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

effort and wages evidence from the payroll tax this is a pre copy editing author produced pdf file of an article accepted for publication canadian journal of economics following peer review this accepted manuscript is being archived under the conditions specified in the bu open access policy

greenhouse warming comparative analysis of nuclear and efficiency abatement strategies abstract we analyse two popular strategies for reducing fossil fuel carbon dioxide co2 emissions revitalizing nuclear power and improving energy efficiency under highly favourable assumptions for nuclear power in scenarios of moderate to high energy growth we find that even if large nuclear plants 1 000 mw could be built every one to three days from now until 2025 which is impossible in the third world global co2 emissions would still continue to grow thus nuclear power cannot contribute significantly to abating greenhouse warming except possibly in scenarios of low energy growth for which the problem is already largely ameliorated by efficiency improvement in the usa the world s largest producer of co2 each dollar invested in electric efficiency displaces nearly seven times as much co2 as a dollar invested in nuclear power even if the most optimistic aspirations for the future economics of nuclear power were realized today efficiency would still displace between 2 5 and 10 times more co2 per unit investment we conclude that revitalizing nuclear power would be a relatively expensive and ineffective response to greenhouse warming and that the key to reducing future co2 emissions is to improve the energy efficiency of the global economy

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

industrial fatigue redux abstract this paper presents a gift exchange labor market model in which workers are prone to exhaustion although norms of reciprocity and fairness indicate that firms and workers must exchange gifts in the form of higher wages and higher effort respectively these incentives are mitigated by the evolution of fatigue and therefore the dynamic efficiency wage is lower than its static counterpart

group reputations stereotypes and cooperation in a repeated labor market reputation effects and other regarding preferences have both been used to predict cooperative outcomes in markets with inefficient equilibria existing reputation building models require either infinite time horizons or publicly observed identities but cooperative outcomes have been observed in several moral hazard experiments with finite horizons and anonymous interactions this paper introduces a full reputation equilibrium fre with stereotyping perceived type correlation in which cooperation is predicted in early periods of a finitely repeated market with anonymous interactions new experiments generate results in line with the fre prediction including final period reversions to stage game equilibrium and non cooperative play under unfavorable payoff parameters

the response of the informal sector to trade liberalization this paper studies the relationship between trade liberalization and informality it is often claimed that increased foreign competition in developing countries leads to an expansion of the informal sector defined as the sector that does not comply with labor market legislation using data from two countries that experienced large trade barrier reductions in the 1980 s and 1990 s brazil and colombia we examine the response of the informal sector to liberalization in brazil we find no evidence of a relationship between trade policy and informality in colombia we do find evidence of such a relationship but only for the period preceding a major labor market reform that increased the flexibility of the colombian labor market these results point to the significance of labor market institutions in assessing the effects of trade policy on the labor market

foreign exchange market reactions to sovereign credit news abstract we analyse the reaction of the foreign exchange spot market to sovereign credit signals by fitch moody s and s p during 1994 2010 we find that positive and negative credit news affects both the own country exchange rate and other countries exchange rates we provide evidence on unequal responses to the three agencies signals fitch signals induce the most timely market responses and the market also reacts strongly to s p negative outlook signals credit outlook and watch actions and multiple notch rating changes have more impact than one notch rating changes considerable differences in the market reactions to sovereign credit events are highlighted in emerging versus developed economies and in various geographical regions

advances in supervision technology and economic welfare a general equilibrium analysis abstract we analyze the impact of improvements in the technology by which employers monitor their workers it is unclear a priori whether workers should benefit or not from such advances on the one hand they decrease the total costs of hiring workers and stimulate labor demand on the other hand as supervision becomes less costly employers tend to substitute monitoring for wages as a means of motivating workers we show how the impact on firms and workers of such technological progress depends on the nature of the labor market equilibrium i e whether there is full employment or not and the cost technology of monitoring a distinct possibility is that unemployed workers welcome the changes in supervision because they promote employment while employed workers resist such changes and the more intensive supervision they encourage

fair wages and effort provision combining evidence from a choice experiment and a field experiment the presence of workers who reciprocate higher wages with greater effort can have important consequences for firms and labor markets knowledge about the extent and determinants of reciprocal effort choices is however incomplete we investigate the role of fairness perceptions and social preferences in a field experiment in which workers were hired for a one time job we show that workers who perceive being underpaid at the base wage increase their performance if the hourly wage increases whereas those who feel adequately paid or overpaid at the base wage do not change their performance moreover we find that only the workers who display reciprocity in a choice experiment show reciprocal effort responses in the field the workers who lack reciprocity in the choice experiment do not respond to the wage increase even if they feel underpaid at the base wage our findings suggest that fairness perceptions and social preferences are key in workers performance response to wage increases in our study the wage increase affects effort mainly through the removal of perceived unfairness i e the elimination of negative reciprocity toward the firm rather than positive reciprocity these results are the first direct evidence of the fair wage effort hypothesis in the field and also help interpret previous contradictory findings in the literature data as supplemental material are available at http dx doi org 10 1287 mnsc 2014 1970 this paper was accepted by uri gneezy behavioral economics

the economics of worldwide stagflation the last fifteen years have witnessed dramatic changes in economics not only in the manner in which the economics profession views economics but also in the manner in which the general public views economics and economists by the late 1960 s there had emerged more or less a consensus macroeconomic framework that is an agreed upon structure to be used to study economic problems at the aggregate level robert solow stated as quoted in leijonhufvud 1968

efficiency wage models of unemployment one view h lorne carmichael persistent wage rigidity and involuntary unemployment appear to be recurrent problems in most economies what could be preventing the wage adjustment necessary to clear the labor market many recent papers claim to have found the answer in efficiency wage models this paper surveys this literature and attempts to evaluate its accomplishments it concludes that the efficiency wage models fail to explain wage rigidity or persistent involuntary unemployment persistent involuntary unemployment of workers is a recurrent problem in labor markets all over the world unemployed workers seem unable to find work even though they are willing to accept lower wages than those being paid employed workers with similar skills what could be preventing wages from adjusting to clear these markets many recent papers known collectively as the efficiency wage literature now claim to have the answer this paper will survey the efficiency wage literature and critically evaluate some of its accomplishments efficiency wage models have already been examined by yellen 1984 katz 1986 and stiglitz 1987 and have received generally favorable reviews this paper is more critical its overall conclusion is that efficiency wage models provide some useful insights into the workings of the labor market but they do not provide a satisfactory account of wage rigidity or involuntary unemployment there are at least five separate versions of the efficiency wage model they share a common structure however and this is outlined in the first section of the paper this section also attempts to relate efficiency wage models to other recent models of unemployment section ii examines and criticizes the different approaches in detail section iii evaluates the achievements of this approach and suggests some directions for future work i a general efficiency wage model efficiency wage models as the name suggests are first of all models of wages they generate unemployment by showing that firms will sometimes want to set wages at non market clearing levels it is useful to begin therefore by reviewing how wages and employment are determined in some related models in a perfectly competitive labor market the wage for each type of labor is adjusted constantly to maintain equality of supply and demand overall employment fluctuates in response to demand changes as workers move up and down their labor supply curves unemployment is voluntary in that anyone who is not working prefers that state to employment at the going wage for people of his skills as well the value of a worker s marginal product is equal to the marginal value of his leisure so there are no unexploited wage bargains between unemployed workers and firms this model is successful in predicting the long term response of wages to shifts in demand and supply but it is clear that in the short run its depiction of voluntary unemployment and flexible wages is unrealistic a natural way to generate more realism is to assume that wages are inflexible in the short run in this case a reduction in demand away from a long run equilibrium will lead to rationing of jobs by employers as they attempt to stay on their labor demand curves the unemployment here is involuntary in that the unemployed would prefer to be working at the going wage and is inefficient in that there are lost gains from trade between these workers and firms the weakness of this model is that it is silent about the mechanism that keeps wages rigid unemployed workers who offer to work for less than the fixed wage ought to find work the early implicit contract models of azariadis 1975 baily 1974 and gordon 1974 provide one explanation for wage rigidity these models introduced the idea that wages can do more than just clear the market for labor wages in an implicit contract model are used to shift the risk generated by uncertain output market conditions from risk averse workers to the risk neutral firm

the choice of exchange rate regimes in developing countries a multinomial panel analysis abstract this paper analyses the choices of exchange rate regimes in developing countries since 1980 static and dynamic random effects multinomial panel models are estimated using simulation based techniques explanatory variables include oca fundamentals stabilization considerations currency crises factors and political and institutional features the results reveal strong state dependence in regime choices we also find evidence for non monotonic relationship between regime determinants and the degree of regime flexibility

the dispersion of employees wage increases and firm performance previous studies examining intra firm wage dispersion and firm performance have focused on wage levels the authors of this study argue that for purposes of comparing wage dispersion s positive inc

assessing the stability of the inter industry wage structure in the face of radical economic reforms we assess the stability of the wage structure in an economy experiencing substantial economic changes we find that the structure of inter industry wage differentials remained remarkably stable in brazil in the face of major shocks

partial gift exchange in an experimental labor market impact of subject population differences productivity differences and effort requests on behavior we report a gift exchange experiment firms make wage offers workers respond by determining an effort level higher effort is more costly to workers and firms have no mechanism for punishing or rewarding workers consistent with the gift exchange hypothesis workers provide more effort at higher wages but undergraduates provide substantially less effort than mbas evidence suggests this results from differences in prior work experience firms nonbinding effort requests are at least partially honored resulting in increased overall effort for undergraduates although higher wages are relatively more costly for lower productivity firms workers do not provide them with more effort

new evidence on the monetary approach of exchange rate determination in mexico 1994 2007 a cointegrated svar model abstract we provide empirical evidence supporting the validity of both short and long run versions of the monetary approach of exchange rate determination for the mexican peso u s dollar exchange rate from 1994 to 2007 using a cointegrated svar model we estimate not only the long run relationship between the variables of the monetary model for the exchange rate but also the very short run effects which have been often ignored in previous empirical work we show that there are robust short and long run relationships between the mexican monetary aggregates and the exchange rate which ultimately responds to what bilson s variant of maer predicts

the role of career and wage incentives in labor productivity evidence from a two stage field experiment in malawi we study how career and wage incentives affect labor productivity through self selection and incentive effect channels using a two stage field experiment in malawi first recent secondary school g

centralisation employment and wage dispersion this paper is about bargaining institutions and their influence on wage dispersion and employment using novel statistical measures it compares labor market performance in seventeen oecd countries since 1973 it concludes that countries with highly centralized wage bargaining have generally achieved the best performance combining high employment with low wage dispersion thereby avoiding certain major inequalities prevalent elsewhere the paper also presents a formal model of bargaining based on the work of l calmfors and j driffill 1988 simulations are used to illustrate how this model generates the kind of outcomes described in the empirical part of the paper copyright 1992 by royal economic society

the efficiency wage hypothesis applying a general model of the interaction between labor quantity and quality abstract the efficiency wage is analyzed in the context of a market for labor quality units the model is equivalent to that of a perishable one period form of firm specific human capital which is most efficiently financed by the employer indirectly through higher wages the hypothesis also assumes a labor market in which the quantity units have zero price i e labor earns no rent which can occur in the absence of unemployment only if the supply of some quality attribute is subject to constant costs on the intensive margin this constant cost condition is implicit in w a lewis original description of the traditional sector in a dual economy otherwise the zero rent assumption requires unemployment in which case it can not be used to explain the existence of unemployment the general applicability of the constant cost condition and of the efficiency wage hypothesis is questioned

efficiency wages and industry wage differentials a comparison across methods of pay efficiency wage considerations should be less important for piece rate pay than for time wages therefore if industry wage differentials reflect efficiency wage factors then these pay differences should be less sizable and have less explanatory power for piecework than for timework we test this proposition using wage data for male production workers employed in the swedish metalworking industries in 1985 the data are partitioned into two groups of workers in our preferred sub sample of workers who received pay under both piece rates and time wages our results are uniformly consistent with efficiency wage implications for industry wage differentials for the subsample of workers who received pay under either piece rates or time wages industry wage differentials are of equal importance under either pay scheme these latter results however may also be influenced by unaccounted for sorting of workers and employers across methods of pay overall our examination of industry wage differentials across m

efficiency wage models of unemployment a second view kevin lang and shulamit kahn efficiency wage models in which firms find it profitable to pay wages above workers reservation wages provide a promising explanation for unemployment and interindustry wage differentials one criticism of such models is they imply firms should sell jobs by requiring up front bonds from new workers however only some efficiency wage models imply this moreover firms might not require bonds for many reasons we show that moral hazard and adverse selection models together explain many labor market phenomena the efficiency wage model conforms well to empirical finding but certain anomalies suggest the need to consider rent sharing models carmichael s paper in this volume is an important contribution to the debate over the importance of efficiency wages he clearly outlines some of the deficiencies in the theory and thus points out areas needing further research nevertheless his conclusions are far too negative he greatly exaggerates the theoretical weakness of the efficiency wage model and gives insufficient recognition to the empirical implications generated by this model and to tests of these implications i shirking models there is direct empirical evidence that shirking is a serious problem for firms firms spend significant sums monitoring workers levine 1987 reviews the evidence that worker shirking is widespread and costly the evidence in burroway 1979 and mars 1982 also demonstrates the importance of shirking and stealing carmichael s primary argument against shirking models is that if the payment of efficiency wages to deter shirking led to an excess supply of workers workers would buy their jobs by posting bonds since we do not observe workers posting bonds he concludes that firms do not pay efficiency wages either given the importance of shirking the absence of market clearing bonds needs explaining one explanation is that the market has found some reasonable substitute for bonds such as deferred wage payments it is theoretically feasible to substitute deferred wage payments for up front bonds as noted by akerlof and katz 1989 however the empirical evidence of industries with deferred payments i e where low beginning wages are balanced by high subsequent wages is mixed dickens and katz 1987b krueger and summers 1988 and abraham and farber 1987 indicate that industries which pay high wages to high tenure workers tend to pay high wages to low tenure workers on the other hand high wage industries also tend to have steeper earnings profiles which may be evidence of deferred earnings in these industries as shapiro and stiglitz 1984 note a second possible explanation for the absence of market clearing bonding is that bonding gives firms an incentive to fire workers immediately upon collecting their bonds however this explanation assumes that a firm will immediately fire every worker who posts a bond if there are any reputation costs at all some firms sometimes will not fire bond posting workers and we should observe some bonding yet with finite length contracts there must be some reputation costs because otherwise firms would never pay workers in the last period thus firm incentives to cheat and fire workers cannot explain the complete absence of bonding clearly the absence of market clearing bonding is not fully understood and further theoretical work is needed dickens katz lang and summers 1989 review a wide variety of possible reasons that bond posting is limited the important point is that there are many potential reasons for limited bonding other than the absence of efficiency wages on the other hand the lack of bonding despite the importance of shirking does not demonstrate that firms pay efficiency wages there may be reputation or other costs to the worker caught shirking even in the absence of bonding as dickens katz lang and summers 1989 demonstrate in the absence of bonding whether paying efficiency wages dominates relying solely on increased monitoring depends on the parameters of the model and is therefore an empirical issue

gift giving and worker productivity evidence from a firm level experiment abstract we present results from a field experiment designed to measure worker response to a monetary gift from their employer the experiment took place inside a tree planting firm paying its workforce incentive contracts firm managers told a crew of tree planters they would receive a pay raise for one day as a result of a surplus not attributable to past planting productivity we compare planter productivity the number of trees planted per day on the day the gift was handed out with productivity on previous and subsequent days of planting on the same block and thus under similar planting conditions we find direct evidence that the gift had a significant and positive effect on daily planter productivity controlling for planter fixed effects weather conditions and other random daily shocks

rational irrationality some economics of self management abstract the paper first reviews some of the main challenges posed to our received economic paradigm by a variety of behaviors documented by psychologists and discusses possible responses to this challenge it then describes a specific attempt at unifying a number of themes in social psychology using a parsimonious modeling of human behavior

labour market institutions and economic performance labour markets richard freeman do particular types of labour market institution hold the key to economic success should other countries try to emulate the flexibility of the american labour market or the centralization of swedish style corporatism since 1970 within the oecd there has been a sharp divergence both of economic performance and of indicators of labour market structure the paper uses union density and the degree of wage dispersion across industries to proxy a country s underlying labour market institutions in assessing economic performance it is argued that cross country differences in output growth were much smaller than differences in employment growth for given output growth there is a clear negative relationship between employment growth and real wage growth across countries why do different countries find themselves at different points on this trade off the final part of the paper examines the correlation between indicators of labour market structure and the position on the wage employment trade off it concludes that the degree of wage dispersion across industries is the most important indicator of market structure and that countries with very high or very low dispersion typically the countries with highly centralized or highly decentralized bargaining in the labour market have better employment performance than countries with intermediate degrees of centralization and wage dispersion

energy conservation in the industrial sector of developing countries abstract this paper begins by examining the most energy intensive industries and methods by which fuel efficiency can be improved next the author analyses the economics of energy conservation using specific case studies drawn from india it is shown that investing in energy efficiency is more economical btu per btu than investing in the enhancement of domestic energy resources the author also assesses changes in the economics of conservation for private firms when there are government incentives finally government policies that can overcome economic and non economic disincentives for investing in energy conservation are examined

allocation under dictatorship research in stalin s archives we survey recent research on the soviet economy in the state party and military archives of the stalin era the archives have provided rich new evidence on the economic arrangements of a command system under a powerful dictator including stalin s role in the making of the economic system and economic policy stalin s accumulation objectives and the constraints that limited his power to achieve them the limits to administrative allocation the information flows and incentives that governed the behavior of economic managers the scope and significance of corruption and market oriented behavior and the prospects for economic reform

unemployment in britain male unemployment in britain has risen from around 2 per cent in the 1950s to around 17 per cent in 1985 see figure 1 the figures are for male unemployment because there is no consistent series for women 1 even more remarkably unemployment has fallen in only three years out of the last twenty 1973 1978 and 1979 to account for this we need a model that explains both changes in the natural or non accelerating inflation rate of unemployment nairu and deviations from it we use a three equation supply side model centred on the labour market this has two main features the first concerns the determination of employment in the short run the labour demand function that we use cuts through the fruitless debate now raging especially in europe as to whether current unemployment is classical or keynesian according to the classical view employment is too high because real wages are too high according to the keynesian view real wages are not binding and unemployment is high because the product market does not clear with prices too high relative to nominal demand the whole debate is set in the framework of perfect competition yet in perfect competition prices are set by impersonal forces and it is not clear what could possibly stop prices clearing the market it is much more reasonable to think of prices as being set by imperfectly competitive firms existing prices being the best they can think of given the demand they face in this context firms demand for labour will depend on both the real product wage and the level of real aggregate demand this is the demand function we estimate and it conforms both to common sense and to the data however this does not imply that employment can be made to grow without limit by pumping up real demand for in the medium term when price surprises are eliminated our model determines three variables employment real wages and real demand on the basis of three equations an employment equation a price equation and a wage equation thus in the medium term there is a natural level of employment and corresponding to this a natural level of real aggregate demand the second key feature of our model concerns the medium term determination of unemployment in the medium term the planned mark up of wages over prices in wage settlements must be consistent with the mark up of prices over wage costs in employers pricing behaviour for if wage setters try to set real product wages higher than is consistent with employers pricing behaviour this generates ever increasing inflation thus the key to understanding unemployment in the medium term is the behaviour of wage setters if events occur that push them towards too high real wages then unemployment has to rise to offset these influences we shall call these influences wage pressure variables or push factors and they are clearly crucial in understanding unemployment the variables here include the social security system employment protection

whither the nonprofit wage differential estimates from the 1990 census this article provides new estimates of the nonprofit for profit wage differential in the u s economy using observations on 4 1 million private sector employees from the 1990 census i find either zero or slightly positive economy wide wage differences between nonprofit and for profit employees in a standard earnings equation format significant wage differentials are found at the disaggregated occupation and industry level and provide a basis for testing hypotheses explaining nonprofit for profit wage differences

reducing public private sector pay differentials the single spine pay policy as a natural experiment in ghana empirical studies have documented the existence of the public private pay differentials in both developed and developing countries the implementation of policies aiming to reduce this gap has however been mitigated or inconclusive this paper exploits the single spine pay policy sspp in ghana as a natural experiment to examine the effectiveness of wage policies in developing countries the sspp was implemented in 2010 by the government of ghana to address the public private sector wage gap and improve productivity in the public sector using a quantile treatment effect approach based on a difference in difference did estimation we show that the sspp has yet to reduce the wage gap between the public and private sectors across the entire distribution of earnings in ghana the improvement observed is only at the lower tail of the distribution of earnings however the sspp has a larger effect on the earnings of female workers than that of males in the education and health services sector suggesting that the policy was successful in reducing the gender wage gap in that sector moreover the sspp has decreased the productivity of workers across the distribution of earnings mainly due to a decrease in the effort of female public sector workers nevertheless the sspp has had some successes and could be improved by putting in place a good managerial quality in the government agencies in addition it is important that the government pays much attention to various macroeconomic factors that have challenged the success of the sspp

wage differentials in brazil theory and evidence the investigation of wage determination and wage differentials in developing countries has concentrated on the effects of human capital and different sources of segmentation associated with institutional arrangements and structural characteristics on earnings in this article we use micro data for brazil for the 1980s and 1990s to test several competitive theories and models with segmentation explained by efficiency wages we find that unmeasured abilities and efficiency wage models seem to play a role in wage determination while compensating differentials and transitory difference theories were found to be irrelevant to wages formation

a multinomial logit approach to exchange rate policy classification with an application to growth we model a country s de jure exchange rate policy as the choice from a multinomial logit response conditioned on the volatility of its bilateral exchange rate the volatility of its international reserves and the volatility of its effective exchange rate the category with the highest predictive probability implied by the logit regressions serves as our de facto exchange rate policy an empirical investigation into the relationship between the de facto classifications and gdp growth finds that growth is higher under stable currency value policies for non industrialized countries a more nuanced characterization of exchange rate policy finds that those who exhibit fear of floating experience significantly higher growth

shirking and choking under incentive based pressure a behavioral economic theory of performance production abstract significant empirical evidence exists within psychology and economics that greater incentives under pressure can lead to lower performance outcomes however standard economic theory does not account for this possibility efficiency wage models for example conclude a positive relationship between wage incentives and productivity while efficiency wage models are shown to describe productivity behavior in numerous settings said models do not describe labor markets featuring counterproductive performance pressure we put forth a theoretical model of performance production in which performance incentives induce productive effects and counterproductive effects the model treats explicit monitoring and distraction as distinct counterproductive processes within a cohesive theory of performance production in settings featuring performance pressure we find that higher levels of performance contingent compensation may decrease not only labor output i e likelihood of task success but also labor input i e effort if counterproductive processes decrease the marginal effectiveness of effort sufficiently the latter finding challenges a common view that performance decrements under pressure occur despite greater effort levels

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

interindustry wage differentials in brazil why workers who have seemingly identical characteristics receive different wages has been a recurrent problem in labor economics and has received much attention lately in the debate on the efficiency wage models ewms in this article we extend this line of research to a less developed economy by testing the existence of interindustry wage differentials in brazilian industries the empirical analysis is based on cross sectional data on individuals working in the manufacturing industry in sao paulo one of the greater industrial areas in brazil the brazilian case shows a number of similarities to previous studies as there is a significant and stable pattern of interindustry wage differentials however it also raises additional issues namely a relationship between technology and wages that extends beyond the size effect as well as the similarities of the wage structure across countries even when workers characteristics are controlled the results have also proven to be quite robust to methodological estimation issues that is changes in the control variables and full correction for the least squares sampling error

a reputational model of authority abstract the paper provides a model where authority relaionships are founded on reputation the viability of authority is the result of subordinates free riding on each other s challenges reducing the frequency of challenges and making reputation worth defending the party with authority secures subordinates compliance through the payment of rents to influence the extent of their failure to act collectively and exacerbate the free rider problem they face the model provides a framework to explain how the magnitude and form of these rents depend on the primitives of the environment and on the authority s design of its reputation applications to employment relationships dictatorships and the notion of legitimacy are considered

the credit signals that matter most for sovereign bond spreads with split rating abstract we investigate how split ratings influence the information content of credit rating events on the sovereign bond markets during 2000 2012 we find that market reactions are far stronger for negative events on the inferior ratings and for positive events on the superior ratings such evidence suggests aversion of market participants to the ambiguity inherent in split ratings sovereign credit spreads are particularly responsive to negative events by s p the more conservative agency in the sample moody s positive events have a significant impact only when moody s assigns superior pre event ratings compared with s p there is little evidence that split ratings involving fitch have any market implication

is work special justice and the distribution of employment i investigate from an egalitarian welfarist standpoint the issue of whether state guaranteed employment should be offered as a matter of right to able bodied poor citizens who suffer chronic or persistent unemployment an affirmative answer is defended one consideration supporting this right to work is that provision of transfer aid in the form of jobs rather than cash screens nonneedy bohemians from the class of beneficiaries the main conclusion of the essay is defended from one objection based on efficiency wage models of the labor market and from another based on the alleged impossibility of maintaining the self respect and self esteem of able bodied individuals who fail to earn their own keep independently in a market economy

unions and interindustry wage differentials abstract we investigate the importance of trade unions in collective bargaining in the context of a developing country manufacturing labor market the methodology we adopt to estimate wage differentials follows the method proposed by haisken denew j p and schmidt c m 1997 review of economics and statistics 79 516 521 since it improves on the standard procedure popularized by krueger a b and summers l h 1988 econometrica 56 193 259 our findings indicate that wage dispersion is far greater in the unionized sector of brazilian manufacturing in contrast to evidence from other countries

information and economic analysis a perspective ten years ago i delivered a paper before this group with the title information and economic analysis i chose the title deliberately i did not call the subject on which i was speaking the economics of information because to do so would have been to suggest that my topic like the economics of agriculture or the economics of industry or the economics of labour represented another branch of specialisation within economics i wanted to suggest that informational considerations were in fact central to the analysis of a wide variety of phenomena that they constituted a central part of the foundations of economic analysis at the time though economists had long paid lip service to the importance of information there was little formal literature the last decade has seen a burgeoning of the literature it has become to the late 7o s and early 8o s what growth theory was to the early 6o s and it has been greeted with some of the same scepticism there seems to be a myriad ofspecial cases and few general principles the little examples are often contrasted unfavourably with the generality of general equilibrium theory what have we learned have diminishing returns set in are there fruitful directions for future research and if so what are they these are the questions which i wish to address here the work of the past decade has made i think a fundamental and lasting contribution to economic analysis the contributions have been both negative and positive we have learned that much of what we believed before is of only limited validity that the traditional competitive equilibrium analysis though having the superficial appearance of generality in terms of superscripts and subscripts is indeed not very general the theory is not robust to slight alterations in the informational assumptions it is but a special and not very plausible example among the possible set of informational assumptions which can be employed to characterise an economy at the same time the theory has been able to provide insights into phenomena about which the traditional model had nothing to say or which seemed inconsistent or inexplicable within the competitive paradigm it has provided some of the micro foundations for macro economics it has provided the basis of a new theory of the firm of a new new welfare economics and of a theory of economic organisation including a comparison of economic

do the poor benefit from devolution policies evidence from malawi s forest co management program do local people especially vulnerable households benefit from devolution of forest management the authors apply the propensity score matching and decomposition techniques on household data from chimaliro and liwonde forest reserves under the pilot forest co management program in malawi after controlling for selection bias they find that while the program raises forest income for participants in chimaliro it reduces revenue for participants in liwonde interestingly results indicate that the program raises forest income for female and low income participants although male and richer participants capture more benefits due to discrimination and endowment differences accounting for 100 and 60 of the inter group income disparity respectively

improving energy efficiency the effectiveness of government action abstract energy conservation involves the substitution of intelligence prudence maintenance and better equipment for scarce insecure and costly energy these substitutions improve efficiency of energy use and thereby enhance economic productivity the benefits of conservation are clear but the proper role for government is hotly debated although the normal workings of the market system are doing much to stimulate cost effective conservation actions several barriers to conservation still exist government programmes are needed to help overcome these barriers present us department of energy conservation programmes could reduce annual energy use by 2 7 quads in 1985 and by 13 quads in 2000 the present worth of the estimated cumulative oil saving over 20 years is 50 billion in addition to the savings realized by energy consumers themselves

the size and sources of economic rents in a developing country manufacturing labour market the potential sources of rent to labor in a developing country urban labor market are considered in this paper the data set used enables the relative importance of unions firm size profitability ownership and firm age to be assessed on the basis of cross section evidence it is shown that all these factors affect earnings a panel data based estimation of the importance of the profitability term provides strong support for a rent sharing theory of wage determination in a developing country similar to much recent evidence for developed country labor markets copyright 1996 by royal economic society

interindustry wage differentials and the gender wage gap using data from the march 1988 current population survey the authors find that the wages of female workers differ significantly by industry even when the analysis controls for workers productivity related characteristics although these interindustry wage differentials are at least as large as men s and are highly correlated with them as well there are statistically significant differences between the two of the overall gender wage gap the average female worker earns about 65 as much as the average male worker 12 22 can be explained by differences between the patterns of interindustry wage differentials of men and women and 15 19 by differences in the distribution of male and female workers across industries thus the combined industry effects explain about one third of the overall gender wage gap

industry wage premia evidence from the wage distribution abstract we argue that under the unobserved quality explanation of industry wage differentials industries with high average premia will have even higher premia among high wage workers we find however that the ols premia correctly illustrate the industry impact across the distribution

theoretical foundations for sticky wages abstract the paper compares three different types of theoretical explanation of sticky wages they are implicit contracts efficiency wage models and insider outsider models it then reconsiders keynes rationale for sticky wages which focuses on relative wage issues finally the paper considers possible directions for future research

inducing political action by workers a firm aiming to influence a governmental policy may benefit from political action by its stakeholders such as workers this article studies the behavior of such a firm showing that workers will have a greater incentive to engage in costly political activity against the governmental policy the greater their number and the higher the wage the firm may therefore profit from paying above market wages and from hiring what might appear to be an inefficiently large number of workers and because unions may overcome free rider problems of uncoordinated political effort a firm may favor unionization or be less opposed to unionization than it would otherwise be the results of this article can also explain why firms may little reduce wages in a recession and why the higher wages paid by unionized firms do not reduce survival rates of these firms

public sector employment rent seeking and economic growth surplus labor in the public sector a characteristic of many developing countries is viewed in this paper as the consequence of rent seeking behavior a theory is presented of a segmented labor market with endogenous government hiring in response to unemployment a simple computable general equilibrium model is used to illustrate how this can give rise to dynamic social costs and to quantify them fiscal resources are diverted to support the unproductive sink the effect of surplus labor on economic growth is shown to be substantial while the government s attempt to reduce unemployment is shown to be futile copyright 1991 by royal economic society

sectoral wage rigidity in the canadian and french economies abstract this paper estimates the degree of wage flexibility in seven french major sectors and 16 canadian manufacturing industries in order to test the predictions of efficiency wage theory and to compare the degree of wage flexibility with the u s we estimate industry wage flexibility with disaggregated phillips curves and find that efficiency wage theory explains the inter industry pattern of wage flexibility in france and canada quite well using previous estimates from the u s we find that wages are usually more flexible in french and canadian industries than in the corresponding u s industry and that the industries with the most flexible wages in france and canada tend to have the most flexible wages in the u s

do sovereign rating announcements affect emerging market exchange rate correlations a multivariate dcc garch approach abstractthis article investigates the effects of sovereign credit rating announcements on time varying exchange rate return correlations for a sample of 11 emerging market countries over the period 2002 2015 the data set covers daily exchange rates and long term foreign currency sovereign ratings outlooks and watch list the pairwise time varying correlations are derived by corrected dynamic conditional correlation cdcc modelling which is a member of multivariate generalized autoregressive conditional heteroskedasticity garch models family furthermore to capture the global factor effect a dynamic weighted index is created by using dynamic principal component dpc analysis findings suggest that some of the emerging market exchange rate co movements are affected by rating announcements upgrades of moody s and downgrades of fitch lead to spillovers main source of these spillovers are sovereign credit rating changes of european countries especially czech republic and turkey countries with high

fixed versus flexible lessons from ems order flow abstract we extend the literature on regime dependent volatility in two ways first our microstructural model provides a qualitatively new explanation second we test implications of our model using europe s recent shift to rigidly fixed rates ems to emu in the model shocks to order flow induce more volatility under flexible rates because the elasticity of speculative demand is endogenously low leading to pronounced portfolio balance effects new data on ff dm transactions show that order flow had persistent effects on the exchange rate before emu parities were announced after announcement the ff dm rate was decoupled from order flow as the model predicts

markets in hierarchies organizational and market influences on gender inequality in a state pay system a pivotal issue in sociological theories of labor markets as well as legal and policy debates on pay equity is the relative importance of market and organizational forces in determining pay differences between jobs held predominantly by men and those held predominantly by women this article develops two models of the market organization relationship an administered efficiency model and a bureaucratic politics model quantitative analyses of individual and job level data in a state government pay system indicate that the administered efficiency model does not adequately explain malefemale earnings differences documentary testimonial and interview data strongly suggest the significance of bureaucratic politics in the pay determination process we conclude that market forces influence wage rates but are heavily mediated by organizational factors unrelated to efficiency considerations in the type of organization studied here

limits to environmental bonds abstract bonds have recently been promoted as an alternative tool to control environmental damages particularly in those instances when the innovative activities of a firm have uncertain future impacts under this mechanism a firm would post a bond ex ante forfeiting all or a portion of the bond if its activities harmed environmental resources while the benefits of bonds have been developed there has been little systematic effort to explore their limitations in contrast the labor literature has extensively studied the limits of bonds as a mechanism to prevent worker shirking using insights from this parallel problem this paper explores the limits to environmental bonds focusing on the problems of moral hazard liquidity constraints and legal restrictions each limit offers a challenge to the success of environmental bonds we explore the use of bonds in surface mining and agricultural nonpoint pollution as motivating examples we also consider how other incentive schemes suggested by the labor literature might prove useful in the context of environmental management we consider the labor mechanisms of efficiency wages increasing wage profiles trust funds and rank order tournaments

performance of an agro forestry based payments for environmental services project in mozambique a household level analysis there has been a paucity of research on the impacts of small scale payments for environmental services pes projects in developing countries the aim of this paper is to evaluate the household level impacts of a small scale agro forestry based carbon sequestration project in rural mozambique in 2006 questionnaire based interviews were conducted quarterly of 290 randomly selected households in the buffer zone of the gorongosa national park in mozambique we used the propensity score matching technique to assess the pes project impacts on household cash income consumption expenditure forest resource use and crop yields we found that in contrast to nonparticipant households pes participant households earned more cash income incurred more consumption expenditure collected less forest products and harvested lower quantities of agriculture crops in addition we found through decomposition analysis that there was a differential in pes income both male headed and high income households were being favoured as project benefit recipients future pes projects should focus on a payment scheme that can better ensure the benefit to all the participant households and also pay extra attention on the benefits distribution to the vulnerable households

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

inter industry and occupational wage differentials in italy the vast literture on wage determination in the post war era extensively documents the existence of large and persistent wage differentials among industries and workers of comparable skills this paper addresses the issue of wage dispersion in the context of the italian economy the stability over time of industry relative wages confirme previous results obtained for the other countries a wide class of earings equations is estimated using microdata for the italian manufacturing industry the results provide little evidence in support of the view that wage dispersion can be explained by either unmeasured workers charcteristics or by compensating wage differentials conversely the estimated pattern of industry occupation wage differentials is consistent with the existence of rent sharing mechanisms and fairness considerations

common elements of efficiency wage theories what relevance for developing countries conventional labour economics argues that wages are determined by supply and demand and that the typical firm is a wage taker efficiency wage theories state that wages are endogenous to a firm s own optimising behaviour and that the wage rate determines the labour productivity these theories raise questions regarding the effectiveness of expenditure reducing and expenditure switching adjustment policies this article reviews the theoretical and empirical literature on efficiency wages it examines alternative models highlights the emphasis of empirical research towards industrial countries and points out the need for a test based on the major implications of the theory

work intensity gender and sustainable development abstract is labour intensive employment compatible with social justice and environmental sustainability this paper examines the question of how far small scale intermediate technology based on energy intensive human work which is central to prescriptions for poverty alleviation and sustainable development is compatible with development objectives emphasizing gender equity work intensity is a neglected characteristic of labour but significant in the determination of human well being and in the intra household distribution of welfare the intensification of energy expenditure does not affect men and women in a uniform way and needs to be gender disaggregated in order to reveal potential trade offs between development strategies based on labour intensive growth and the well being of men and women the paper draws upon the experience with treadle pumps for irrigation in bangladesh as an illustration of such potential trade offs and argues for more rigorous analyses of gender divisions of labour which include work intensity in combination with time allocation

evidence on the impact of minimum wage laws in an informal sector domestic workers in south africa what happens when a previously uncovered labor market is regulated we exploit the introduction of a minimum wage in south africa and variation in the intensity of this law to identify increases in wages for domestic workers and no statistically significant effects on employment on the intensive or extensive margins these large partial responses to the law are somewhat surprising given the lack of monitoring and enforcement in this informal sector we interpret these changes as evidence that strong external sanctions are not necessary for new labor legislation to have a significant impact on informal sectors of developing countries at least in the short run

rating the rating agencies anticipating currency crises or debt crises abstract we revisit the question whether sovereign ratings predict financial crises in line with previous studies we find that ratings do not predict currency crises and are instead downgraded ex post however the likelihood of currency crisis and the implied probability of sovereign default are not closely linked in emerging markets post 1994 when debt crises are defined as sovereign distress when spreads are higher than 1000 basis points or 10 percentage points we find that access to international capital markets is reduced by half in addition although sovereign distress events last for typically 5 2 consecutive months they can persist for longer periods up to nine quarters finally lagged ratings and ratings changes including negative outlooks and credit watches are useful in anticipating sovereign distress

equilibrium wage distributions the observation that different firms charge different prices for what appears to be the same commodity or pay different wages for what appears to be equivalent labour has long been explained in economics by a reference to imperfect information this paper is concerned with characterising market equilibrium with imperfect information we do not present a general theory rather we develop in some detail an example of importance in its own right imperfect information in the labour market several properties of our example in particular the existence of equilibria with price wage dispersion unemployment excess supply of labour positive profits multiple equilibria and the nonoptimality or some of all of the equilibria are of more general validity other results may not be this paper is concerned with two kinds of imperfect information a individuals may not know the wage paid in any particular firm or whether there is a vacancy in any particular firm until they apply for a job 1 b there are several characteristics besides the wage rate associated with a job which are important to the individual some like the normal length of a work week become known when the individual applies for the job information about other characteristics e g personalities of colleagues is acquired only gradually there is one important difference between the two kinds of imperfect in

the impact of macroeconomic surprises on spot and forward foreign exchange markets abstract this paper evaluates the effects of surprises in 23 types of macroeconomic announcements on foreign exchange rates and on the forward premium several findings emerge first as in the balance of payment framework announcements that convey a decline in consumer demand increase foreign exchange rates second the ppp hypothesis is rejected in favor of portfolio balance effects in determining exchange rates third the behavior of forward premiums is consistent with covered interest rate parity fourth exchange rates respond to announcements related to consumer demand inflation and interest rates but not to the announcements directly related to the general strength of the economy finally among the news releases considered surprises in the treasury budget trade balance and capacity utilization have the strongest influence in the currency market