"Minimálbér-paradoxon" versenyzői munkaerőpiacon? ("Minimum-wage paradox" in a competitive labour market? Lessons from an experimental line of thought)

A versenyzői munkaerőpiac hagyományos kereslet-kínálati modellje az egyensúlyi bérszintet meghaladó minimálbér következményeként az egyensúlyi bérszint mellettinél alacsonyabb foglalkoztatást jósol; minél magasabb a minimálbér, annál alacsonyabbat. Empirikus vizsgálatok szerint ugyanakkor a minimálbér-emelés nem feltétlenül csökkenti a foglalkoztatást - ezt nevezik minimálbér-paradoxonnak -, ami legkézenfekvőbben a munkáltatók munkaerő-piaci monopszonerejével látszik magyarázhatónak. Ezzel szemben az a gondolatkísérlet, amelyről ez a cikk beszámol, általánosabb érvényű, versenyzői munkaerőpiacot feltételező magyarázat kidolgozására irányul. / === / In the conventional textbook demand/supply model of competitive labour markets, the introduction of a minimum wage above market-clearing level must reduce employment. Empirical findings suggest, however, that this may not always be the case, a finding most readily explained by monopsonistic competition in the labour market. The experimental line of thought reported here explores an alternative root, interpreting the "minimum-wage paradox" as the outcome of a competitive labour market that displays friction.

A magyar minimálbér-szabályozás és hatása a foglalkoztatásra, különösen 2000-től napjainkig (Minimum-wage regulation in Hungary and its impact on employment, with particular respect to the 2000’s)

Noha az 1990-es évek első felében felbomlott az akadémiai közgazdászok sok évtizeden át örök érvényűnek hitt közmegegyezése a minimálbér szükségképpen negatív foglalkoztatási hatásáról, a túlságosan magas minimálbért minden közgazdász foglalkoztatáscsökkentő hatásúnak jósolja. Tanulmányunkban a magyar minimálbér-szabályozást e hatás szempontjából vizsgáljuk és értékeljük. / === / Although the long-held view of an unambiguously negative employment effect of a binding minimum wage was challenged by empirical findings in the early 1990’s, it is unanimously predicted that if the minimum wage is set too high it will bring about adverse employment effects. Accordingly, our study starts from an evaluation of the magnitude of the Hungarian minimum wage, i.e., of how it relates to minimum wage rates elsewhere, and of how it has developed through time. Next we inspect the main features that characterize the Hungarian system of minimum wage regulation. Theoretical views on the potential employment effect of minimum wage regulation are then surveyed and contrasted to empirical findings. The study concludes by policy recommendations. To sum up the main strand of arguments, we try to demonstrate that even though Hungary’s minimum wage, if assessed by its ratio to average and/or median full-time earnings, does not appear particularly high by international standards, it might rightly be regarded as unreasonably high in light of Hungary’s excessively low relative rate of employment among the least schooled. This diagnose should become particularly evident once one takes into account that, in sharp contrast to established rules elsewhere, a significantly higher wage floor is in effect for those with lower secondary schooling. Abolition of this legally guaranteed premium over the minimum wage as well as more moderation in minimum wage adjustments are thus highly recommended.

A minimálbér költségvetési hatásai = The budgetary effects of the minimum wage

A minimálbér-emelés a munkapiacon közvetlenül hat a keresletre és a kínálatra. Közvetett hatásai azonban túlmutatnak a munkapiacon, ezért azokat egy makromodell keretei között elemezzük. A makromodellben háromféle munkafajta és tíz ágazat van; az egyes ágazatok az árképzésükben és az adó- és járulékelkerülésük szerkezetében különböznek. A minimálbér-emelés munkapiaci feszültséget generál: csökkenti a foglalkoztatást a szakképzetlenek körében. Mivel az árszint az átlagbérnél gyorsabban nő, és az aggregált foglalkoztatás is csökken, így csökken a reálfogyasztás. A vállalatok profitja és beruházása csökken, ugyanakkor a vállalati profit csökkenése már csekély mértékű adóelkerülés-növeléssel is kiegyensúlyozható. A minimálbér-emelés hatására nőnek ugyan az adóbevételek, viszont a kiadások nagyobb mértékben nőnek, így általában romlik az egyenleg. Aki tehát a minimálbér emelését követeli, annak a felelős döntés során számolnia kell ezekkel a következményekkel. _____ Raising the minimum wage on the labour market has direct effects on supply and demand. But its indirect effects extend beyond the labour market. They are analysed here with a macro model that distinguishes three types of work and ten industries, whose firms differ in their price structures and the degrees to which tax and social-insurance payments are avoided. Raising the minimum wage generates tension on the labour market and reduces employment of the unskilled. Since the price level rises faster than average pay and aggregate employment falls, so does real consumption. The firms’ profits and investment decline, but the former can be offset even by a small increase in tax avoidance. Although the rise in the minimum wage boosts tax revenues, budgetary expenditures rise more and the balance deteriorates. Advocates of a higher minimum wage need to consider these consequences if they are to reach a responsible decision.

Tennessee trabajadores: Global wage arbitrage comes home to roost

In the 1980s, the American meat industry began restructuring both its domestic production methods and the distribution of its processing facilities. Many meat and poultry processing facilities have since been relocated into small rural communities. The red meat industry was once highly-paid and unionized, but now work in both meat and poultry processing is a dangerous, low-paid manufacturing job, heavily reliant on immigrant workers who must turn to local social services to supplement their wages and benefits. In an attempt to discover the manner in which the social relations of a specific locale may be enmeshed with global production, this research explored perceptions of social power and alliances after a rural community became host to a foreign workforce employed by the local poultry processing plant. On-site semi-structured interviews were conducted with sixteen local residents, and a content analysis of the community newspaper was undertaken. ^ The research found that as new production relations were inserted into the community, the society continued to reproduce and social relations remained relatively unchanged. The community's cultural standards and social infrastructure dictate that residents are respectful of authority, extend Christian charity to those less fortunate, and are generally accepting of a community known for low wages, low taxation, and low standards of education. Hegemonic ideologies seem to dictate the goals and beneficiaries of social power, and residents are unable to name any power vectors even in the face of sustained community support of, for example, the company that introduced the immigrant labor into the community. While there are indications of displeasure with the influx of immigrants appearing in the newspaper and the interviews, there are tangible examples that the community was proactive in welcoming the immigrants into their community. Thus, given that the last time elements of the community united around an issue was in the mid-1970s and no other issue has evoked any type of tangible struggle since then, there is no indication that any social alliances will be formed in reaction to changes in the community wrought by the globalization of its economy. ^

Assessing administrative and political factors in implementing a living wage ordinance

Since 2000, the number of living wage ordinances has steadily increased throughout the country. While most of the current research has focused on the beneficial outcomes of living wages, little has been published on their administrative practices. To address this shortcoming, this study focused on the identification of key administrative and political factors involved impacting the implementation of living wage ordinances in Miami-Dade and Broward Counties. The study utilized a triangulation of interviews, surveys, and direct observation. The author conducted interviews of administrators and members of the living wage oversight boards in both counties and observed the monthly meetings held by each county's oversight board from January 2006 to June 2007. These findings were buttressed with a national survey of senior staff in other living wage communities. The study utilized descriptive statistics, Chi Square, Cronbach's Alpha, and Spearman's Rank Correlation Coefficient (Spearman's rho). Interviews indicated that administrators in Dade and Broward are seriously under-staffed and budgeted. Ambiguities in the enabling ordinances have lead to loopholes that undermine implementation and accountability for participating contractors. Survey results showed that policy ambiguity, organizational politics, and a lack of organizational capacity were significant negative factors in the implementation process while an organizational culture emphasizing consistent enforcement was a positive factor. Without the proper inputs, an organization hinders itself from meeting its outputs and outcomes. This study finds that Broward and Miami-Dade Counties do not provide the necessary administrative support to implement a living wage effectively – in stark contrast to the high hopes and strong political support behind their passage. For a living wage to succeed, it first needs an organizational culture committed to providing the necessary resources for implementation as well as transparent, consistent accountability mechanisms.

Three essays on self-employment transitions, organizational capital, and firm formation

This dissertation explores how economic, organizational, and personal factors affect self-employment transitions, occupational decisions, and firm formation activities of individuals at different positions in the skill distribution. The first essay of my dissertation studies how local unemployment rates differentially affect entry into self-employment by individuals at different places in the skill distribution. The empirical results show a positive correlation between local unemployment rates and entry into self-employment for low-ability workers, but not for high-ability workers. Including employer size to eliminate possible distortions showed that the positive association between unemployment and self-employment among low-ability workers is in fact driven by the small firm effect. Controlling for firm size yields a negative association between unemployment and self-employment among high-ability workers. Effects of organizational capital, human capital and physical capital, on the firm formation activities of people at distinct skill levels depend on the type of the industry which is chosen for the new firm. Two types of industries, capital-intensive and ability-intensive, are utilized to explore this hypothesis in the second essay. A capital-intensive industry requires more physical investment, and consequently more funds, whereas, an ability-intensive industry requires more human capital. It is shown that high human capital requirements are associated with higher earnings among the most able individuals, and therefore makes them more likely to found firms in an ability-intensive industry. Wealthy people are more likely to establish both capital-intensive and ability-intensive firms, even though the amount of funds necessary for two industry types differs. Moreover, entry into both industries is predicted to happen later in life due to the removal of entry barriers constituted by required investment spending using savings when old. Empirical mixed results are observed. The third essay investigates earning differentials between future entrepreneurs and their non-entrepreneurial colleagues. Results show that high-ability firm-owners in an ability-intensive industry were earning more than those that remained in wage-work, whereas, low-ability firm-owners in a capital-intensive industry were earning less than those remaining in paid-work.

Wage matters & globalization: South Florida's low-wage immigrant plant nursery workers and business protectionism in the age of neoliberalism

Ornamental plant production in the State of Florida is an anomaly with respect to current theories of globalization and particularly their explanation of the employment of low-wage, immigrant labor. Those theories dictate that unskilled jobs that do not need to be performed within highly developed countries are outsourced to where labor is cheaper and more flexible. However, the State of Florida remains an important site of ornamental plant production in the US amidst a global economic environment of outsourcing and transnational corporate expansion. This dissertation relies on 50 semi-structured interviews with insiders of the Florida plant nursery industry, focus groups, and participant observation to explain how US trade, labor, and migration policy-making at local levels are not removed from larger global processes taking place in the world since the 1970s. In Florida, elite market players of the plant nursery industry have been able to resist global trends in free trade, operating instead in a protected market. They have done this by appealing to scientific justifications and through arbitrary implementations of neoliberal ideology that keeps small and middle range business alive, while maintaining a seemingly endless supply of marginalized and exploited low-wage, immigrant workers.^

Assessing Administrative and Political Factors in Implementing a Living Wage Ordinance

Since 2000, the number of living wage ordinances has steadily increased throughout the country. While most of the current research has focused on the beneficial outcomes of living wages, little has been published on their administrative practices. To address this shortcoming, this study focused on the identification of key administrative and political factors involved impacting the implementation of living wage ordinances in Miami-Dade and Broward Counties. The study utilized a triangulation of interviews, surveys, and direct observation. The author conducted interviews of administrators and members of the living wage oversight boards in both counties and observed the monthly meetings held by each county’s oversight board from January 2006 to June 2007. These findings were buttressed with a national survey of senior staff in other living wage communities. The study utilized descriptive statistics, Chi Square, Cronbach’s Alpha, and Spearman’s Rank Correlation Coefficient (Spearman’s rho). Interviews indicated that administrators in Dade and Broward are seriously under-staffed and budgeted. Ambiguities in the enabling ordinances have lead to loopholes that undermine implementation and accountability for participating contractors. Survey results showed that policy ambiguity, organizational politics, and a lack of organizational capacity were significant negative factors in the implementation process while an organizational culture emphasizing consistent enforcement was a positive factor. Without the proper inputs, an organization hinders itself from meeting its outputs and outcomes. This study finds that Broward and Miami-Dade Counties do not provide the necessary administrative support to implement a living wage effectively – in stark contrast to the high hopes and strong political support behind their passage. For a living wage to succeed, it first needs an organizational culture committed to providing the necessary resources for implementation as well as transparent, consistent accountability mechanisms.

The impact of migration on regional wage inequality : a semiparametric approach

Peer reviewed

The impact of migration on regional wage inequality : a semiparametric approach

Peer reviewed

Black-White Wage Gap Among Restaurant Servers: A Replication, Extension, and Exploration of Consumer Racial Discrimination in Tipping

There is a rich history of social science research centering on racial inequalities that continue to be observed across various markets (e.g., labor, housing, and credit markets) and social milieus. Existing research on racial discrimination in consumer markets, however, is relatively scarce and that which has been done has disproportionately focused on consumers as the victims of race-based mistreatment. As such, we know relatively little about how consumers contribute to inequalities in their roles as perpetrators of racial discrimination. In response, in this paper we elaborate on a line of research that is only in its’ infancy stages of development and yet is ripe with opportunities to advance the literature on consumer racial discrimination and racial earnings inequities among tip dependent employees in the United States. Specifically, we analyze data derived from a large exit survey of restaurant consumers (n=378) in an attempt to replicate, extend, and further explore the recently documented effect of service providers’ race on restaurant consumers’ tipping decisions. Our results indicate that both White and Black restaurant customers discriminate against Black servers by tipping them less than their White coworkers. Importantly, we find no evidence that this Black tip penalty is the result of interracial differences in service skills possessed by Black and White servers. We conclude by delineating directions for future research in this neglected but salient area study.

The gender wage gap in the public and private sectors in Bangladesh

The gender wage gap is well studied in developed countries; however, recently it has generated much interest in developing countries. This thesis addresses three issues regarding the gender wage gap in Bangladesh. Firstly, it explores the wage determinants for formal public and private sector employees in Bangladesh and examines the gender pay gap. This is the first time different decomposition methods have been used to compare the sources of the gender wage gap as well as any potential discrimination effect in the formal sector of the Bangladeshi labour market. These decomposition methods are: the original Oaxaca (1973) and Blinder (1973) decomposition methods, the Neumark (1988), Cotton (1988), and Reimers (1983) methods, and the extended Oaxaca method including both the employment selection and the double selection correction in the wage equation. In addition to mentioned methods, to quantify the gender wage gap in monetary terms, a recently developed ‘simulated change’ approach by Olsen and Walby (2004) is also applied for the first time to the Bangladeshi data. By using the Labour Force Survey 2005-06, BBS (LFS 2005-06) data results show formal sector female employees earn about 32.1 per cent less than their male counterparts. Without considering the selection correction, a large range of human capital, demographic and labour market related variables are explained less than half of the total gender wage gap (21 to 46 per cent of the total wage gap) and the major part of the wage gap is unexplained (54 to 79 per cent of the total wage gap). This could partly be attributed to discrimination. Using the double selection correction method, the decomposition results changed where a small part of the wage gap was explained by the measured characteristics (only nine per cent of the total wage gap) and a major part is attributed to the discrimination and selection effect. The selection effect also reveals that exclusion of the double selection correction might lead to an overestimation of the gender wage gap in the formal sector of Bangladesh. In addition, results based on the Olsen and Walby (2004) simulation method show that, if the other characteristics of male and female employees were similar, ‘being female’ is sufficient, to generate significantly lower wages than males in the formal sector. If females in the workplace are treated as males, without considering any other endowment increases, females could increase their earnings by 4095.3 Taka1 per year. Results also indicate that not only endowment differences in human capital and work experience related variables were important, but discrimination appears to play a significant role in the total wage gap throughout the formal sector of the Bangladeshi labour market. Secondly, the study investigates whether public sector employees enjoyed a wage premium or not, compared to the private sector and whether the gender wage gap is greater in the public sector. In addition, the research considered whether there was an impact from the inclusion of the different selection correction terms in the wage equation. In Bangladesh, public sector employees have, on average, a 60 per cent wage premium over the private sector. Using both the original Oaxaca and the extended Oaxaca methods, where selection effect is partly captured by both explained and unexplained components, and using the public sector wage structure as the basis of the non-discriminatory wage structure, these methods revealed a considerably larger portion of explained (72 - 93 per cent of the total wage gap) and a smaller portion of unexplained part of the wage gap. However, if the selection correction is considered as another component of the decomposition outcome then the major portion of the total public and private sectors wage gap is justified (explained) by the effect of the selection correction and unexplained factors. Furthermore, a large part of the wage premium exists in favour of public sector female employees compared to males and the gender wage gap is lower in the public sector than the private sector. Finally, this study compares the gender wage gap of five different occupations. The gender wage gap is associated with labour market rigidities where one of the important factors is occupational segregation where females are disproportionately distributed in occupations resulting in lower earnings. The largest gender wage gap was found in agriculture, forestry, fisheries, production and transport labour jobs (56.4 per cent) and the lowest in the professional, technical administrative and managerial jobs (22.1 per cent). Substantial differences are found in the size of the endowment gap across occupations and larger variations occurred in the adjusted wage gap which varied from 21.4 per cent in sales and service occupations, to 100 per cent in professional and technical jobs (the highest). This too can be partly explained by discrimination. A reduction in the gender wage gap is expected not only to increase national income, but also to reduce poverty and lead to better outcomes for future generations. National policy should aim to reduce the gender wage gap and achieve gender wage equality in the formal sector; for example through a targeted program to remove the gender differences in education and to reduce the skill difference, with a better child care policy to encourage labour force retention and increased labour market experience for female employees, with anti-discriminatory policies and the enforcement of existing antidiscrimination policies, and a more equal distribution of males and females across occupations.

Area wage survey.

1976: 22 x 28 cm.