lowers the return on investment instead firm level bargaining appears to split the rents after deducting the full cost of capital

insider outsider theory and the case for implicit contracts the purpose of this paper is to show that insider outsider theory and implicit contracts are complementary rather than rival theories insider outsider theory introduces some realistic institutional detail into implicit contracts and insider outsider theory is enriched by a more careful consideration of optimal wage contracts under conditions of uncertainty which is the main comparative advantage of the implicit contract approach the paper introduces a hybrid model and shows how the predictions of both approaches are modified copyright 1992 by royal economic society

insider power and wage setting in transition evidence from a panel of large polish firms 1988 1994 abstract we analyse wage setting behaviour in the period of transition using the right to manage model the results show a significant change in wage bargaining in 1990 however the insider power measured by the employees capacity to capture productivity gains persists the sensitivity of wages to productivity changes is much stronger on the upside than on the downside in soes insiders capture important part of labour productivity gains in firms transformed into treasury owned joint stock companies insider effect is weaker in privatised firms the bargaining power of the employees is too weak to let them push up wages in response to labour productivity growth these results are robust to the potential selection bias

wages profits and rent sharing the paper suggests a new test for rent sharing in the u s labor market using an unbalanced panel from the manufacturing sector it shows that a rise in a sector s profitability leads after some years to an increase in the long run level of wages in that sector the paper controls for workers characteristics for industry fixed effects and for unionism lester s range of wages is estimated for rent sharing reasons alone at approximately 24 per cent of the mean wage

rent sharing and wages evidence from company and establishment panels a central question in labor economics and macroeconomics is whether the textbook competitive model provides an adequate representation of the labor market using longitudinal data on companies and establishments this article suggests that it may not as predicted by rent sharing models of the labor market changes in profitability are shown to feed through into long run changes in wages these are not temporary wage effects and are not driven by the unionized workplaces in the data the article s estimates imply that for rent sharing reasons alone lester s range of wages is approximately 16

debt and wage negotiations a bankruptcy based approach the role of debt in wage negotiations is considered in a framework where both the entrepreneur and the workforce are indispensable in production when workers and the entrepreneur fail to reach an agreement the firm eventually defaults bankruptcy is represented as a three party bargaining game among the entrepreneur workers and lenders we show that debt financing by reducing workers bargaining power increases the firm s share of surplus and improves the incentives to invest further our model allows for overborrowing the firm borrows more than required by its productive activity as well as underinvestment due to wealth constraints i introduction as asserted by grout 1984 the inability of labour unions to make wage commitments creates an underinvestment problem when wages can be negotiated after investment has been sunk the entrepreneur chooses an inefficiently low investment level in this paper we reconsider grout s underinvestment problem by concentrating on the role of debt in wage bargaining when long term labour contracts cannot be written as we show through an explicit analysis of the threat of bankruptcy the extent of underinvestment depends on whether leverage can influence the distribution of surplus between wages and profits we analyse the relation between debt and wages in a strategic bargaining framework assuming that delays in agreement will reduce the surplus

firm specific determinants of the real wage bargaining models suggest that firm specific variables play an important role in wage determination yet previous empirical studies of wage determination have largely ignored these variables the authors analysis of a large panel data set of u s wage contracts suggests that firm specific variables suggested by bargaining models such as the value of sales the capital labor ratio and the financial liquidity of the firm are important determinants of negotiated real wages copyright 1992 by mit press

the wage curve convexity kinks and composition effects a detailed analysis is provided of the shape of the wage curve using annual time series for norwegian manufacturing the main results are summarized as follows unemployment affects wages significantly and we provide evidence in favour of a monotonically decreasing but highly non linear wage curve the long term unemployed exert less of a wage dampening effect than do recently laid off workers and real wage responsiveness to unemployment seems also to be stronger with higher inflation

micro foundations for wage flexibility wage insurance at the firm level to what extent do firms insulate their workers wages from fluctuations in product markets which firm and worker attributes are associated with wage flexibility at the micro level we first rely on guiso pistaferri and schivardi 2005 to estimate dynamic models of sales and wages finding that in portugal workers wages respond to permanent shocks on firm performance as opposed to transitory shocks we then explore the factors associated with wage flexibility finding that collective bargaining and minimum wages are associated with higher wage insurance by the firm while the threat of firm bankruptcy reduces it managers receive less protection against permanent shocks than other workers

shareholder wealth and wages evidence for white collar workers we present empirical evidence on the relationship between individual wages conditional on worker characteristics and equity returns using a unique survey from the bureau of labor statistics equity returns affect the wages only of workers with three or more years of tenure a 4 percent increase in a firm s market value raises pay by 0 3 percent within three years our estimates suggest that each 10 increase in shareholder wealth raises the present value of a firm s wage bill by 1 the elasticity of white collar wages with respect to equity returns is one third smaller than the ceo salary elasticities in our sample

when does privatization work the impact of private ownership on corporate performance in the transition economies this paper compares the performance of privatized and state firms in the transition economies of central europe while controlling for various forms of selection bias it argues that privatization has different effects depending on the types of owners to whom it gives control in particular privatization to outsider but not insider owners has significant performance effects where privatization is effective the effect on revenue performance is very pronounced but there is no comparable effect on cost reduction overlooking the strong revenue effect of privatization to outsider owners leads to a substantial overstatement of potential employment losses from postprivatization restructuring

internal migration and urban employment reply despite the diversity and intensity of michael todaro s comment 1986 the essence of controversy reduces to differences in the respective views of the urban subsistence sector each view in turn depends upon a distinctive viewpoint observing from the viewpoint of the bureaucrat and other elite to whom he defers in his comment todaro sees the large cityward flow of third world humanity as a menace destroying urban amenities todaro s focus being the modern sector his model only incorporates an urban subsistence sector indirectly and then only as a way station on the route to modern sector employment his assumption is that every potential migrant has modern sector employment as an explicit goal conceptually he leaves no room for the uneducated rural persons whose aspirations are keyed to the modest employments of the urban subsistence sector we on the other hand look from below from the subsistence sector from there we see both rural and urban welfare gains from observed spatial movement of labor we grant that unpleasant externalities may be involved especially from the point of view of a discomfitted elite however those possible externalities should be studied in their own right and have no place in a debate between competing explanations of migration 2 the present debate therefore comes down to a straightforward empirical question if in fact there are persons who move to the city with the intent of taking up permanent employment in the urban subsistence sector then their decisions cannot be explained by todaro if they are few in number the theorist may assume them away if their numbers are significant however migration flows must be viewed as dual in nature and an alternative explanation for the subsistence portion is required todaro s crucial point is that the colesanders theory requires them to make an artificial separation of migration flows into those who go to the modern sector and those who go to and remain in the subsistence sector this argument is effectively countered we believe by our crucial point that todaro s view of an undifferentiated flow carries with it the inappropriate assumption that all migrants deem themselves able to enter into modern sector employment 3

firms rents workers bargaining power and the union wage premium this article identifies the wage premium associated with firm level union recognition in france an average premium of 2 is found despite the fact that most workers are already covered by industry level agreements to explore the origin of the premium i construct a simple bargaining model from which i derive three predictions which are tested empirically using matched employer employee data the main prediction is that if intra firm bargaining is behind the union wage premium the latter increases with the amount of quasi rents available in the firms that unions organise this prediction is validated empirically when firms market shares are used as a proxy for their rents

unemployment questions and some answers in more or less every country in the oecd unemployment was lower in the decades following the second world war than in any other period of comparable length either before or since for example in britain unemployment has exceeded 5 in every peacetime decade from 1850 onwards except for the 1950s and 1960s alternatively as we can see in table 1 p 779 average unemployment in the 1980s and 90s is higher generally much higher than in the 1960s in every country considered why this is so is one of the questions which underlies this paper a second question which is also illustrated in the unemployment numbers presented in table 1 p 779 concerns the causes of the enormous variation in unemployment rates across the oecd countries as we shall see these are difficult questions the first in particular is one for which we do not have a complete answer by this i do not mean that we do not have theories which are broadly consistent with these numbers in fact we have theories consistent with more or less any numbers what we lack is a satisfactory empirical explanation of the time series pattern of oecd unemployment in what follows we remain focused on these two questions first considering the theoretical background and then looking at some possible answers we finish with some speculative conjectures on the first question

wages and product market power this paper analyses time series on some 800 british manufacturing companies to address various questions concerning the role of insiders and market power in wage determination the following are the most important results first product market power has a positive impact on wages this impact is enhanced in large firms but is not influenced by union status second while firm specific factors influence wages the size of these effects is not influenced by union status firm size or product market power however product market power reduces the generally strong negative effect of unemployment on wages finally there is no robust evidence of insider power at work in wage setting irrespective of product market position

insider forces and wage determination this paper investigates the relative importance of firm specific factors i e insider forces in wage determination using firm level data on 219 u k companies over 1974 82 it finds that a 1 percent rise in a firm s prices or productivity relative to the aggregate economy leads to a rise in relative wages of 0 1 0 2 percent as a corollary to this outside factors like the aggregate wage and the unemployment rate also play an important role there is evidence for insider based hysteresis effects but these are inversely related to the extent to which firms take national agreements into account copyright 1990 by royal economic society

new firm growth and bank financing this paper examines the extent to which lucas ideas on human capital and jovanovic theorising on learning can provide further insights into the development of small firms it focuses exclusively upon newly established independent firms our evidence from two surveys is that bank lending to new firms is unrelated to many of the personal characteristics of founders which have been argued by other researchers to relate to small firm performance instead lending appears to be more related to whether or not the founder can or chooses to use personal savings and the legal status of the business

does unmeasured ability explain inter industry wage differentials this paper provides empirical assessments of the two leading explanations of measured inter industry wage differentials 1 true wage differentials exist across industries and 2 the measured differentials simply reflect unmeasured differences in workers productive abilities first we summarize the existing evidence on the unmeasured ability explanation second we construct a simple model which shows that if matching is important then endogenous job change decisions can create important self selection biases even in first differenced estimates of industry wage differentials third we analyze a sample that approximates the experiment of exogenous job loss we find that i the wage change experienced by a typical industry switcher closely resembles the difference in the relevant industry differentials estimated in a cross section and ii pre displacement industry affiliation plays an important role in post displacement wage determination

determinants of price adjustment this paper reports results of an empirical study investigating the adjustment speed of prices to change in costs and demand particular emphasis is laid on the impact of concentration on the adjustment speed in addition the effects of the business cycle and capital intensity are considered it shows that concentrated industries tend to adjust prices faster while capital intensity has a negative impact prices are more flexible during an upswing than in times of a recession

does political knowledge increase turnout evidence from the 1997 british general election a number of recent formal models predict a positive effect of political knowledge on turnout both information acquisition and turnout however are likely to be determined by a similar set of variables rendering hard the identification of a causal link in empirical investigations available empirical regularities should therefore be interpreted as mere correlations i address this problem by using an intrumental variables approach where the instruments are represented by various proxies of information supply on mass media using survey data from the 1997 british general election study i show that political knowledge has a sizeable influence on the probability of voting and that mass media play an important role in influencing political participation

the direct incidence of corporate income tax on wages a stylised model is provided to show how the direct effect of corporate income tax on wages can be identified in a bargaining framework using cross company variation in tax liabilities conditional on value added per employee using data on 55 082 companies located in nine european countries over the period 1996 2003 we estimate the long run elasticity of the wage bill with respect to taxation to be 0 093 evaluated at the mean this implies that an exogenous rise of 1 in tax would reduce the wage bill by 49 cents only a weak evidence of a difference for multinational companies is found

insider effects in wage determination abstract the paper attempts to shed new light on the determinants of industry wages by a cross country comparison of wage setting relationships making use of comprehensive and consistent panel data on industries from the early 1960s to the mid 1980s the empirical analysis involves estimations of identically specified industry wage equations for each of five countries sweden norway finland germany and the united states a key finding is that industry wages in the u s are the most responsive to sectoral price and productivity changes by contrast industry wages in the nordic countries are largely unaffected by sectoral conditions the results cast doubt on the competitive model as an accurate characterization of wage setting under decentralization

enterprise breakups and performance during the transition from plan to market using firm level data we estimate the effects of the major wave of 1991 breakups of czechoslovak state owned enterprises on the subsequent performance of the master enterprises and spun off divisions we estimate the performance effects of spinoffs by comparing the performance of enterprises that remained intact throughout the 1990 1992 period to the performance of the master enterprises that experienced spinoffs and the newly spun off subsidiaries our estimates suggest that the breakups had a significant immediate effect on the productive efficiency and on the profitability of industrial firms in 1991 and that the effect became much less significant in 1992 the effect is a negative function of the size of the spinoff being positive for small to slightly above average sized spinoffs and negative for very large ones we cannot reject the hypothesis that the estimated effect was identical for the spun off subsidiaries and the master enterprises that experienced the spinoffs our 1991 estimates sugges

exogenous shocks and democratic accountability evidence from the caribbean this study attempts to contribute to the growing debate over democratic accountability by focusing on the electoral impact of natural disasters and economic crises in the caribbean although largely ignored by political science the polities in the region share a long history of democratic governance as well as extreme vulnerability to adverse weather conditions and global economic fluctuations the caribbean thus offers unusually fertile opportunities for research on the capacity of voters to make rational electoral decisions two key questions are addressed first to what extent do citizens of the caribbean punish incumbents for exogenous economic and climatic shocks second what factors if any help to insulate democratic leaders from blame for conditions largely outside their control contrary to recent research on natural disasters and economic downturns in other contexts the analysis provides no evidence that voting in the caribbean has been characterized by systematic attribution errors or elec

clientelism and voting behavior evidence from a field experiment in benin the author conducted a field experiment in benin to investigate the impact of clientelism on voting behavior in collaboration with four political parties involved in the 2001 presidential elections clientelist and broad public policy platforms were designed and run in twenty randomly selected villages of an average of 756 registered voters using the survey data collected after the elections the author estimated the effect of each type of message by comparing voting behavior in the villages exposed to clientelism or public policy messages treatment groups with voting behavior in the other villages control groups the author found that clientelist messages have positive and significant effect in all regions and for all types of candidates the author also found that public policy messages have a positive and significant effect in the south but a negative and significant effect in the north in addition public policy messages seem to hurt incumbents as well as regional candidates finally the evidence indicates that female voters tend to have stronger preference for public policy platforms than male voters

trade union membership and earnings in kenyan manufacturing firms this study analyses the effect of trade unions on male earnings in the kenyan manufacturing sector using a regression method which takes into account endogeneity of the union status of workers in contrast to earlier studies of the kenyan labour market that report a negative effect of unions on wages a positive effect is found the study further shows that elite workers tend to abstain from union membership

the equal pay act as an experiment to test theories of the labour market the uk equal pay act of 1970 resulted in a large rise in the relative earnings of women in the early 1970s as this change unlike most wage changes was largely exogenous to employers one can think of this episode as an experiment for testing different theories of the labour market hence study of the effects of the equal pay act should be given considerable weight and is likely to have wider implications about the operation of labour markets most models of the labour market used by economists assume that employment is demand determined at least after a large positive shock to the wage these models would predict that female relative employment should have fallen after the introduction of the equal pay act yet it is hard to find evidence of this this paper argues that female relative employment did not fall because the female labour market is in part monopsonistic

beyond ses a resource model of political participation this paper develops a resource model of political participation the resources considered are time money and civic skills those communications and organizational capacities that are essential to political activity these skills are not only acquired early in life but developed in the nonpolitical institutional settings of adult life the workplace organizations and churches and synagogues these resources are distributed differentially among groups defined by socioeconomic status a two stage least squares analysis shows these resources have powerful effects on overall political activity thus explaining why socioeconomic status has traditionally been so powerful in predicting participation we disaggregate overall activity into three kinds of acts those that involve giving time those that entail donating money and voting each requires a different configuration of resources resulting in different patterns of stratification across various political acts

who delivers partisan clients in the argentine electoral market why do some parties fail to benefit from patronage in pork ridden political systems this article analyzes the interaction between patronage and partisanship to explain why some incumbents are more likely to benefit from pork politics than others we explain such differences by focusing on political parties access to resources supply side and voters dependence on fiscal largesse demand side we show how these differences affect the patron s choice of public sector wages and employment we use subnational level data to show different electoral returns from patronage for the two major political coalitions in argentina peronism and the ucr alianza and their effect on preferences over public sector wages and employment w hy do some political parties fail to benefit from patronage in pork ridden political systems this article analyzes the interaction between patronage and partisanship to explain why some incumbents are more likely to benefit from pork politics than others we explain returns to patronage by highlighting differences in the political parties access to resources supply side and the voter s dependence on public sector jobs demand side we propose that just as political parties cater their policies to particular groups of voters they pursue different strategies when allocating pork in exchange for support on the supply side we highlight the importance of partisan biases in the fiscal and electoral institutions that regulate the access and distribution of public resources on the demand side we show that patronage is a distributive mechanism that provides different returns to voters with different skills and labor market expectations

the effects of minimum wages on employment theory and evidence from britain recent work on the economic effects of minimum wages has stressed that the standard economic model where increases in minimum wages depress employment is not supported by empirical work in some labor markets we present a general theoretical model whereby employers have some degree of monopsony power which allows minimum wages to have the conventional negative impact on employment but which also allows for a neutral or positive impact studying the industry based british wages councils between 1975 and 1992 we find that minimum wages significantly compress the distribution of earnings but do not have a negative impact on employment

bargaining with outside options wages and employment in uk manufacturing 1974 1982 this paper studies the determinants of wages and employment at the firm level the question which is addressed is the extent to which external market pressures are important relative to economic variables which are specific to the firm one can interpret the former set of factors as outsider variables and the latter as reflecting the importance of insider variables the research is therefore a microeconomic investigation on insider versus outsider factors in wage and employment determination it can thus provide some evidence on the role played by the currently incumbent workers in affecting the economic conditions at the workplace see e g lindbeck and snower i986 i988 the issue has recently attracted considerable attention in view of its alleged capability of explaining the high and persistent levels of unemployment in western countries see also blanchard and summers i986 i987 and layard and bean i989 the theoretical model developed in the first part of the paper section i and then tested in the second part sections ii iv is a variant of the efficient bargains model of the labour market modified in accordance to recent developments in non cooperative game theory the classical model of labour bargaining is set out in mcdonald and solow i98i the firm and the union bargain over wages and employment simultaneously and the outcome is thus efficient in the sense of leontief 1946 traditional axiomatic bargaining