The Wage Rate and the Profit Rate in the Price of Production Equation: a New Solution to an Old Problem

The aim of this paper is to demonstrate that, even if Marx's solution to the transformation problem can be modified, his basic concusions remain valid.

The steel industry wage rate inequity program; a case study.

"Prepared for use in the course, 'Problems in labor relations.'"

Appropriate wage rate and estimate of labour availability for a public works based safety net in Cambodia

Employment generating public works (EGPW) are an important part of Royal Government of Cambodia’s (RGC’s) strategy being developed through Council for Agriculture and Rural Development (CARD) to develop a comprehensive social safety net (SSN) to provide a measure of protection from shocks for the poor and vulnerable and to contribute to poverty alleviation through short-term unskilled employment.

Appropriate wage rate and related issues for employment intensive public works programmes in Timor Leste

Employment generating public works (EGPW) are an important part of GoTL’s strategy to reduce unemployment, underemployment and poverty and contribute to social stability. The term EGPW is used in this report as a generic term to encompass labour intensive (LI) and labourbased (LB) approaches. The distinction between these approaches is made below. SEFOPE is being supported by a number of international agencies to develop and implement employment generating public works programmes (EGPWPs). Other government ministries and agencies and NGOs offering different wage rates are also engaged in such programmes and projects. In setting wage rates for such programmes, it is necessary to take account of (a) the nature of benefits they offer (e.g. the balance between employment creation and effective use of labour); (b) the beneficiaries to be targeted, and (c) any adverse impacts on other economic activities. The purposes of this assignment are: (a) to make recommendations on appropriate wage rates for unskilled casual employment on public works programmes, and (b) make a broad assessment of the labour supply response to the employment opportunities created by employment intensive programmes. The latter would help in gauging the scale of such activities required.

Az egyensúlyi ráták unicitása és a bérráta pozitivitása a Neumann-modell általánosításaiban (Uniqueness of equilibrium rates and the positive value of the wage rate in generalizations from the Neumann model)

Cikkünk arról a paradox jelenségről szól, hogy a fogyasztást explicit módon megjelenítő Neumann-modell egyensúlyi megoldásaiban a munkabért meghatározó létszükségleti termékek ára esetenként nulla lehet, és emiatt a reálbér egyensúlyi értéke is nulla lesz. Ez a jelenség mindig bekövetkezik az olyan dekomponálható gazdaságok esetén, amelyekben eltérő növekedési és profitrátájú, alternatív egyensúlyi megoldások léteznek. A jelenség sokkal áttekinthetőbb formában tárgyalható a modell Leontief-eljárásra épülő egyszerűbb változatában is, amit ki is használunk. Megmutatjuk, hogy a legnagyobbnál alacsonyabb szintű növekedési tényezőjű megoldások közgazdasági szempontból értelmetlenek, és így érdektelenek. Ezzel voltaképpen egyrészt azt mutatjuk meg, hogy Neumann kiváló intuíciója jól működött, amikor ragaszkodott modellje egyértelmű megoldásához, másrészt pedig azt is, hogy ehhez nincs szükség a gazdaság dekomponálhatóságának feltételezésére. A vizsgált téma szorosan kapcsolódik az általános profitráta meghatározásának - Sraffa által modern formába öntött - Ricardo-féle elemzéséhez, illetve a neoklasszikus növekedéselmélet nevezetes bér-profit, illetve felhalmozás-fogyasztás átváltási határgörbéihez, ami jelzi a téma elméleti és elmélettörténeti érdekességét is. / === / In the Marx-Neumann version of the Neumann model introduced by Morishima, the use of commodities is split between production and consumption, and wages are determined as the cost of necessary consumption. In such a version it may occur that the equilibrium prices of all goods necessary for consumption are zero, so that the equilibrium wage rate becomes zero too. In fact such a paradoxical case will always arise when the economy is decomposable and the equilibrium not unique in terms of growth and interest rate. It can be shown that a zero equilibrium wage rate will appear in all equilibrium solutions where growth and interest rate are less than maximal. This is another proof of Neumann's genius and intuition, for he arrived at the uniqueness of equilibrium via an assumption that implied that the economy was indecomposable, a condition relaxed later by Kemeny, Morgenstern and Thompson. This situation occurs also in similar models based on Leontief technology and such versions of the Marx-Neumann model make the roots of the problem more apparent. Analysis of them also yields an interesting corollary to Ricardo's corn rate of profit: the real cause of the awkwardness is bad specification of the model: luxury commodities are introduced without there being a final demand for them, and production of them becomes a waste of resources. Bad model specification shows up as a consumption coefficient incompatible with the given technology in the more general model with joint production and technological choice. For the paradoxical situation implies the level of consumption could be raised and/or the intensity of labour diminished without lowering the equilibrium rate of the growth and interest. This entails wasteful use of resources and indicates again that the equilibrium conditions are improperly specified. It is shown that the conditions for equilibrium can and should be redefined for the Marx-Neumann model without assuming an indecomposable economy, in a way that ensures the existence of an equilibrium unique in terms of the growth and interest rate coupled with a positive value for the wage rate, so confirming Neumann's intuition. The proposed solution relates closely to findings of Bromek in a paper correcting Morishima's generalization of wage/profit and consumption/investment frontiers.

Liquidity Constraint and Child Labor In India: Is Market Really Incapable Of Eradicating It From Wage-Labor Households?

One way to measure the lower steady state equilibrium outcome in human capital development is the incidence of child labor in most of the developing countries. With the help of Indian household level data in an overlapping generation framework, we show that production loans under credit rationing are not optimally extended towards firms because of issues with adverse selection. More stringent rationing in the credit market creates a distortion in the labor market by increasing adult wage rate and the demand for child labor. Lower availability of funds under stringent rationing coupled with increased demand for loans induces the high risk firms to replace adult labor by child labor. A switch of regime from credit rationing to revelation regime can clear such imperfections in the labor market. The equilibrium higher wage rate elevates the household consumption to a significantly higher level than the subsistence under credit rationing and therefore higher level of human capital development is assured leading to no supply of child labor.

Natural-Resource Exploitation with Costly Enforcement of Property Rights

This paper proposes a model of natural-resource exploitation when private ownership requires costly enforcement activities. For a given wage rate, it is shown how enforcement costs can increase with labor's average productivity on a resource site. As a result, it is never optimal for the site owner to produce at the point where marginal productivity equals the wage rate. It may even be optimal to exploit at a point exhibiting negative marginal returns. An important parameter in the analysis is the prevailing wage rate. When wages are low, further decreases in the wage rates can reduce the returns from resource exploitation. At sufficiently low wages, positive returns can be rendered impossible to achieve and the site is abandoned to a free-access exploitation. The analysis provides some clues as to why property rights may be more difficult to delineate in less developed countries. It proposes a different framework from which to address normative issues such as the desirability of free trade with endogenous enforcement costs, the optimality of private decisions to enforce property rights, the effect of income distribution on property rights enforceability, etc.

Growth and distribution: a revised classical model

This paper discusses distribution and the historical phases of capitalism. It assumes that technical progress and growth are taking place, and, given that, its question is on the functional distribution of income between labor and capital, having as reference classical theory of distribution and Marx’s falling tendency of the rate of profit. Based on the historical experience, it, first, inverts the model, making the rate of profit as the constant variable in the long run and the wage rate, as the residuum; second, it distinguishes three types of technical progress (capital-saving, neutral and capital-using) and applies it to the history of capitalism, having the UK and France as reference. Given these three types of technical progress, it distinguishes four phases of capitalist growth, where only the second is consistent with Marx prediction. The last phase, after World War II, should be, in principle, capital-saving, consistent with growth of wages above productivity. Instead, since the 1970s wages were kept stagnant in rich countries because of, first, the fact that the Information and Communication Technology Revolution proved to be highly capital using, opening room for a new wage of substitution of capital for labor; second, the new competition coming from developing countries; third, the emergence of the technobureaucratic or professional class; and, fourth, the new power of the neoliberal class coalition associating rentier capitalists and financiers

An empirical model to estimate the demand for primary care in urban settings

Objective. To measure the demand for primary care and its associated factors by building and estimating a demand model of primary care in urban settings.^ Data source. Secondary data from 2005 California Health Interview Survey (CHIS 2005), a population-based random-digit dial telephone survey, conducted by the UCLA Center for Health Policy Research in collaboration with the California Department of Health Services, and the Public Health Institute between July 2005 and April 2006.^ Study design. A literature review was done to specify the demand model by identifying relevant predictors and indicators. CHIS 2005 data was utilized for demand estimation.^ Analytical methods. The probit regression was used to estimate the use/non-use equation and the negative binomial regression was applied to the utilization equation with the non-negative integer dependent variable.^ Results. The model included two equations in which the use/non-use equation explained the probability of making a doctor visit in the past twelve months, and the utilization equation estimated the demand for primary conditional on at least one visit. Among independent variables, wage rate and income did not affect the primary care demand whereas age had a negative effect on demand. People with college and graduate educational level were associated with 1.03 (p < 0.05) and 1.58 (p < 0.01) more visits, respectively, compared to those with no formal education. Insurance was significantly and positively related to the demand for primary care (p < 0.01). Need for care variables exhibited positive effects on demand (p < 0.01). Existence of chronic disease was associated with 0.63 more visits, disability status was associated with 1.05 more visits, and people with poor health status had 4.24 more visits than those with excellent health status. ^ Conclusions. The average probability of visiting doctors in the past twelve months was 85% and the average number of visits was 3.45. The study emphasized the importance of need variables in explaining healthcare utilization, as well as the impact of insurance, employment and education on demand. The two-equation model of decision-making, and the probit and negative binomial regression methods, was a useful approach to demand estimation for primary care in urban settings.^

Measuring population mobility speed from space

Ad-hoc population dynamics in Krugman’s type core and periphery models adjust population share of a region, based on its real wage rate deviation from national average, at pre-specified speed of population mobility. Whereas speed of population mobility is expected to be different across countries, for geographical, cultural, technological, etc. reasons, one common speed is often applied in theoretical and simulation analysis, due to spatially patchy, and temporally infrequent, availability of sub-national regional data. This article demonstrates how, increasingly available, high definition spatio-temporal remote-sensing data, and their by-products, can be used to measure speed of population mobility in national and sub-national level.

Making the construction industry resilient to extreme weather:lessons from construction in hot weather conditions

The construction industry is susceptible to extreme weather events (EWEs) due to most of its activities being conducted by manual workers outdoors. Although research has been conducted on the effects of EWEs, such as flooding and snowfall, limited research has been conducted on the effects of heatwaves and hot weather conditions. Heatwaves present a somewhat different risk profile to construction, unlike EWEs such as flooding and heavy snowfall that present physical obstacles to work onsite. However, heatwaves have affected the construction industry in the UK, and construction claims have been made due to adverse weather conditions. With heatwaves being expected to occur more frequently in the coming years, the construction industry may suffer unlike any other industry during the summer months. This creates the need to investigate methods that would allow construction activities to progress during hot summer months with minimal effect on construction projects. Hence, the purpose of this paper. Regions such as the Middle East and the UAE in particular flourish with mega projects, although temperatures soar to above 40̊C in the summer months. Lessons could be learnt from such countries and adapted in the UK. Interviews have been conducted with a lead representative of a client, a consultant and a contractor, all of which currently operate on UAE projects. The key findings include one of the preliminary steps taken by international construction companies operating in the UAE. This involves restructuring their entire regional team by employing management staff from countries such as Lebanon, Palestine, Iraq, and their labour force from the sub-continent such as India and Pakistan. This is not only due to the cheap wage rate but also to the ability to cope and work in such extreme hot weather conditions. The experience of individuals working in the region allows for future planning, where the difference in labour productivity during the extreme hot weather conditions is known, allowing precautionary measures to be put in place.

The gender wage gap : a comparison of Australia and Canada

Using data from the 1989 Canadian Labour Market Activity Survey and, for Australia, the 1989-90 Income Distribution Survey, the authors investigate the reasons for the significantly lower gender wage gap in Australia than in Canada. Key similarities and differences between these two countries, the authors argue, make them a good basis for a "natural experiment" to investigate the effects of different labor market institutions. In particular, Australia has a stronger union movement and a greater degree of centralization in wage determination than Canada, and most of its workers are covered by legally binding minimum working conditions. The authors conclude that several differences between the countries in labor market structure-notably, a lower rate of return to education, a lower rate of return to labor market experience, and a lower level of wage inequality in Australia than in Canada- are largely responsible for the smaller gender wage gap in Australia.

Ceilings and Floors? Gender Wage Gaps by Education in Spain

Revised: 2006-11.-- Published as an article in: Journal of Population Economics, 2007, vol. 21 issue 3, pp. 751-776.

Wage stickiness and unemployment fluctuations: an alternative approach

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The Transformation Problem : an Aleternative Solution with an Identical Aggregate Profit Rate in the Labor value and the Monetary Space.

The aim of this paper is to demonstrate that, even if Marx's solution to the transformation problem can be modified, his basic conclusions remain valid. the proposed alternative solution which is presented hare is based on the constraint of a common general profit rate in both spaces and a money wage level which will be determined simultaneously with prices.