scholarly journals On the Very Idea of an Efficient Wage

2018 ◽  
Vol 11 (2) ◽  
pp. 85-104
Author(s):  
Peter Dietsch
Keyword(s):  
Social Norms ◽  
Labour Supply ◽  
Market Competition ◽  
Reservation Wage ◽  
Economic Rent ◽  
Trade Off ◽  
Reservation Wages ◽  
Income Inequalities ◽  
Constitutive Element

This paper argues that the standard characterisation of the equity-efficiency trade-off as set out in this symposium by Joe Heath overstates the tension between these two values. The reason lies in the fact that economists tend to take individual labour supply preferences as given, which leads to a superficial analysis of the concepts of reservation wage and of economic rent. The paper suggests that we should instead think of reservation wages as variable and as influenced by social norms. Social norms play a double role in this context. First, they represent a constitutive element of market competition; second, they can be a determinant of income inequalities. From this perspective, a certain share of high reservation wages sustained by contingent inegalitarian social norms should count as economic rent. The last section of the paper strengthens this conclusion further by drawing a parallel between expensive tastes in consumption and a certain class of high reservation wages. To the extent that the latter are underpinned by social norms rather than efficiency considerations, not paying them is both just and efficient.

Paradoxes of reservation wage setting in the Russian labor market. Part I

2016 ◽  
pp. 5-27
Author(s):  
R. Kapeliushnikov ◽  
A. Lukyanova
Keyword(s):  
Labor Market ◽  
Empirical Studies ◽  
Reservation Wage ◽  
Wage Setting ◽  
Reservation Wages ◽  
Monitoring Survey ◽  
Main Determinants ◽  
Subjective Estimates ◽  
Objective Indicators

Using panel data from the Russian Longitudinal Monitoring Survey for 2006-2014, the paper investigates reservation wages setting in the Russian labor market. The sample includes non-employed individuals wishing to get a job (both searchers and non-searchers). The first part of the paper provides a survey of previous empirical studies, describes data and analyzes subjective estimates of reservation wages in comparison with various objective indicators of actual wages. The analysis shows that wage aspirations of the majority of Russian non-employed individuals are overstated. However their wage expectations are rather flexible and decrease rapidly as the search continues that prevents high long-term unemployment. The second part of the paper provides an econometric analysis of main determinants of reservation wage and its impact on probability of re-employment and wages on searchers’ new jobs.

Labour-Supply Behaviour

2021 ◽  
pp. 115-149
Author(s):  
Cathal O'Donoghue
Keyword(s):  
Fiscal Policy ◽  
Labour Supply ◽  
Choice Model ◽  
Policy Instruments ◽  
Revealed Preference ◽  
Behavioural Response ◽  
Trade Off ◽  
Measurement Issues ◽  
Labour Participation ◽  
Microsimulation Models

In the preceding chapters, the focus was on simulating policies that aim to reduce poverty, generate revenue, or redistribute resources. However, many public policies also try to incentivize behaviour, such as those to improve labour participation or supply, or to change behaviours in relation to savings or pollution. Social- and fiscal-policy instruments face a fundamental trade-off. An instrument that performs well from an income-maintenance perspective may have unintended behavioural consequences. This chapter considers the structure of instruments that have an explicit goal to improve behavioural response, particularly focusing on in-work benefits. The chapter also describes how to use a microsimulation mode to simulate the inputs required for the estimation of a behavioural-econometric model, and then estimates a revealed-preference-choice model. The chapter then describes a method often used in microsimulation models to calibrate choice models for simulation purposes. In terms of measurement issues related to the behavioural analysis, we describe the design and use of replacement rates. The chapter concludes by undertaking a simulation of the introduction of a change in in-work benefits.

scholarly journals Media Bias in China

2018 ◽  
Vol 108 (9) ◽  
pp. 2442-2476 ◽  
Author(s):  
Bei Qin ◽  
David Strömberg ◽  
Yanhui Wu
Keyword(s):  
Market Competition ◽  
Media Bias ◽  
The Political ◽  
Bottom Up ◽  
Trade Off ◽  
Political Bias ◽  
Product Proliferation

This paper examines whether and how market competition affected the political bias of government-owned newspapers in China from 1981 to 2011. We measure media bias based on coverage of government mouthpiece content ( propaganda) relative to commercial content. We first find that a reform that forced newspaper exits (reduced competition) affected media bias by increasing product specialization, with some papers focusing on propaganda and others on commercial content. Second, lower-level governments produce less-biased content and launch commercial newspapers earlier, eroding higher-level governments’ political goals. Third, bottom-up competition intensifies the politico-economic trade-off, leading to product proliferation and less audience exposure to propaganda. (JEL D72, L31, L82, O14, O17, P26, P31)

Labour market dualism drives inequality in Japan

2018 ◽  
Keyword(s):  
Income Inequality ◽  
Labour Market ◽  
Older Workers ◽  
Market Competition ◽  
Social Equality ◽  
Content Type ◽  
Income Inequalities ◽  
Post War ◽  
Rich Countries

Subject Inequality in Japan. Significance Since the early 1980s, income inequality has been rising in Japan, as in other rich countries. Wartime physical destruction and post-war financial collapse had wiped out the wealth of the richest Japanese, while 'miracle' growth raised the fortunes of most others, creating widespread economic and social equality. That egalitarian experience did not last. Recent OECD inequality comparisons place Japan in the middle of the pack. Impacts Policies to increase market competition would not only drive out weaker firms, but also reduce income inequalities. Increased automation will increase income inequality for women, non-regular workers and the low skilled. Redistribution lowers income inequality for older workers but not for others, making a case for more comprehensive reforms.

Optimal Contracting Model in a Social Environment and Trust-Related Psychological Costs

2013 ◽  
Vol 13 (1) ◽  
pp. 271-284 ◽  
Author(s):  
Suren Basov ◽  
M. Ishaq Bhatti
Keyword(s):  
Social Norms ◽  
Social Environment ◽  
Point Of View ◽  
The Other ◽  
Trade Off ◽  
Optimal Contracting ◽  
The Social ◽  
The One ◽  
Contracting Model

AbstractMost research in contract theory concentrated on the role of incentives in shaping individual behavior. Recent research suggests that social norms also play an important role. From a point of view of a mechanism designer (a principal, a government, and a bank), responsiveness of an agent to the social norms is both a blessing and a curse. On the one hand, it provides the designer with extra instruments, while on the other it puts restrictions on how these new and the more conventional instruments can be used. The main objective of this paper is to investigate this trade-off and study how it shapes different contracts observed in the real world. We consider a model in which agent’s cost of cheating is triggered by the principal’s show of trust. We call such behavior a norm of honesty and trust and show that it drives incentives to be either low powerful or high powerful, eliminating contracts with medium powerful incentives.

scholarly journals Social Norms and Legal Design

2019 ◽  
Author(s):  
Bruno Deffains ◽  
Claude Fluet
Keyword(s):  
Social Norms ◽  
Codes Of Conduct ◽  
Trade Off ◽  
Legal Standards ◽  
Regulatory Policies ◽  
General Law ◽  
Societal Norms ◽  
Legal Obligations ◽  
Professional Codes ◽  
The Law

Abstract We consider legal obligations against a background of social norms, for example, societal norms, professional codes of conduct, or business standards. Violations of the law trigger reputational sanctions insofar as they signal nonadherence to underlying norms, raising the issue of the design of offenses. We show that the law generally ought to follow social norms or be stricter than them. When society is only concerned with the trade-off between deterrence and enforcement costs, legal standards defining offenses should align with underlying norms so long as the latter are not too deficient. When providing productive information to third parties is also a concern, legal standards should either align with underlying norms with fines that trade off deterrence against the provision of information; or legal standards should be more demanding and enforced with purely symbolic sanctions, for example, public reprimands. Our analysis has implications for general law enforcement and regulatory policies. (JEL: D8, K4, Z13)

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