campaign contributions and congressional voting a simultaneous probit tobit model m any citizens and scholars have been troubled by the influence that special interest groups appear to exert over policymaking as a result of their roles in the financing of political campaigns these concerns inspired the enactment of a number of election law reforms in the 1970s and have led to increasing popular support for public financing of electoral campaigns despite the public attention these issues have attracted few social scientists have attempted to analyze the financial relationships between interest groups and policymakers empirically 1 one such study was reported by durden and silberman 1976 who included contributions from the afl cio political action committee as an independent variable in an equation explaining congressional voting on minimum wage legislation their results indicated that campaign contributions significantly affected voting on that issue the work i have done differs substantially from that of durden and silberman in two ways first i have chosen to examine issues which were of considerably narrower concern than the minimum wage issue in the interest of simplicity i examine issues of concern to just one or a few groups i have also used a different econometric technique if campaign contributions are actually endogenous as seems plausible the single equation estimation technique employed by durden and silberman is subject to a possible simultaneous equations bias for each issue studied i have therefore jointly estimated a two equation system explaining both votes on the bill and contributions from an associated interest group the simultaneous probit tobit model which i use takes into account the dichotomous nature of the variable indicating a congressman s vote the non negativity constraint imposed on the contribution variable and the possibility of correlation between the error terms for the equations explaining these two variables 2 full information maximum likelihood fiml estimates for the model are consistent and asymptotically efficient

tax fairness conceptual foundations and empirical measurement prior research shows taxpayers perceptions of fairness leads to greater cooperation and compliance with tax authorities yet our understanding of tax fairness has been hampered by its general reliance upon models and measures of fairness developed by organizational fairness research even though fairness is a perception subject to contextual influences accordingly we attempt to gain insight into the influence of contextual factors on fairness through the development of a theoretically based and empirically derived model of tax fairness grounded in organizational literature but empirically tested in the tax context our analysis shows the extent to which items and dimensions found in the organizational fairness literature reflect taxpayers perceptions of tax fairness most importantly our findings contribute to fairness research by identifying the role of relevant comparison groups in affecting perceptions of fairness and thereby extends our understanding of the role of context in affecting fairness perceptions furthermore by identifying the dimensions and items incorporated in perceptions of tax fairness our study provides a foundation for tax researchers and policy makers to determine how best to promote voluntary taxpayers compliance and in so doing mitigate tax avoidance and tax evasion

the effectiveness of bank capital adequacy regulation a theoretical and empirical approach the aim of this paper is to analyse how banking firms set their capital ratios that is the rate of equity capital over assets in order to study this isue two theoretical models are developed both models deal with the existence of an optimal capital ratio the first one for firms not affected by capital adequacy regulation the second one for firms which are the models have been tested by estimating a disequilibrium model using data of spanish savings banks

price pass through and the minimum wage this paper tests a textbook consequence of competitive markets that an industry wide increase in the price of labor is passed on to consumers through an increase in prices using several data sources on restaurant prices i explore the price impact of minimum wage hikes in canada and the united states particular attention is paid to the timing of these price responses to gauge the stickiness of minimum wage cost shocks i find that restaurant prices generally rise with changes in the wage bill and that this response is concentrated in the quarter surrounding the month during which the legislation is enacted

the dissipation of minimum wage gains for workers through labor labor substitution evidence from the los angeles living wage ordinance author affiliation david fairris department of economics university of california riverside ca 92521 usa david fairris ucr edu corresponding authorleon fernandez bujanda oficina de investigaciones economicas banco central de venezuela av urdaneta esq carmelitas edf sede piso 2 caracas dc venezuela lefernan bcv org ve acknowledgment we have received helpful comments from philip babcock charlie brown david card eve caroli arin dube shelly lundberg mindy marks david neumark and participants in presentations at the society of labor economists uc berkeley ucla and pse in paris we acknowledge financial support from the ford foundation and the university of california labor and employment research fund and research support of various kinds from researchers at the los angeles alliance for a new economy 1 introductioneconomic theory suggests that firms will replace low skill workers with high skill workers if the two are substitutes in production and the wages of low skill workers increase as the result of a minimum wage labor labor substitution may also take place along dimensions other than skill if for example employers have a taste for discrimination and the minimum wage reduces the wage premium they must pay for favored personal characteristics of workers if affected firms replace low skill workers with high skill workers following enactment of a wage minimum the initial benefits of the regulation for workers at these firms will be dissipated over time as the wage gains for new hires are less than for members of the original workforce a similar dissipation of wage gains will occur if employers replace workers that are discriminated against in the labor market with those that are not most theoretical depictions of labor labor substitution focus on employer initiated causes it may result from changes in firms demand for worker skills from employer efforts to dissipate worker minimum wage rents by requiring greater work effort or less absenteeism from workers and by seeking workers that better match these new employer goals or from employers invoking their taste for discrimination however successful labor substitution rests on workers supply decisions as well indeed such substitution could result solely from labor supply effects if for example firms were to hire nonselectively from an altered more highly skilled or otherwise favored applicant pool which is brought on by the higher wage the empirical literature on the employment effects of wage minimums has found little employment loss among affected jobs or more highly impacted worker populations such as teenagers brown 1999 this suggests that there may be little labor labor substitution across broad skill occupational categories for example adults for teenagers workers with some college experience for high school graduates or backhoe operators for ditch diggers 1 however labor labor substitution may still take place along more refined dimensions of workers skills abowd and kilingsworth 1981 for example neumark and wascher 1996 find evidence that minimum wages lead firms to substitute away from younger teenagers and toward older more experienced teenagers labor substitution following a minimum wage may dissipate the initial wage gains for workers empirical evidence suggests however that just as in the case of unions card 1996 the rent dissipation is by no means complete it is now well established empirically that a spike exists in the wage distribution around the relevant minimum wage card and krueger 1995 dinardo fortin and lemieux 1996 suggesting that the wages of low skill workers are indeed affected by wage mandates 2 moreover job queues exist for minimum wage jobs suggesting that economic rents are earned by low wage workers in these positions holzer katz and krueger 1991

joint effects of interest rate deregulation and capital requirements on optimal bank portfolio adjustments the 1980 depository institution deregulation and monetary control act didmca mandates that regulation q be phased out by 1986 with deregulation of interest rate ceilings the cost of raising capital funds for commercial banks would become more volatile and more closely related with interest rates in the money and capital markets thus value maximizing bank managers would need to be concerned not only with the internal risk but also with the external risk in bank portfolio management decisions based upon the cash flow version of the capital asset pricing model this paper analyzes the joint impact of interest rate deregulation and capital requirements on the portfolio behavior of a banking firm the 1980 depository institution deregulation and monetary control act didmca mandates that regulation q be phased out by 1986 with deregulation of interest rate ceilings the cost of raising capital funds for commercial banks would become more volatile and more correlated with interest rates in the money and capital markets the bank s cash profit would be more dependent on the interest rate fluctuation ceteris paribus thus the value of a banking firm would also be more dependent on the correlation of the banking firm s cash profit with that of the external market ceteris paribus therefore as deregulation continues a value maximizing bank manager would need to be concerned not only with variance and covariances among the returns on bank assets but also with covariances between rates on bank assets and liabilities as well as that in the external markets study of portfolio behavior of a banking firm should distinguish between the impact of internal risk and external risk on firm value furthermore with interest rate deregulation and the ensuing interactions among various risks banks may also react differently to capital regulation imposed by the regulatory agency despite numerous studies on regulation of bank capital the joint effects of interest rate deregulation and capital requirements on bank

the association between vertical equity and presidential voting behavior and taxpayers compliance since taking office the president of the united states has consistently refused to make his tax returns available for public scrutiny in so doing he has broken with presidential tradition and kept people guessing about what his tax returns would show if they were disclosed interestingly enough in the absence of concrete knowledge about the president s tax circumstances some taxpayers perceive that he did not pay his fair share and others perceive that he did this situation presents an opportunity for us to consider how vertical equity perceptions about the president s fair share of taxes and identification with the president via voting behavior are jointly associated with taxpayers compliance using insights from equity theory as reported in adams in berkowitz ed advances in experimental social psychology academic press new york 1965 and social learning theory as reported in bandura social learning theory general learning press new york 1971 social learning theory prentice hall englewood cliffs 1977 we anticipate and find that those taxpayers who perceive that the president did not pay his fair share of taxes and who most closely socially identify with him have the lowest tax compliance we use a survey of 600 american taxpayers to capture their perceptions of vertical equity voting behavior and tax compliance intentions our results may reflect that taxpayers who identify with the president will tend to model his tax related actions or may also indicate that some taxpayers vote for a president whose actions are similar to their own insights and implications for ethics and tax researchers and tax policy makers are discussed

the impact of minimum wages on youth employment in portugal textabstractfrom january 1 1987 the legal minimum wage for workers aged 18 and 19 in portugal was uprated to the full adult rate generating a 49 3 increase between 1986 and 1987 in the legal minimum wage for this age group this shock is used as a natural experiment to evaluate the impact of the minimum wage change on teenagers employment by using a large firm level micro data set it is shown that by comparing the employment growth of 18 19 year old workers with their 20 25 year old counterparts one can identify the employment effects of the minimum wage hike the same comparisons are done with 30 35 year old workers this study finds that the rise in the minimum wage significantly reduced employment this conclusion is reinforced by evidence showing that these employment effects are concentrated in firms more likely to be affected by the change in the law

the davis bacon act an appraisal of recent studies the intensified controversy in recent years over the davis bacon act which requires the payment of prevailing wages on federally funded construction projects has resulted in several new studies of the effects of that act this invited paper reviews the evidence presented in these recent studies on several aspects of the act including how davis bacon wage determinations compare to local construction wages as measured by sources other than the act s administrators the effects of lags in the act s data gathering process and the savings that would result from calculating the prevailing rate as the arithmetic mean of local wages instead of the current use of the modal rate in most cases the authors conclude that although the cost studies to date have been faulty in several respects it is reasonably clear that davis bacon is unattractive on grounds of economic efficiency alone the question remains however whether these efficiency costs are offset partially or wholly by the possible equity benefits o

theories of bank behavior under capital regulation abstract this paper reviews academic studies of bank capital regulation in an effort to evaluate the intellectual foundation for the imposition of the basel i and basel ii systems of risk based capital requirements the theoretical literature yields general agreement about the immediate effects of capital requirements on bank lending and loan rates and the longer term impacts on bank ratios of equity to total or risk adjusted assets this literature produces highly mixed predictions however regarding the effects of capital regulation on asset risk and overall safety and soundness for the banking system as a whole thus the intellectual foundation for the present capital regulation regime is not particularly strong the mixed conclusions in the academic literature on banking certainly do not provide unqualified support for moving to an even more stringent and costly system of capital requirements these widely ambiguous results do suggest however that assessing the implications of capital regulation for balance sheet risk and monitoring effort in diverse banking systems is an important agenda for future theoretical research in the banking area

minimum wage effects on employment and school enrollment we argue in this article that the focus on employment effects in recent studies of minimum wages ignores an important interaction between schooling employment and the minimum wage to study these linkages we estimate a conditional logit model of employment and enrollment outcomes for teenagers using state year observations for the period 1977 to 1989 the results show a negative influence of minimum wages on school enrollment and a positive effect on the proportion of teens neither employed nor in school we further suggest that our results are consistent with substitution by employers of higher for lower skilled teenagers with the displaced teens ending up both out of work and out of school

a multisector model of efficiency wages the pattern of effort and wages is derived in a multisector efficiency wage model firms choose effort endogenously easily monitored or low turnover jobs have high effort and may have low wages in equilibrium empirical wage differentials from a measure of supervision are smaller than observed industry differentials that have been attributed to efficiency wage models and are closer to those predicted by the model workers can search for and avail of on the job offers if sectors grow at different rates or the unemployment rate changes the pattern of wage differentials is unaffected

minimum wage effects under endogenous compliance evidence from peru latin american labor markets feature large informal sectors in practice however the simple duality formal informal has many different shades firms tend to comply more with certain legislation than with other recent evidence has suggested that minimum wages have significant effects on the informal sector bell 1997 for mexico gindling and terrell 2004 for costa rica lemos 2004 and fajnzylver 2001 for brazil and maloney and nunez 2004 for colombia further some of this evidence suggests effects throughout a large part of the wage distribution this has been interpreted as evidence of lighthouse or numeraire effects we test this hypothesis using panel data from peru to identify effects throughout the wage distribution although there are some effects on informal sector workers overall results provide little support for numeraire or lighthouse effects labor monthly earnings are affected only at the bottom of the distribution 0 25 0 60 of the minimum wage made up mostly of informal workers and for formal workers earning between the old the new minima negative effects on the probability of retaining employed status after a minimum wage shock are either weak or non significant for wage earners below the minimum wage but significant for formal workers trapped between minima and for both formal and informal earning between 1 2 and 2 times the minimum wage independent workers earning below minimum suffer negative effects on both earnings and employment

effects of the minimum wage on the employment status of youths an update the large decline in the relative value of the minimum wage during the 1980s makes that period a valuable one for identifying the impact of variation in the minimum wage on youth employment this study produces the robust finding that when the experience of the 1980s is included a 10 percent increase in the minimum wage is estimated to reduce teen employment by less than 1 percent the lower end of the range of previous estimates because this small employment effect is offset by a labor force withdrawal effect the study finds no discernible effect on measured unemployment the study also finds no apparent effect of the minimum wage on the employment of young adults aged 20 24

minimum wages and the wage distribution in estonia abstract this article studies how changes in the statutory minimum wage have affected the wage distribution in estonia a post transition country with little collective bargaining and relatively l

who minimum wage increases bite an analysis using monthly data from the sipp and the cps 1 introduction neoclassical competitive models of firm behavior predict that wage increases reduce the quantity of labor demanded by firms and holding the wage rate constant that the least valued workers are the first fired or the last hired minimum wage legislation exogenously increases the price of labor and data from periods when the minimum wage changes can be used to empirically test its effect on the employment of vulnerable workers however a new body of research using such data suggests that minimum wage increases do not reduce employment and may even increase it card 1992a b katz and krueger 1992 card katz and krueger 1994 card and krueger 1994 1995 from a theoretical perspective this new economics of the minimum wage has been characterized as an assault on the law of demand ehrenberg 1995 if modest increases in the minimum wage have no employment effects then the appropriateness of this method in helping the working poor is strictly a distributional issue 2 however if minimum wage increases reduce employment and if the jobs lost are concentrated among the vulnerable groups the policy claims to assist then policy makers must consider this unintended consequence hence estimating the elasticity of employment with respect to minimum wage increases is more than simply an empirical test of economic theory in this paper we use monthly data from the survey of income and program participation sipp and the current population survey cps to examine the effect of raising the minimum wage on employment in contrast to much of the new minimum wage literature we find that minimum wage increases significantly reduce employment moreover we find that the elasticity of demand for labor with respect to increases in the minimum wage is greatest for the most vulnerable groups in the working age population young adults who have low levels of education young black adults and teenagers and teenagers we also find that minimum wage increases reduce the overall employment of young adults and teenagers though the estimated elasticities are smaller 2 the new economics of the minimum wage the new minimum wage literature is dominated by studies that find that minimum wage increases have an insignificant or in some cases a positive and significant effect on the employment of young adults and teenagers aged 16 24 or on other subgroups within that population card 1992a b katz and krueger 1992 card katz and krueger 1994 card and krueger 1994 1995 most of these studies have now generated replies arguing that raising the minimum wage significantly decreases employment in these populations neumark and wascher 1992 1994 1996 in press deere murphy and welch 1995 taylor and kim 1995 burkhauser couch and wittenburg in press because these new studies of the minimum wage vary widely in their techniques we focus our discussion on those that use cps data and employ an estimation strategy related to the one we use in this paper neumark and wascher 1992 1994 1996 card katz and krueger 1994 card and krueger 1995 deere murphy and welch 1995 burkhauser couch and wittenburg in press 3 specifically we review studies that use a pooled time series cross sectional approach to estimate the employment effects of minimum wage increases on vulnerable groups such as teenagers with cps data deere murphy and welch 1995 also use pooled repeated cross sectional data from the cps to estimate the impact of minimum wage increases but their specification differs in some important ways from the studies discussed above deere murphy and welch 1995 estimate the effect of minimum wage increases over the period from 1985 through 1993 they construct intervals of monthly data from 1985 through 1993 that begin on the first day of april of each year and end on the last day of match during the following year for each interval they create annual averages of variables

minimum wages and the gender wage gap estimates are made of the effect of minimum wages on the size and composition of the gender wage gap in canada in 1986 it is found that minimum wages close the wage gap substantially for young workers and less so for adults the reduction in the gap is most attributable to the adverse employment effects of minimum wages the results also indicate that most of the reduction in the gap is realized through a fall in the discriminatory component

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

tournaments as a worker discipline device c c yang i introduction in the absence of unemployment a worker caught shirking and subsequently fired could obtain a new job at the market wage without difficulty as a result of this and the imperfect monitoring of workers on the job effort shapiro and stiglitz 1984 argued that there must be involuntary unemployment in equilibrium to serve as a worker discipline device making job loss costly so as to discourage shirking 1 in response to shapiro and stiglitz s argument carmichael 1985 suggested that workers could pay employment fees to purchase their jobs and that the competition among workers for jobs would raise such fees until all involuntary unemployment disappeared alternatively there is the so called bonding scheme bonds are posted by workers when initially hired and forfeited if the workers are caught shirking the fear of losing the bonds then substitutes for the threat of becoming unemployed in creating work incentives the competition among workers for jobs would allow firms to charge an amount for bonds until there were no difference between employment and unemployment and so again there would be no involuntary unemployment in a nutshell the introduction of an employment fee or a bonding scheme can eliminate involuntary unemployment making obsolete unemployment as a worker discipline device in the real world however rarely are employment fees or bonding observed why do employment fees bonding or the like not then emerge to arbitrage the difference between employment and unemployment so as to eliminate involuntary unemployment this is a puzzle for shirking models romer 1996 461 2 it has been claimed that contracts with upward sloping age earning profiles the so called implicit bonding can act as perfect substitutes for contracts with explicit employment fees or bonds akerlof and katz 1989 negate this claim and show that the implicit bonding in general does not eliminate the need for involuntary unemployment as a worker discipline device to resolve the bonding issue katz 1986 suggests that future theoretical work is required to analyze the problem in an explicitly contractual setting this article offers an attempt in this direction we study a type of contract which is prevalent in the real world and most importantly can act as a perfect substitute for the employment fee or bonding scheme as far as the elimination of involuntary unemployment is concerned the contract in question is the so called tournament 3 a tournament contract compensates workers on the basis of their relative performance prizes arising from tournaments are fixed in advance and a worker receives the winner s prize not by being good in the absolute sense but by being better than the other workers contracts with the characteristics of tournaments are prevalent in labor markets the salesman who sells the most is given a large bonus the best worker gets promoted to become the company manager etc the incentive effects of tournaments have been analyzed in detail by lazear and rosen 1981 green and stokey 1983 nalebuff and stiglitz 1983 malcomson 1984 and others 4 in contrast to the extensive analysis of the microeconomic incentives of tournaments this article focuses on the macroeconomic implications of tournaments in the vein of shirking models it is shown that all involuntary unemployment will disappear if it is feasible for firms to exploit tournaments to full flexibility this finding pinpoints the power of tournament contracts in resolving involuntary unemployment as a consequence of this result the generation of equilibrium unemployment will require that there be certain impediments to the full exploitation of tournaments we suggest institutional constraints legal rules or social norms as possible candidates for the impediments the rest of this article is organized as follows

using regional variation in wages to measure the effects of the federal minimum wage the imposition of a national minimum wage standard provides a natural experiment in which the treatment effect varies across states depending on the fraction of workers initially earning less than the new minimum the author exploits this fact to evaluate the effect of the april 1990 increase in the federal minimum wage on teenagers wages employment and school enrollment comparisons of grouped and individual state data confirm that the rise in the minimum wage increased teenagers wages there is no evidence of corresponding losses in teenage employment or changes in teenage school enrollment

do minimum wage hikes raise us long term unemployment evidence using state minimum wage rates partridge m d and partridge j s 1999 do minimum wage hikes raise us long term unemployment evidence using state minimum wage rates reg studies 33 713 726 several recent studies have challenged the conventional notion that raising the minimum wage reduces employment this study considers a related but relatively unexplored issue by examining the minimum wage s influence on long durations of unemployment by considering long term unemployment rates this study extends the previous minimum wage literature by examining the persistence of minimum wage effects the empirical analysis considers state data from the latter 1980s a unique period when many states raised their minimum wage above the federal level the results suggest that a greater minimum wage increases long term unemployment rates further evidence indicates that increased minimum wage coverage also raises long term unemployment rates subsequent analysis yielded similar patterns for other aggregate labour market measures thus state

employment effects of minimum and subminimum wages panel data on state minimum wage laws using panel data on state minimum wage laws and economic conditions for the years 1973 89 the authors reevaluate existing evidence on the effects of a minimum wage on employment their estimates indicate that a 10 increase in the minimum wage causes a decline of 1 2 in employment among teenagers and a decline of 1 5 2 in employment for young adults similar to the ranges suggested by earlier time series studies the authors also find evidence that youth subminimum wage provisions enacted by state legislatures moderate the disemployment effects of minimum wages on teenagers

the contribution of minimum wages to increasing wage inequality recent research has shown the reduction in the minimum wage to be the main cause of the rise in wage dispersion in the lower half of the wage distribution in the us during the 1980s however the return to human capital does not seem to have been much affected using new methodology this paper confirms previous conclusions regarding the wage distribution but shows that the return to human capital has also increased strongly a 10 reduction of the minimum wage causes the wage of someone earning the previous minimum to fall by 8 evidence in favour of a distance dependent elasticity of substitution dides production function there has been a massive increase in wage inequality in the us the 10 50 and 50 90 log wage differential grew by 0 10 and 0 06 respectively during the 1980s economists have tried to put their finger on the causes of this phenomenon wood 1995 believes globalisation to be the main cause however most empirical research suggests that international trade is only a small part of the explanation see freeman 1995 for a survey others hold skill biased technological progress responsible for example bound and johnson 1992 technology is always a kind of residual item for which appropriate variables are hardly available its impact is therefore difficult to pin down empirically autor et al 1998 have shown that the use of computers by industry is strongly correlated to the increase in the employment of college graduates dinardo et al 1996 called attention to the role of institutions in particular declining unionism and the fall in minimum wages during the 1980s they hold minimum wages responsible for 25 of the increase in wage dispersion pictures of the estimated density functions for the period 1973 90 show that minimum wages have had a large impact dinardo et al calculate the effect of minimum wages by assuming a change in the minimum wage to have no effect on the shape of the wage distribution to the right of the minimum at first glance the wage distributions plotted in their paper suggest that this assumption is not supported by the data implying that their estimate of 25 is a lower bound indeed applying a different methodology lee 1999 reached the conclusion that the decrease in minimum wages can explain virtually the whole increase in wage inequality he simply regresses 10 50 and 50 90 log wage differentials by year and state on the relevant minimum wage using state variation in minimum wages lee s results open the question as to what mechanism makes that minimum wages have so large an impact there are two potential channels either minimum

the state and american trade strategy in the pre hegemonic era trade policy is commonly seen as a product of domestic interest group politics despite the obvious economic distortions introduced by trade barriers protectionism recurs we are often told because producers organize more readily than consumers and dominate the political process in this demand side explanation of protection the state is seen as the empty receptacle of societal bargaining with no independent voice or role

union effects on nonunion wages evidence from panel data on industries and cities the authors test for threat and crowding effects of unions on non union wages at the industry and city levels using panel data on the percent organized and nonunion industry and city wage differentials constructed from current population surveys over the period 1973 89 at the industry level increases in the percent organized were associated with decreases in the nonunion industry wage differential suggesting that crowding effects were the predominant union effect on nonunion industry wage differentials in contrast at the city level increases in the percent organized were associated with increases in the nonunion city wage differential suggesting that threat effects predominated the authors also find evidence of negative cross occupation union effects on nonunion industry wage differentials supporting their hypothesis that the industry level results were partly driven by complementarity between union and nonunion labor

comparative economic voting britain france germany italy likelihood of a vote for the incumbent coalition in contrast personal economic circumstances no matter how measured demonstrate nonexistent to weak effects on vote choice overall economic conditions emerge as a relatively important vote determinant when a more properly specified general multi equation model of the vote is estimated economics shows itself to be as powerful as traditional factors used to explain the western european vote in particular economic variables exceed the impact of partisan identification in britain and roughly equal it in germany moreover the economic variables exercise more influence than the social cleavages of class and religion everywhere except italy

the impact of the minimum wage on other wages in this paper i explore how changes in the minimum wage affect various occupational wages i postulate that other wages increase for two reasons first firms try to mitigate the deterioration in a worker s relative wage which would cause him to reduce his work effort and second there is an increase in the demand for nonminimum wage workers wage adjustment patterns are examined to ascertain whether wage comparisons play a role in the adjustment process the empirical work shows a short run wage compression among white collar occupations which is consistent with the wage comparison model however large standard errors make inferences weak

minimum wage policy and employment effects evidence from brazil the international literature on minimum wages greatly lacks empirical evidence for latin america in brazil not only are minimum wage increases large and frequent but they also have been used as both a social policy and an anti inflationary policy this paper estimates the effects of the minimum wage on wages and employment using panel data techniques and brazilian monthly household data from 1982 to 2000 a number of conceptual and identification questions are discussed for example the paper summarizes various strategies on how best to measure the effect of a constant national minimum wage presenting a menu of minimum wage variables that are then used to estimate wage and employment effects the paper also uses an employment decomposition that separately estimates the effect of the minimum wage on hours per worker and on the number of jobs robust results indicate that an increase in the minimum wage strongly compresses the wages distribution with small adverse effects on employment

the impact of minimum wages in mexico and colombia there are diverging views about how minimum wages affect labor markets in developing countries advocates of minimum wages hold that they redistribute resources in a welfare enhancing way and can thus reduce poverty improve productivity and foster growth opponents on the other hand contend that minimum wage interventions result in a misallocation of labor and lead to depressed wages in the very sectors the rural and informal urban sectors where most of the poor are found with the effect of wasting resources and reducing the growth rate data from colombia and mexico for the 1980s provide an opportunity to evaluate the impact of minimum wages in mexico in the 1980s the minimum wage fell in real terms roughly 45 percent by 1990 mexico s minimum wage was about 13 percent of the average unskilled manufacturing wage during the same period the minimum wage in colombia increased at nearly the same rate reaching roughly 53 percent of the average unskilled wage the author charts how the mandated minimum wage affected the demand for skilled and unskilled labor in both countries during that decade findings are as follows in mexico minimum wages have had virtually no effect on wages or employment in the formal sector the main reason the minimum wage is not an effective wage for most firms or workers in the informal sector in turn there is considerable noncompliance with the mandated minimum wage especially among part time and female workers as a result significant numbers of workers are paid at or below minimum wages in colombia minimum wages have a much stronger impact on wages judging from their proximity to the average wage and both cross section and time series estimates the estimates imply that the elasticity of low paid unskilled employment with respect to minimum wages is in the range of 2 to 12 percent

reply to credible research designs for minimum wage studies the authors make three points in this reply to the article by allegretto dube reich and zipperer adrz 2017 first adrz shed no new light on the sensitivity of estimated minimum wage employmen

axe the tax taxes are disliked more than equivalent costs abstract tax collection is critical for the proper functioning of society however many people strongly dislike paying taxes although this distaste could be rational on economic grounds the authors show that this attitude extends beyond simply disliking the costs incurred and affects behavior in counternormative ways they demonstrate the phenomenon of tax aversion a desire to avoid taxes per se that exceeds the rational economic motivation to avoid a monetary cost across five experiments the authors provide evidence that people have a stronger preference to avoid tax related costs than to avoid equal sized or larger monetary costs unrelated to taxes tax aversion affects consumer preferences in a variety of domains including standard store purchases financial investments and job selection furthermore this tendency is most prevalent among people who identify with political parties that generally favor less taxation finally encouraging participants who identify with antitax parties to cons

minimum wage effects throughout the wage distribution this paper provides evidence on a wide set of margins along which labor markets can adjust in response to increases in the minimum wage including wages hours employment and ultimately labor income not surprisingly the evidence indicates that low wage workers are most strongly affected while higher wage workers are little affected workers who initially earn near the minimum wage experience wage gains nevertheless their hours and employment decline and the combined effect of these changes on earned income suggests adverse consequences on net for low wage workers

minimum wage effects across the private and public sectors in brazil abstract most of the available evidence on the effect of minimum wages concerns the private sector of developed countries in this paper we examine minimum wage effects in both private and public sectors for a key developing country we use monthly data from a brazilian household survey from 1982 to 2000 we find a strong compression effect in the wage distribution for both the private and public sectors however we find no evidence of adverse employment effects in either sector at the aggregate level or for vulnerable groups such as teenagers women and the low educated hence minimum wage policies in brazil appear to be a potentially viable anti poverty instrument

equilibrium wage dispersion and interindustry wage differentials this paper develops a search theoretic explanation of interindustry wage differentials given coordination problems in the labor market the probability of filling a vacancy is an increasing function of the wage offered in equilibrium firms that find vacancies more costly will offer higher wages the model thus explains the persistence of interindustry wage differentials and their correlation with industry average capital labor ratio and profitability additionally the model predicts that high wage firms will receive more applications per job opening and that wages in the labor market will behave as strategic complements

unions norms and the rise in u s wage inequality from 1973 to 2007 private sector union membership in the united states declined from 34 to 8 percent for men and from 16 to 6 percent for women during this period inequality in hourly wages increased by over 40 percent we report a decomposition relating rising inequality to the union wage distribution s shrinking weight we argue that unions helped institutionalize norms of equity reducing the dispersion of nonunion wages in highly unionized regions and industries accounting for unions effect on union and nonunion wages suggests that the decline of organized labor explains a fifth to a third of the growth in inequality an effect comparable to the growing stratification of wages by education

the determinants of minimum wage rates this paper attempts to test the degree of responsiveness of canadian provincial governments to different political groups in establishing their relative minimum wage policies over the 1975 1982 period it discusses alternative explanations of minimum wage policies and focuses on the political market approach where women youth small business and unions play a role an econometric model is specified and estimated on pooled annual time series and cross section data for nine provinces in canada the results tend to support most of the hypotheses

the wealth effects of the risk based capital requirement in banking the evidence from the capital market abstract the imposition of risk based capital requirements has been advocated by some regulatory authorities as a means of mitigating the incentive problems created by fixed premium deposit insurance however their imposition also constitutes a requirement to maintain an exogenously influenced capital structure which may adversely affect the values of the firms involved this paper examines the wealth effects of the announcement of the basle committee s intention to impose across international boundaries a pre determined minimum level of risk adjusted capital we find that in general the equity values of a sample of large publicly traded banks decrease at the time of the announcement further those banks with capital levels which are deficient relative to the mandated levels suffer the largest relative losses

federal deposit insurance regulatory policy and optimal bank capital this paper seeks to explain the combination of explicit and implicit pricing for deposit insurance employed by the fdic essentially the fdic sells two products insurance and regulation to span the product space it must and does set two prices we argue that the need to establish regulatory disincentives to bank risk taking is the heart of the controversy over the adequacy of bank capital and that the ability to close risky banks before exhausting their charter value i e the value of their right to continue in business stands at the center of these disincentives and in front of the fdic s insurance reserves just as a book shouldn t be judged by its cover a government agency shouldn t be judged by the words behind its initials with the fdic federal deposit insurance corporation the agency s name describes only part of its formal operations the fdic is quasi governmental has a regional structure and sells deposit insurance however the initials fail to convey the fdic s critical place in the governmental regulatory structure as the sole federal overseer of the approximately 8900 state chartered commercial banks that have chosen not to belong the federal reserve system reflecting the federal reserve s membership problem the number of these banks is growing year by year besides selling deposit insurance at bargain explicit rates the fdic performs four regulatory functions 1 entry regulation it passes on new banks applications for deposit insurance and on branch and merger proposals as well thereby protecting the value of existing bank charters 2 examination two thirds of fdic employees are concerned with inspecting bank records and supervising managerial activity 3 regulation of deposit rates and conditions for withdrawal by tradition fdic policies on these matters conform entirely with regulations applicable to federal reserve member banks and 4 disposition of failed banks when an insured bank fails the fdic usually chooses not to liquidate it 2

minimum wages and the demand for labor i formulate measures of the effective minimum wage based on broad definitions of the labor costs that face employers and use these measures in reestimating some simple equations relating the relative employment of youths and adults to the u s minimum wage using aggregate data for 1954 78 i then ground the model more closely in the theory of factor demand first by adding the relative wages of youths and adults to the equation describing their relative employment and then by specifying a complete system of demand equations for these two types of labor teen employment responds quite robustly to changes in the effective minimum in these specifications with an elasticity of 0 1 a translog cost function defined over young workers adults and capital shows that the effective minimum wage reduces employers ability to substitute other factors for young workers using both sets of results i find that a subminimum wage for youths would have increased their employment with at most a small loss of jobs among adults this abstract was borrowed from another version of this item

minimum wage effects on employment substitution and the teenage labor supply evidence from personnel data using personnel data from a large us retail firm i examine the firm s response to the 1996 federal minimum wage increase compulsory increases in average wages had negative but statistically insignificant effects on overall employment however increases in the relative wages of teenagers led to significant increases in the relative employment of teenagers especially younger and more affluent teenagers further analysis suggests a pattern consistent with noncompetitive models where the legislation affected mainly the wages of teenagers and so was only moderately binding it led both to higher teenage labor market participation and to higher absolute employment of teenagers

the effect of unions on wage inequality in the u s labor market this study uses current population survey micro data for 1973 74 and 1993 to evaluate the effect of changing union membership on trends in male and female wage inequality unionization rates of men fell between the two sample periods with bigger declines among lower skill groups these trends account for 15 20 of the rise in male wage inequality union membership rates of low wage women also declined while unionization increased among higher wage women on balance shifting unionization accounts for very little of the rise in female wage inequality economy wide trends in unionization mask a sharp divergence between the private sector where unionism was declining and the public sector where it was rising comparisons across sectors suggest that unionization substantially slowed the growth in wage inequality in the public sector

impact of personal and situational factors on taxpayer compliance an experimental analysis this study used a laboratory experiment with monetary incentives to test the impact of three personal factors moral reasoning value orientation and risk preference and three situational factors the presence absence of audits tax inequity and peer reporting behavior while controlling for the impact of other demographic characteristics on tax compliance analysis of covariance ancova reveals that all the main effects analyzed are statistically significant and robustly influence tax compliance behavior these results highlight the importance of obtaining a proper understanding of these factors for developing effective policies for increasing the level of compliance and indicate that standard enforcement polices based on punishment alone should be supplemented by an information system that would acquaint tax payers with the compliance level of other tax payers reinforce the concept of fairness of the tax system among tax payers and develop programs that enhance and appeal to a taxpayer s moral conscience and reinforce social cohesion

do living wage ordinances reduce urban poverty living wage ordinances typically mandate that businesses under contract with a city or in some cases receiving assistance from a city must pay their workers a wage sufficient to support a family financially we estimate the effects of these ordinances on wages hours and employment in cities that have adopted such legislation we then examine the effects of these laws on poverty our findings indicate that living wage ordinances boost wages of low wage workers moreover we find a moderate negative employment effect finally some of the evidence suggests that living wages achieve modest reductions in urban poverty

product market evidence on the employment effects of the minimum wage we infer the employment response to a minimum wage change by calibrating a model of employment for the restaurant industry whereas perfect competition implies that employment falls and prices rise after a minimum wage increase the monopsony model potentially implies the opposite we show that estimated price responses are consistent with the competitive model we place fairly tight bounds on the employment response with the most plausible parameter values suggesting that a 10 increase in the minimum wage lowers low skill employment by 2 4 and total restaurant employment by 1 3

the effect of the minimum wage on the fast food industry using a longitudinal survey of fast food restaurants in texas the authors examine the impact of recent increases in the federal minimum wage on a low wage labor market less than 5 of fast food restaurants were using the new youth subminimum wage in july august 1991 even though the vast majority paid a starting wage below the new hourly minimum wage immediately before it became effective although some restaurants increased wages beyond the level needed to comply with higher minimum wages in both 1990 and 1991 those federal minimum wage increases greatly compressed the distribution of starting wages in the texas fast food industry two findings at variance with conventional predictions are that 1 employment increased more in those firms likely to have been most affected by the 1991 minimum wage increase than in other firms and 2 price changes were unrelated to mandated wage changes

learning to love the government trade unions and late adoption of the minimum wage one counterintuitive variation in wage setting regulation is that countries with the highest labor standards and strongest labor movements are among the least likely to set a statutory minimum wage this the author argues is due largely to trade union opposition trade unions oppose the minimum wage when they face minimal low wage competition which is affected by the political institutions regulating industrial action collective agreements and employment as well as by the skill and wage levels of their members when political institutions effectively regulate low wage competition unions oppose the minimum wage when political institutions are less favorable toward unions there may be a cleavage between high and low wage unions in their minimum wage preferences the argument is illustrated with case studies of the uk germany and sweden the author demonstrates how the regulation of low wage competition affects unions minimum wage preferences by exploiting the following labor market institutional shocks the conservatives labor law reforms in the uk the hartz labor market reforms in germany and the european court of justice s laval ruling in sweden the importance of union preferences for minimum wage adoption is also shown by how trade union confederation preferences influenced the position of the labour party in the uk and the social democratic party in germany

do minimum wages fight poverty i introduction one of the most compelling rationales for a national minimum wage floor is to raise the incomes of poor or near poor families with members in the workforce this general point however is often missed in the debates over the merits of a higher minimum wage in contrast to these oft stated distributional goals much of the focus in such debates has been on the employment effects of minimum wages especially among the teenage population in large part this focus is probably attributable to the extensive body of economic research on the effects of minimum wages on employment of low skilled workers however although negative employment effects represent a cost of minimum wages such costs do not necessarily imply that minimum wages constitute bad social policy in particular the employment losses associated with a higher minimum wage may be more than offset by positive effects on low income families especially if minimum wages are a significant factor in helping move families out of poverty 1 this is not to argue that research on employment effects of minimum wages is irrelevant but such research may be more important as a test of the theory of labor demand and as a method of learning how employers and individuals adjust to exogenous wage increases than as a method of assessing the wisdom of the policy in addition we do not mean to suggest that the short run effects of minimum wages on the incomes of poor families should be the sole criterion for evaluating such policies other studies have found evidence suggesting for example that minimum wage increases reduce school enrollment rates and training neumark and wascher 1996a hashimoto 1982 factors that may affect longer run earnings or earnings growth these deleterious longer run effects might offset the benefits of shorter run effects of minimum wages on family incomes nonetheless our perception is that potential increases in the incomes of poor families provide the main motivation for raising the minimum wage making it important to assess the evidence on whether minimum wage increases achieve this goal in this regard there are two questions that pertain to the influence of minimum wages on family incomes generally and on poverty in particular first there is the question of the effects of minimum wages on low wage workers that is do the wage gains received by employed workers more than offset the lost earnings suffered by those who lose or cannot find jobs 2 second there is the question of how minimum wages affect workers in different parts of the family income distribution because many roughly speaking a large minority of minimum wage workers are in relatively affluent families gramlich 1976 card and krueger 1995 burkhauser et al 1996 which workers gain and which lose will have an important influence on the effects of minimum wages on the distribution of family incomes in this article we present evidence on the effects of minimum wages on family incomes focusing in particular but not solely on the effectiveness of minimum wages in reducing poverty using matched march current population surveys cpss we estimate the effects of minimum wages on the probabilities of various transitions in the family income distribution such as transitions into and out of poverty given that federal changes in minimum wages may be confounded with other aggregate level shocks influencing family income we rely heavily on state level changes in minimum wages to identify minimum wage effects in a nutshell our empirical strategy is to compare rates of transition through the family income distribution in states in which minimum wages do and do not increase for example if poor families are more likely to escape from poverty when minimum wages increase in their states of residence we would infer that minimum wage hikes help families move out of poverty on the other hand if transitions in to poverty are more common when minimum wages increase we would infer that the disemployment effects of minimum wages play a dominant role among the low income population

the political economy of minimum wage legislation two questions are addressed in this paper a why do labor unions and certain employer organizations respectively promote and impede minimum wage legislation b do these groups have significant impacts on minimum wages question a is examined in the context of models that identify the economic self interest of unionized skilled workers and capitalists in legal wage floors question b is approached by a median legislator utility maximization model that leads to tobit estimation of the relationship between state minimum wage rates and measures of statewide organized labor and capital and average hourly earnings

minimum wage increase and firm productivity evidence from the restaurant industry abstract the purpose of this paper is to examine the effects of increasing the federal minimum wage on productivity in the restaurant industry based on the equity theory and fair wage hypothesis this study empirically investigated the relationship between the federal minimum wage and restaurant productivity the results revealed that increasing the federal minimum wage immediately enhances restaurant productivity for up to two years the results further indicated that both full service restaurants and low wage restaurants benefit from the positive effect while there is no significant effect on limited service restaurants and high wage restaurants the results suggest that restaurants should cope with minimum wage policies by focusing on implementing initiatives that can maximize enhanced work efforts and productivity more importantly the results further highlight that restaurants should consider either continuously raising wage levels or raising them every two years to consistently obtain enhanced motivation and productivity

a reassessment of the new economics of the minimum wage literature with monthly data from the current population survey we estimate the employment effects of federal minimum wage increases using monthly current population survey cps data from 1979 through 1997 we find that the empirical differences in the new minimum wage literature based on cps data primarily can be traced to alternative methods of controlling for macroeconomic conditions we argue that the macroeconomic controls commonly included in models where no employment impact is found are inappropriate we consistently find a significant but modest negative relationship between minimum wage increases and teenage employment using alternative controls or allowing employer responses to the policy to occur with some delay

a reexamination of mean variance analysis of bank capital regulation abstract the mean variance framework has been used to analyze the effects of bank capital regulation on the asset and bankruptcy risk of insured utility maximizing banks this literature claims that more stringent capital regulation will increase asset risk and can increase bankruptcy risk these conclusions are notable because they are opposite to those obtained for insured value maximizing banks in this paper we show that the utility maximization literature does not support its conclusions regarding the effects of bank capital regulation because it has mischaracterized the bank s investment opportunity set by neglecting the option value of deposit insurance

the impact of the overtime policy reform evidence from the low paid workers in taiwan this article investigates the effects of shortening standard workweek on workers with different income levels using two repeated cross sectional survey data the taiwanese manpower utilization survey and human resource survey we estimate the impacts of the new policy on working hours and monthly income our results show that the new standard workweek in taiwan has made the working hours drop but the scale of decrease becomes smaller in the following 3 years although the hours drop has gradually risen back for every worker the rate of increase is higher for the low income workers the monthly incomes of the high income female workers have decreased however the decreases in the hourly wage rates are less than their average wage rates our results also show that the firms have automatically adapted under the new law and a poor enforcement scheme after a period of time

a contingent claim analysis of a regulated depository institution abstract a model of financial intermediation to determine the market value of bank equity deposits and deposit insurance is developed the implicit equilibrium interest rate on deposits is derived and analyzed three types of risks are considered in the model interest rate risk financial risk and default risk the effect of different regulatory measures such as capital adequacy reserve and liquidity requirements deposit insurance and interest rate ceilings is analyzed and their impact on the bank behavior is also assessed moreover we investigate the interactions among these measures to determine which are dominant under alternative circumstances and which are redundant

inflation minimum wage and other wages an econometric study on french macroeconomic data this study examines the set of interdependences between the formation of wages prices and the minimum wage smic through a vectorial error correction model estimated on french quarterly macroeconomic data covering the 1970 1 1999 4 period two periods are distinguished the period of inflation rise from 1970 to 1981 which coincides with an important squeeze of the wage range measured by the ratio of the minimum wage to the hourly wage rate the period of disinflation since 1981 that has been concomitant with a stability of wage inequalities disinflation has hardly benefited the evolution of the smic which has always profited by price rises in real and relative terms which have become less strong this evolution does not benefit any more on wage rises when the interdependences between variables are taken into account the smic seems however to have gained in efficiency as an instrument on wage disparity reduction it rises are finally more persistent in real terms and relatively to the other salar

skill biased technological change and wage inequality evidence from a plant retooling1 one of the most popular explanations for the increased wage inequality that has occurred since the late 1970s is that technological change has resulted in a downward shift in the demand for low skill workers this pattern is also alleged to account for the growth in racial inequality in wages over the same period this article reports on a case study of the retooling of a food processing plant a unique longitudinal multimethod design reveals the nature of the technological change the changes in job requirements and the mechanisms by which the changes affect the wage distribution for hourly production workers this research finds that indeed the retooling resulted in greater wage dispersion and that the changes have also been associated with greater racial inequality in wages however contrary to the claims of advocates of the skill bias hypothesis organizational and human resources factors strongly mediated the impact of the changing technology absent these high road organizational choices th

contextual and individual dimensions of taxpayer decision making we examine whether a taxpayer s decision to choose a taxpayer favorable vs a taxpayer unfavorable characterization of income is associated with contextual and individual dimensions of that decision using a 2 2 factorial experimental design we manipulate the prevailing social norm on whether there is a general belief that a specific form of income should be characterized as a capital gain taxed at a lower tax rate and hence taxpayer favorable or as ordinary income taxed at a higher tax rate and hence taxpayer unfavorable and the group affiliation on whether the individual is making a tax characterization decision as a sole proprietor or as a member of a group practice moreover we measure participants fairness perception of characterizing the income as capital gains versus ordinary we study the decisions of 180 graduate business and accounting students from two us business schools to explore these dimensions using a tax ambiguous income situation results indicate that both contextual and individual dimensions impact taxpayer decisions specifically the social norm and fairness perception of characterizing income as capital gains affects the likelihood of choosing such a characterization being a sole proprietor or a member of a group practice does not have any significant main effect however relative to all other conditions taxpayers are most likely to characterize income as capital gains when both the social norms are for capital gains characterization and when the taxpayer is a member of a group practice results remain largely robust to a variety of alternative explanations we conclude the paper with a discussion of our findings and their implications for tax policy enforcement and research

monopsony in the labor market this paper surveys recent theoretical and empirical research on monopsony in labor markets broadly defined as upward sloping labor supply to an employer we compare older monopsony models based on small numbers of employers with newer models based on labor market frictions such as moving costs and search we also compare older econometric approaches that focus on static wage concentration relationships with newer approaches that focus on dynamics our review of empirical estimates suggests that monopsony power based on small numbers of employers is probably rare but occasionally large while monopsony power based on frictions is probably widespread but small on average

lobbying for minimum wages using a common agency lobbying framework this paper illustrates how the minimum wage set reflects the interaction between economic and political factors and under what circumstances will the policymaker be induced through lobbying to change the minimum wage specifically when the labor demand elasticity is large lobbying is successful in inducing the policymaker to set the minimum wage in accordance with her political ideology however the paper also shows the conditions under which lobbying will reverse the ideological preference and induce a business friendly government to increase the minimum wage empirical analysis on a panel data for ten canadian provinces gives considerable support for theoretical predictions the real minimum wage decreases in skill adjusted union density and political ideology while larger labor demand elasticity reinforces the influence of political ideology in the presence of lobbying jel j38 d72 d78

the economic effects of a citywide minimum wage this paper presents the first study of the economic effects of a citywide minimum wage san francisco s adoption of an indexed minimum wage set at 8 50 in 2004 and 9 14 by 2007 compared to earli

revisiting the minimum wage employment debate throwing out the baby with the bathwater we revisit the minimum wage employment debate which is as old as the department of labor in particular we assess new studies claiming that the standard panel data approach used in much of the new minimum wage research is flawed because it fails to account for spatial heterogeneity these new studies use research designs intended to control for this heterogeneity and conclude that minimum wages in the united states have not reduced employment we explore the ability of these research designs to isolate reliable identifying information and test the untested assumptions in this new research about the construction of better control groups our evidence points to serious problems with these research designs we conclude that the evidence still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others and that policymakers need to bear this tradeoff in mind when making decisions about increasing the minimum wage

minimum wage legislation in a dual labor market the paper studies the equilibrium effects of minimum wage legislation in an economy with coexisting primary and secondary labor markets owing to difficulties in monitoring relative wages and the threat of job loss play a functional role in eliciting effort from primary sector workers minimum wage laws hence affect the primary wage and employment level even if the law only binds in the secondary labor market furthermore interaction between the two sectors can also alter the secondary outcome relative to the standard analysis and has implications for participation decisions and for the level of unemployment

optimal bank interest margin under capital regulation and deposit insurance this paper examines the relationships among capital regulation deposit insurance and the optimal bank interest margin in a model where loan losses are the source of uncertainty changes in capital regulation or deposit insurance premiums have direct effects on the bank s interest margin an increase in bank capital requirement or in deposit insurance premiums results in a reduced interest margin under nonincreasing risk aversion comparative static analysis also explores the relation between asset quality and interest margin it is shown that a mean preserving spread of the distribution of loan losses results in a reduced margin

the distributional impacts of minimum wage increases when both labor supply and labor demand are endogenous we develop and estimate a one shot search model with endogenous firm entry and therefore zero expected profits and endogenous labor supply positive employment effects from a minimum wage increase can result as the employment level depends upon both the numbers of searching firms and workers welfare implications are similar to the classical analysis workers who most want the minimum wage jobs are hurt by the minimum wage hike with workers marginally interested in minimum wage jobs benefiting we estimate the model using cps data on teenagers and show that small changes in the employment level are masking large changes in labor supply and demand teenagers from well educated families see increases in their employment probabilities and push out their less privileged counterparts from the labor market this article has supplementary material online

regional effects of the minimum wage on teenage employment previous research on the minimum wage using national level data concludes that the minimum wage has a small effect on the employment of teenagers this paper provides new evidence that there is substantial regional variation in the effect of the minimum wage and in some regions it has a decidedly larger impact on teenage employment than previously measured estimates from a panel data set of the us states suggest that the minimum wage may cause almost a 7 reduction in teenage employment in some regions this results is robust to different econometric specifications and holds whether a relative or real specification of the estimating equation is used

why unions reduce wage inequality a theory of domino effects numerous empirical studies show that unions reduce wage differences i demonstrate that their motive might be a mix of fairness and strategy maximizing the use of union bargaining power in the presence of efficiency wages unions can push primarily for raising the lowest wages and still not sacrifice higher wages much if the employers themselves increase higher wages to protect efficiency enhancing wage differences if these domino effects are strong enough then an egalitarian wage policy might even increase the median wage

do ethics matter tax compliance and morality in this article we argue that puzzle of tax compliance can be explained at least in part by recognizing the typically neglected role of ethics in individual behavior that is individuals do not always behave as the selfish rational self interested individuals portrayed in the standard neoclassical paradigm but rather are often motivated by many other factors that have as their main foundation some aspects of ethics we argue that it is not possible to understand fully an individual s compliance decisions without considering in some form these ethical dimensions specifically we argue here that there is much direct and indirect evidence that ethics differ across individuals and that these differences matter in significant ways for their compliance decisions we then put this in the larger context of the inability of the standard neoclassical paradigm to explain compliance of at least some individuals and we suggest several possible avenues by which theory can be expanded to incorporate ethics we conclude by arguing that a full house of compliance strategies is needed to combat tax evasion strategies that include the traditional enforcement paradigm suggested by and consistent with neoclassical theory a less traditional service paradigm that recognizes the important role of a kinder and gentler tax administration in encouraging compliance and importantly a new trust paradigm that is built on the foundation of ethics in which the tax administration must recognize that it can erode the ethics of taxpayers by its own decisions

the response of hours of work to increases in the minimum wage this paper examines the effect of minimum wage increases on the hours of work of teenagers ages 16 to 19 using monthly data from the current population survey our findings are consistent with the prediction from neoclassical theory that minimum wage increases have a negative effect on labor demand however the estimates we provide here for the elasticity of hours of teen labor demanded with respect to the minimum wage suggest that alternative estimates based on aggregate employment consistently understate the total impact of minimum wage increases on teenage labor utilization

the effect of changes in firm diversification on union wage settlements for 15 major u s industrial firms a well known argument is that conglomerate firms may exploit their ability to cross subsidize price wars for the purpose of engaging in predatory pricing a similar argument advanced by organized labor is that conglomerate firms can often outlast unions during strikes because they can cross subsidize strike costs indefinitely 1 15 17 this cross subsidizing of strike costs labor argues greatly reduces the effectiveness of striking as a bargaining weapon resulting in lower wage settlements for the union another fear articulated by organized labor is that conglomerates can simply eliminate divisions with troublesome unions since this threat is perceived by most unions as credible it may further increase the bargaining power of the firm 19 while the opportunity to cross subsidize strike costs or to eliminate troublesome divisions clearly exists for many conglomerates there is no empirical evidence that they engage in these activities or that they enjoy lower wage settlements 12 15 this paper tests the proposition that diversification efforts by the firm can lead to lower wage settlements unlike earlier studies that examine the effect of a firm s conglomerate nature on wage levels this paper examines how recent changes in the firm s level of diversification may affect wage settlements the remainder of the paper is outlined as follows in section i several key aspects of organized labor s argument are discussed and a formal testable hypothesis is proposed section ii proposes a simple empirical test of the hypothesis section iii discusses the data and the construction of key variables section iv reports and interprets the results of the regressions section v concludes the paper

comment on david neumark and william wascher employment effects of minimum and subminimum wages panel data on state minimum wage laws in their article published in the minimum wage research symposium in the october 1992 issue of this journal industrial and laborrelations review volume 45 number 1 pp 55 81 david neumark and william wascher claim to find empirical support for three propositions 1 a higher minimum wage leads to a lower teenage employmentpopulation rate 2 the effect of the minimum wage on employment can be seen within a year but becomes stronger after two years and 3 in states with legal subminimum wages a significant fraction of teenage employees are paid a subminimum wage and the availability of a subminimum wage blunts the disemployment effect of the minimum wage the same symposium contains three papers by us that present empirical evidence suggesting conclusions opposite those of neumark and wascher 1 since neumark and