Can loss aversion shed light on the deflation puzzle?

This paper argues that the application of loss aversion to wage determination can explain the deflation puzzle: the failure of persistently high unemployment to exert a persistent downward impact on the rate of inflation in money wages. This is an improvement on other theories of the deflation puzzle which simply assume downward wage rigidity, namely the hysteresis theory, the lubrication theory and the efficiency wage theory. The paper presents estimates that support the loss-aversion explanation of the deflation puzzle for both the US and Australia. Furthermore, our estimation approach gives a more precise estimate of the potential rate of unemployment than does the natural rate approach and reveals potential rates of unemployment for the US and Australia at the end of 2017 of about 4 per cent and 3.3 per cent respectively.

Tenaga Kerja Produksi Dan Non Produksi Padaindustri Makanan Di Indonesia (Production and Non Production Workers on Food Industry In Indonesia)

This study aims to determine the role of production and non-production workers in the large and medium-scale food industry in Indonesia and to determine the response of the food industry to the demand for production and non-production labor on changes in several input factors in the production process. The fixed effect model in panel data analysis is performed on secondary data in the form of raw data of the Manufacturing Industry Annual Survey in 2013-2015. Demand for production and non-production labor is obtained through the derivation of the production function of Constant Elasticity of Substitution (CES). The results showed that non-production labor had a positive and significant effect on output in all industrial categories, while production labor had only a positive and significant effect on the overall industry category, non-export oriented and located in regions outside of Java. Production and non-production workers are complementary. Demand for production and non-production labor is affected by changes in wages, respectively. The food industry is labor intensive and applies a high wage system (efficiency wage theory).

Tinjauan Fiqh Muamalah tentang Upah Pemeliharaan Hewan Ternak pada Akad Ijarah (Praktik Gaduh Sapi)

The Ijarah contract is a contract whose object is the exchange of benefits for a certain period, that is the ownership of benefits in return, is the same as selling benefits. Ijarah is divided into two types namely, Ijarah which leads to wage wage (‘ala al-asykhash), which is of service nature as is the case with livestock raising in Kampung Cipondok, District of Cigedug, Garut Regency. The formulation of the problem is: How is the Wage Theory of Livestock in Muamalah Jurisprudence? What is the Practice of Giving Wages to Cattle Keepers with the Ijarah Agreement in Cipondok Village, Cigedug District, Garut Regency? How is the Muamalah Fiqh Analysis on the Wage Practice of Cattle Livestock Maintenance in Cipondok Village, Cigedug District, Garut Regency? This study aims to determine the theory of livestock maintenance wages in Muamlah Jurisprudence, knowing the practice of giving wages to livestock raising, knowing the analysis of Muamalah Jurisprudence on the practice of livestock raising wages in Cipondok Village, Cigedug Subdistrict, Garut Regency, is it in accordance with Islamic Sharia. The research method used was qualitative, interview, literature study, documentation. Based on Muqalah Fiqh analysis in terms of the Ijarah contract, the service of raising cattle in Cipondok Village is said to be illegal if it is associated with Ibn Majah's Hadith because the maintenance of cattle is entitled to wages, because the cattle keeper has fulfilled his obligations as a livestock keeper serviceKeywords: Fiqh Muamalah, Ijarah Covenant, Rearing LivestockAbstrak. Akad Ijarah adalah akad yang objeknya ialah penukaran manfaat untuk masa tertentu, yaitu pemilikan manfaat dengan imbalan, sama dengan menjual manfaat. Ijarah dibagi menjadi dua macam yaitu, Ijarah yang mengarah kepada upah mengupah (‘ala al-asykhash) yaitu bersifat jasa seperti halnya dengan pemeliharaan hewan ternak di Kampung Cipondok Kecamatan Cigedug Kabupaten Garut. Rumusan masalah yaitu: Bagaimana Teori Upah Pemeliharaan Hewan Ternak dalam Fikih Muamalah ? Bagaimana Praktik Pemberian Upah pada Pemelihara Sapi dengan Akad Ijarah di Kampung Cipondok Kecamatan Cigedug Kabupaten Garut ? Bagaimana Analisis Fiqh Muamalah Terhadap Praktik Upah Pemaliharaan Hewan Ternak sapi di Kampung Cipondok Kecamatan Cigedug Kabupaten Garut?Penelitian ini bertujuan untuk mengetahui teori upah pemeliharaan hewan ternak dalam Fikih Muamlah, mengetahui praktik pemberian upah pada pemeliharaan hewan ternak, mengetahui analisis Fikih Muamalah terhadap praktik upah pemeliharaan hewan ternak di Kampung Cipondok Kecamatan Cigedug Kabupaten Garut, apakah sudah sesuai dengan Syari’at Islam. Metode Penelitian yang digunakan adalah menggunakan Kualitatif, Wawancara, Studi Kepustakaan, Dokumentasi.Berdasakan analisis Fiqh Muamalah ditinjau dari akad Ijarah, jasa pemelihara hewan ternak sapi di Kampung Cipondok dikatakan tidak sah jika dikaitkan dengan Hadits Ibnu Majah karena pemeliharaan hewan ternak sapi berhak mendapatkan upah, karena si pemelihara hewan ternak sapi sudah memenuhi kewajibanya sebagai jasa pemelihara hewan ternak sapi.Kata kunci : Fikih Muamalah, Akad Ijarah, Pemeliharaan Hewan Ternak

Living wages across the Pacific Rim: A localised replication study from China

Theoretically, a living wage is a threshold that, once crossed, may transform qualities of work life, including from wage injustice to justice, organizational disengagement to commitment, and life dissatisfaction to satisfaction. Initial studies from New Zealand, South Africa and Thailand have found a threshold-like cusp in the relationship between wages and quality-of-work-life. Our aim in this study was to explore whether we would replicate a cusp in a localized study within China, among 135 employees in Shandong Province, Northern China. Survey data used minimal assumption and exploratory techniques to probe links between levels of employees’ (1) take-home wage and (2) net household income; and (3) perceived wage justice, (4) commitment to employing organization, and (5) life satisfaction. Measures were locally aligned and statistically reliable. Consistent with living wage theory, as a participant’s wage tended to cross a pay threshold of (1) RMB 4–5000 personally per month and (2) RMB 7–8000 household monthly, workers tended to report (3) wage justice (in place of injustice), (4) presence (replacing absence) of organizational commitment, and (5) satisfaction with life (replacing dissatisfaction). Our replication aim was met, but generalizing to any kind of national living wage across China would require a larger and more representative study and sample.

Using Fixed Wages for Management Control: An Intra-Firm Test of the Effect of Relative Compensation on Performance

ABSTRACT Efficiency wage theory predicts employers can elicit better employee performance ex post by paying higher fixed compensation ex ante, relative to the market wage. Relative compensation may thereby constitute an alternative control mechanism when performance-based compensation is difficult to implement. Using proprietary data from 436 hotels in a U.S. lodging chain, we find that relative compensation is positively associated with performance, and additional profits associated with higher compensation exceed the wage increase. Relative compensation has a larger impact on profit when tasks are more complex and a smaller impact on profit, revenue, and quality when chain monitoring is stronger. Finally, the magnitude of the relation between relative compensation and financial performance (nonfinancial) is larger (the same) for employees earning more than the median wage compared with those earning less. Overall, our results are consistent with assertions that higher relative compensation attracts more capable candidates and mitigates shirking, but provide little support for reciprocity. Data Availability: The confidentiality agreement with the firm that provided data for this study precludes revealing its identity and disseminating data.

The efficiency of wages, profit sharing, and stock

Purpose The purpose of this paper is to examine which forms of compensation are more efficient at affecting employee attitudes, thus extending efficiency wage theory from wage-based compensation to profit sharing and stock-based compensation. Design/methodology/approach Three models of efficiency wage theory were tested: shirking, turnover and gift exchange. The effects of those three modes of compensation (wages, profit sharing and stock) were contrasted for the three models of efficiency wage theory. Findings The findings were that raising wages is the most efficient form of compensation in the turnover and shirking models, while in the gift exchange model profit sharing and stock-based compensation may function like efficiency wages. Originality/value This is the first study of this particular issue.

Wage theories: past and present

The authors study the essence and evolution of views on such an important economic category as wages, as well as the main modern directions of theories of wages. Salary, which is the price of labor, is considered the most important source income of the population, and its level is determined by the action of certain forces on the labor market, the interaction of demand and supply of labor. When a market economy is a commodity, labor, respectively, acquires properties corresponding to the product, such as, for example, the dependence of its price on correlation of supply and demand for certain professions and specialties, and, as a result, this price may be unstable. The first economist to implement a systematic interpretation of wage theory in the framework of a clear classification of income in a capitalist society, was A. Smith, although various theories were put forward before him in this field, but they had a comprehensive character. To date, there are various views, methods, tools studies in the framework of the theory of employment, presented by various directions and schools, the main ones are: neoclassical school, Keynesian school, monetary school, institutional and sociological school, the concept of a flexible market. The competitiveness of national economies in the global market is determined by greater part of the ability to innovate and perceive the latest technological achievements based on human, intellectual, social capital, that is, quality labor force and employee motivation. Raising wages and the quality of education, modernization based on new technologies, etc. considered as the main factors in the growth of productivity of human capital.

The Paradigm of Proper Wage for Home Base Worker in Indonesian Labor System Based on Fair Wage Theory

The low appreciation and recognition for workers, particularly home base worker in the labor system in several regions of Indonesia has caused ignorance on their well-being. Their condition requires the attention from all parties including businesspeople, government (executive and legislative), and other social institutions. Without the support of other related parties, significant changes on the welfare of home base worker are impossible to take effect. There are several factors that cause the low welfare of home base worker in Indonesia, one of which is wages they receive, far lower from provincial, municipal, and sectoral proper wage standards. Fair wage is defined as equitable wage, in that equitable means consistent, impartial, and unbiased. Wage is closely related to worker’s proper life. Standardization of waging system is expected to relieve home base worker from job stress and maintain their socio-economic stability for sustainable development. This study uses sociolegal method, which discusses phenomena in the society, developed and institutionalized into legislations in a coherent rule of law. Using statute, conceptual, and case approach, the prescriptive analysis of this study uses fair wage theory as a guideline and parameter of proper wage for housemaids. In order to create welfare for home base worker in Indonesia, particularly regarding wage, regulations that govern minimum wage are required. For housemaids, wage is a source of income to be used for fulfilling their daily needs properly and equitably to create prosperous society according to Indonesian constitutional mandate based on the nation’s philosophy that had been stated as the foundation of the state, which is Pancasila.

Wage–Productivity Relationship in Indian Manufacturing Industries: Evidences from State-level Panel Data

Indian manufacturing industries have experienced the major effects of economic reforms. Since the effect of any policy is ultimately transferred to workers, this article is an attempt to determine the extent to which labour productivity and wages are inter-related in manufacturing industries. The study uses state-level panel data of manufacturing industries and empirically tests the relevance of marginal productivity theory of wages and efficiency wage theory. After confirming the stationarity of the series, various empirical tests such as cointegration, vector error correction mechanism and Granger causality are applied to check the long-run equilibrium relationship between wage growth and productivity growth. The study finds a divergence between wages and productivity in India as well as in the states. The empirical analysis confirms the existence of long-run relationship between the two variables and finds efficiency wage theory to be more appropriate as its long-term disequilibrium correcting process is quicker as compared to the marginal productivity theory. The study suggests for having a skill intensity matching with capital intensity. Appropriate level of skill and training among the workers will, on the one hand, increase their bargaining strength for more compensation, and on the other hand, will encourage them to produce more. JEL: J31, J24, O30, F66, L66