Institutional variation in occupational licensing and its consequences for wages. A distributional analysis for the USA and Germany.

Licensing is a central institution in labor markets worldwide. Using the example of the USA and Germany, this study shows strong institutional differences between licensing systems that are of great importance for wage distribution but are not yet part of the debate about the economic consequences of licensing. The two countries differ significantly in terms of the rules of entry into occupational labor markets, the competencies of occupational boards, and the combination of licensing with price regulation. I claim that licensing systems change the bargaining power and bargaining scope for wages, which leads to different wage premiums across the distribution and different consequences for wage inequality. Using novel license data, I empirically show that licensing is associated with the largest relative wage premium for German low-wage and American middle-wage workers. In addition, the USA system leads to greater dispersion among licensed workers and to higher wage inequality overall. In contrast, the German system compresses wages for licensed workers, thereby reducing overall wage inequality.

Marcellus Shale Gas Boom and Forestry Employment: Evidence from West Virginia

Advancement in drilling technology has increased natural gas extraction activities from the Marcellus shale deposit resulting in a shale gas boom in many regions, including West Virginia. This boom has created a significant labor demand shock to local economies experiencing the boom. A number of studies have shown that a shale gas boom directly increases employment and the income of those working in the industry. However, the boom can also have an adverse impact on other sectors through the resource movement effect and intersector labor mobility, pulling workers away from a related sector like forestry. Thus, an econometric model of employment in the forestry sector was developed to investigate the impact of the Marcellus shale gas boom in West Virginia. There is evidence of a labor movement effect with forestry employment negatively affected by the Marcellus shale boom. Specifically, the overall marginal effect of the shale boom on forestry employment is approximately 435 fewer jobs. However, the extent of the decline is slightly moderated by a higher relative wage between gas and forestry, perhaps suggesting diminishing returns and overall slack in the local labor market. Study Implications Although a Marcellus shale gas boom directly increases employment and the income of those working in that industry, it can have an adverse impact on other sectors by pulling workers away from a related sector like forestry. This study showed that employment in the West Virginia forestry sector was negatively affected by the shale gas boom. An important policy issue is how to manage the cyclical nature of shale gas booms and the negative impacts on other industries with long-term growth potential, like the forestry sector. This sector does not suffer through boom-and-bust cycles, making it important for long-term economic stability.

GRAHAM’S THEORY OF INTERNATIONAL VALUES REVISITED: A RICARDIAN TRADE MODEL WITH LINK COMMODITIES

Frank D. Graham (1890–1949) presented an innovative multi-country, multi-commodity trade model that attached great importance to link commodities and quantity adjustments, not perfect specializations and price adjustments as emphasized by John Stuart Mill and Alfred Marshall. However, due to some shortcomings, this model was not sufficiently understood and has been forgotten. This study reconstructs Graham’s theory of international values by rectifying the shortcomings. Through this reconstruction, the following is clarified. First, in multi-country, multi-commodity trade models, the existence of link commodities is general and perfect specializations seldom appear; therefore, quantity adjustments are normally performed in the face of demand shifts. Second, notwithstanding unchanging sectoral productivity at a national level, national wage rates can vary greatly according to the patterns of the international division of labor. Third, while the domestic relative wage rate increases with an increase in a home country’s productivity of link commodities, it does not increase with an increase in the productivity of commodities produced only in the home country.

Graham’s Theory of International Values Revisited: A Ricardian Trade Model with Link Commodities

F. D. Graham (1890–1949) presented an innovative multi-country, multi-commodity trade model that attached great importance to link commodities and quantity adjustments, not perfect specializations and price adjustments as emphasized by J. S. Mill and A. Marshall. However, due of some shortcomings, this model was not sufficiently understood and has been forgotten. This study reconstructs Graham’s theory of international values by rectifying the shortcomings. Through this reconstruction, the following is clarified. First, in multi-country, multi-commodity trade models, the existence of link commodities is general and perfect specializations seldom appear; therefore, quantity adjustments are normally performed in the face of demand shifts. Second, notwithstanding unchanging sectoral productivity at a national level, national wage rates can vary greatly according to the patterns of the international division of labor. Third, while the domestic relative wage rate increases with an increase in a home country’s productivity of link commodities, it does not increase with an increase in the productivity of commodities produced only in the home country.

Determinants of Job Seekers’ Decision for Migration; A Study in Big Cities in Indonesia

This study aims to analyze the influence of pull and push factors of job seekers to migrate to cities classified as big cities in Indonesia. The research variables consisted of economic infrastructure, employment opportunities, security levels, and differences in wage levels as pull factors. Meanwhile, the variables of gender, physical condition of the area, parents' occupation, migration culture, work opportunities in the place of origin served as push factors. The destination cities of migration were cities with the classification of big cities in Indonesia, which included Medan, Jakarta and Surabaya. The study population was prospective job seekers from the city of Padang, presented by students of Padang State University and Andalas University in their last semester (semester eight). Samples of each University were 4 faculties, namely, Faculty of Economics, Faculty of Social Sciences, Faculty of Engineering and Faculty Science and Mathematic.To determine the student sample size is based on a purposive sampling technique by assigning as many as 120 people in each faculty so that a total sample of 960 people, that is, around 460 respondents or 320 people for each migration destination cityparticipated in answering the questionnaires. The analytical technique followed the Logistic Regression Model. The research results showthat (a) economic infrastructure, level of security and comfort, gender, and parents' occupations were factors that influenced the decision of job seekers to emigrate from Padang City to Surabaya City; (b) employment opportunities, relative wage levels, physical condition of the area of origin are factors that influenced the tendency of job seekers to emigrate from Padang City to Medan City; (c) while the physical condition of the place of origin, parental education, migration culture and employment opportunities in the area of origin were factors that influenced the tendency of job seekers to emigrate to Jakarta. Furthermore, the cities of Jakarta and Surabaya tended to have relatively strong pull and push factors for prospective jobseekers to migrate while Medan has only relatively strong pull factors compared to the push factors.

Dual-Labor Market and Unemployment Compensation

This paper discusses the impact of unemployment compensation on the employment and wages of regular and non-regular labor in a dual-labor market. The model in this paper assumes an effective demand constraint and an imperfectly competitive market. The results obtained are as follows. An increase in unemployment compensation increases the wages of regular labor to maintain its productivity. However, this temporarily decreases the employment of regular labor, so that the productivity and wages of non-regular labor decrease. The result is an increase in the relative wage rate of regular labor and the relative amount of non-regular labor employed. This result is independent of any economic regime. In terms of the impact on employment volume, the existence of two regimes, one wage-driven and one profit-driven, is confirmed. However, the effect on employment is weaker if unemployment compensation is financed by taxing profits.

Unskilled Migration, Child labor and Human Capital Accumulation of Children in the Presence of Parental Absenteeism

Temporary unskilled migration and the remittancesit generateshavethe potential to reduce child labor and improve educational outcomes in developing countries. However, recent literature points towards the adverse impact of the parental absenteeism on children left behind. We build a theoretical model to explore the joint impact of remittances and parental absenteeism on child labor and human capital formation of children left behind in the context of unskilled workers’ migration. We find threshold conditions for the relative wage of source to destination countriesbeyond which unskilled migration helps in reducing child labor and increasing human capital. Moreover, the threshold is endogenous and depends on the sensitivity of human capital formation to parental absenteeism relative to the child’s time spent on acquiring human capital. In a special case when the former is equal to the latter, the wages in the destination country should at least be twice as much as in the source country to have a detrimental (promoting) impact on child labor (human capital formation). Since the importance of parental absenteeism would depend on a variety of sociocultural factors such as marriage, presence of extended families, religious communities, and social networks, there will be heterogeneity in the impact of unskilled migration.

Wage Differentials, Bargaining Protocols, and Trade Unionism in Mid-Twentieth-Century American Labor Markets

Income inequality in the United States has been lower in periods when trade unionism has been strong. Using observations on wages by occupation, by geography, and by gender in collective bargaining contracts from the 1940s to the 1970s, patterns in movements of wage differentials are revealed. As wages increased, some contracts maintained relative wage differentials constant, some maintained absolute differences in wages constant, others combined these two patterns, and some did not reveal an obvious pattern. The patterns persisted even as price inflation increased in the 1970s. The dominant pattern implies a reduction in inequality as usually measured.

Cohort risk sharing in Pakistan: Relative wage and consumption movements over time

This study analyzes to which extent the distribution of consumption is affected by the relative wage movement among birth cohorts and education groups. Our empirical design is based on a synthetic panel constructed using repeated cross-sectional data from “Household Integrated Economic Survey of Pakistan.” We limit our analysis to persons aged between 26 to 50 years at the time of survey. To see the evolution of change in income and consumption we measured growth by taking 6, 8- and 10-years’ difference respectively. The findings ascertained there is limited risk-sharing across cohort-education groups in Pakistan, but the measured extent of risk-sharing increases over longer horizons. Furthermore, we observe relatively higher consumption smoothing among the less educated people over the period of ten years. In the university education group, results reveal less consumption smoothing in the shorter, six- and eight-year time periods. The study concludes that the relative risk-sharing over a decade is better in Pakistan than the shorter growth horizon.

Lowering Standards to Wed? Spouse Quality, Marriage, and Labor Market Responses to the Gender Wage Gap

This paper examines the effect of the female-to-male wage ratio, “relative wage,” on women's spouse quality, marriage, and labor supply over three decades. Exploiting task-based demand shifts as a shock to relative pay, I find that a higher relative wage (i) increases the quality of women's mates, as measured by higher spousal education, (ii) reduces marriage without substitution to cohabitation, and (iii) raises women's hours of work. These effects are consistent with a model in which a higher relative wage increases the minimum non-pecuniary benefits (“quality”) women require from a spouse and therefore reduce marriage among low-quality husbands.