The Role of Wage Formation in Empirical Macroeconometric Models

The specification of model equations for nominal wage setting has important implications for the properties of macroeconometric models and requires system thinking and multiple equation modeling. The main models classes are the Phillips curve model (PCM), the wage–price equilibrium correction model (WP-ECM), and the New Keynesian Phillips curve (NKPCM). The PCM was included in the macroeconometric models of the 1960s. The WP‑ECM arrived in the late 1980s. The NKPCM is central in dynamic stochastic general equilibrium models (DSGEs). The three model classes can be interpreted as different specifications of the system of stochastic difference equations that define the supply side of a medium-term macroeconometric model. This calls for an appraisal of the different wage models, in particular in relation to the concept of the non-accelerating inflation rate of unemployment (NAIRU, or natural rate of unemployment), and of the methods and research strategies used. The construction of macroeconomic model used to be based on the combination of theoretical and practical skills in economic modeling. Wage formation was viewed as being forged between the forces of markets and national institutions. In the age of DSGE models, macroeconomics has become more of a theoretical discipline. Nevertheless, producers of DSGE models make use of hybrid forms if an initial theoretical specification fails to meet a benchmark for acceptable data fit. A common ground therefore exists between the NKPC, WP‑ECM, and PCM, and it is feasible to compare the model types empirically.

FORMULA UPAH BAGI PENGEMUDI TRUK BAHAN BAKAR MINYAK

ABSTRACT This study tries to offer a formula for calculating a decent wage for fuel truck drivers, especially those transporting fuel oil. The meaning of the word decent is related to meeting the needs of a reasonable life, considerations of driver productivity and safety as well as compliance with applicable wage provisions. The data is based on the monthly salary report at XYZ Company, the results of interviews, and field observations. The multiple linear regression method is used to determine what factors affect the number of wages and the value of the coefficient generated from each variable/factor as the basis for formulating the formula. Related literature review and analysis of applicable wage provisions (wages and overtime pay) are used to strengthen the variables raised in the wage formula. The results showed that several variables did not have a significant effect on wage formation, and the resulting calculation model was able to produce a decent wage level. Keywords: wage formula, minimum wage provisions, overtime pay, fuel truck driver.

Cointegration and Structure in Norwegian Wage–Price Dynamics

Wage coordination plays an important role in macroeconomic stabilization. Pattern wage bargaining systems have been common in Europe, but in different forms, and with different degrees of success in terms of actual coordination reached. We focus on wage formation in Norway, a small open economy, where it is custom to regard the manufacturing industry as the wage leader. We estimate a model of wage formation in manufacturing and in two other sectors. Deciding cointegration rank is an important step in the analysis, economically as well statistically. In combination with simultaneous equation modelling, the cointegration analysis provides evidence that collective wage negotiations in manufacturing have defined wage norms for the rest of the economy over the period 1980(1)–2014(4).

The Cost of Job Loss

This article identifies an equilibrium theory of wage formation and endogenous quit turnover in a labour market with on-the-job search, where risk averse workers accumulate human capital through learning-by-doing and lose skills while unemployed. Optimal contracting implies the wage paid increases with experience and tenure. Indirect inference using German data determines the deep parameters of the model. The estimated model not only reproduces the large and persistent fall in wages and earnings following job loss, a new structural decomposition finds foregone human capital accumulation (while unemployed) is the worker’s major cost of job loss.

FORMATION OF COMPENSATION POLICY IN MODERN CONDITIONS OF NATIONAL ECONOMY DEVELOPMENT

Introduction. The development of the national economy requires modern enterprises to build and implement a new compensation policy through innovative approaches to the formation of wages and incentive mechanism. Goal is the theoretical substantiation of the essence of compensation policy and the development of directions of its formation on the basis of the organization of wages and motivational mechanism, regulation at the state and contractual levels, the level of the enterprise. Methods. The article uses a monographic method, analysis, method of generalization of scientific approaches. Results. The article provides a theoretical analysis of scientific thought on the interpretation of the concepts of "compensation" and "compensation policy". The author's approach to the definition of "compensation policy" is formed. The study of the essence of compensation policy allows to interpret it as an activity at different levels of government (state, industry, regional, enterprise and organization, interpersonal) to form the conditions of remuneration and motivational mechanism to achieve strategic goals of social and labor relations. The foreign experience of the organization of the compensation system is considered. The influence of compensation policy on the competitiveness of personnel and the enterprise as a whole is determined. The directions of wage formation at the state and contractual levels as an important component of compensation policy in modern conditions of national economy development are developed. Conclusions. The study allows to generalize scientific approaches to the concept of "compensation policy" and suggest directions for its development, which will help ensure the competitiveness of staff, enterprises, the region, the national economy as a whole.

Regional Differentiation of Labour Productivity and Distribution of Value Added

The article deals with the issue of the distribution of value added in the course of wage formation. Improvement of the efficiency of social production in Russia is associated with the need for innovative, technological changes that should lead to an increase in labor productivity. The Russian Federation is not a country with a high level of production efficiency. Frequently, this very fact is the reason for justifying the low wages in the country. The paradox of the existence of the category of working citizens — “the working poor” — in the country is based, among other things, on a low level of guaranteed incomes — the minimum wage. The minimum wage until May 1, 2018 did not meet the minimum wage. Neither in economic theory nor in the practice of national economies does there exist an “optimal” correlation of the distribution of value added between employees and owners. Yet, the ratio of the minimum wage to the value added rather vividly characterizes the fairness of the current systems of relations in the labour market, this phenomenon being termed “the freedom of work” by a number of experts. The size of the average wage in the region depends on the presence of high value added industries in the territory, i.e. on industry specialization. The established practice in Russia is as follows: the higher the level of average wage is, the lower the share of value added per wage is. Regions without specialization in high value-added economic activities will more realistically assess the level of socio-economic development, basing their strategic development on industries that form more equitable wage systems and equalize the average wage

“Cost of getting older”: Wages of older age workers

The article focuses on the wage formation of workers in the pre-retirement and retirement age in Russia. For this, the authors analyze age-wage profile and wage differentiation within and between age groups. The study exploits the Sample Survey of Household Incomes and Participation in Social Programs for 2016 which has a large sample and covers all groups of employed in the economy . It measures wages payed during the year 2015, thus allowing estimates for annual as well as hourly wages. Multiple previous studies across developed countries come to the consensus that wages tend to grow over age until late in life, though with decreasing pace. However, this pattern does not show up in Russian data. Earnings peak early in working life and then decline monotonically. By their pre-retirement age, Russian workers find themselves on the declining wage trend. Though this deviation from stylized facts has already been noted in the literature, we explore it using the new and more comprehensive dataset. In addition, our analysis deals with annual earnings as well as hourly wage rates, and it explores trends in hours worked over age. The findings suggest that wage differentiation tends to be higher among older age workers reflecting stronger selection into employment with age. Given the forecast of changes in the age composition of employment by 2025—2030 and assuming the stability of the age-wage profile, we can expect non-trivial reallocation of the aggregate wage fund to the benefit of the middle age group of workers while the old age group is likely be unaffected.