A Relationship Between the Factor Indivisibility and the Output Elasticity of the Indivisible Factor

The paper puts forth a notion and derives a special type of production function where labour is an indivisible factor and is in the integer space. Thus, Newtonian calculus is not an appropriate method of deriving the marginal value because limit point does not exist. This shows that indivisibility determines the output elasticity. In the first part, the paper propounds a notion regarding how indivisibility determines curvature of the production function. In the second part, the paper incorporates the findings within a production function and derives a new type accordingly. Moreover, it formally derives the standard wage equation considering all the entitlements of labour, namely (a) normal wages, (b) interest and (c) rent of ability. So far, no such mathematical proof is there to support this wage composition. This paper, for the first time, derives this wage equation considering indivisibility of labour. JEL Classifications: J23, J24, J31, D24, C61, E24, L8

The persistence of apartheid regional wage disparities in South Africa

In this article, we use a new economic geography (NEG) model to estimate the extent to which the persistence in apartheid regional wage disparities in South Africa is an outcome of economic forces such as market access. We estimate a structural wage equation derived directly from the NEG theory for 354 regions over the period 1996 to 2011. We find support for an augmented NEG model in explaining regional wage disparities across regions in South Africa, although the market access effects are highly localised in view of high distance coefficients. We also find, even after controlling for NEG and other region-specific characteristics, a persistent wage deficit in the former homelands, where under apartheid black South Africans were forcefully relocated according to their ethnic groups. Average wages of workers in homelands remained approximately 17% lower than predicted between 1996 and 2011, despite the reintegration of these regions into South Africa and the implementation of regional policies after the end of apartheid.

The wage premium from foreign language skills

The globalisation of labour markets makes language skills one of the key competences required by employers nowadays. The purpose of this paper is to estimate the wage premium from the foreign language skills earned by Poles. Poles seem to be a good case study, because the Polish language is not used for international communication and as many as 58% of Poles command at least one foreign language. I use data from three waves (2012–2014) of the Human Capital Balance survey with a pooled sample of about 35,000 individuals. I estimate a wage equation with the Heckman correction for selection to employment and I check for robustness with propensity score matching. I find that the advanced command of a foreign language yields a wage premium of 11% on average. Interestingly, I find a much higher wage premium from proficiency in Spanish (32%), French (22%) or Italian (15%) than from proficiency in English (11%) or German (12%).

Existence of a Short-Run Equilibrium of the Dixit-Stiglitz-Krugman Model

Each short-run equilibrium of the Dixit-Stiglitz-Krugman model is defined as a solution to the wage equation when the distributions of workers and farmers are given functions. We extend the discrete nonlinear operator contained in the wage equation as a set-valued operator. Applying the Kakutani fixed-point theorem to the set-valued operator, under the most general assumptions, we prove that the model has a short-run equilibrium.

THE WAGE EFFECTS OF OVER-EDUCATION AMONG YOUNG STEM GRADUATES

Using data from the 2010 Graduates Occupational Mobility Survey, this paper examines the wage effects of over-education (OE) among graduates in science, technology, engineering, and mathematics (STEM) disciplines at the early stage of their careers. In the pooled OLS analysis, the negative correlation between OE and wages remains even if we were to estimate an augmented specification where OE is disaggregated according to perceived skill mismatch. However, the pooled OLS estimates are changed dramatically when we control for unobserved individual heterogeneity (i.e., ability) using the panel FE estimation procedure; namely, reduced coefficients in the wage equation compared to pooled OLS estimation.

Existence and Uniqueness of Solutions to the Wage Equation of Dixit-Stiglitz-Krugman Model with No Restriction on Transport Costs

In spatial economics, the distribution of wages is described by a solution to the wage equation of Dixit-Stiglitz-Krugman model. The wage equation is a discrete equation that has a double nonlinear singular structure in the sense that the equation contains a discrete nonlinear operator whose kernel itself is expressed by another discrete nonlinear operator with a singularity. In this article, no restrictions are imposed on the maximum of transport costs of the model and on the number of regions where economic activities are conducted. Applying Brouwer fixed point theorem to this discrete double nonlinear singular operator, we prove sufficient conditions for the wage equation to have a solution and a unique one.