Labor Market Theory

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Alan Manning - One of the best experts on this subject based on the ideXlab platform.

  • a test of competitive Labor Market Theory the wage structure among care assistants in the south of england
    Industrial and Labor Relations Review, 2004
    Co-Authors: Stephen Machin, Alan Manning
    Abstract:

    This paper examines the structure of wages in a very specific Labor Market: care assistants in residential homes for the elderly on England's “sunshine coast.†This sector corresponds closely to economists' notion of what should be a competitive Labor Market, both because it has a large number of small firms undertaking a very homogeneous activity in a concentrated geographical area, and because the workers are neither unionized nor covered by any minimum wage legislation, so that there are effectively no external constraints on the wage-setting process. The authors find that the wage structure deviates in important respects from what would be expected in a competitive Labor Market. In particular, wage dispersion is small within firms, but large between firms; and the wage dispersion that is present does not seem to be closely related to workers' productivity-related characteristics. A test rejects the hypothesis that unobserved Labor quality can explain these findings.

  • Developments in Labour Market Theory and Their Implications for Macroeconomic Policy
    Scottish Journal of Political Economy, 1995
    Co-Authors: Alan Manning
    Abstract:

    This paper reviews a number of Labor Market theories that have been developed over the past twenty-five years with the aim of explaining the behavior of unemployment in that period. It reviews union models, efficiency wage models, and insider-outsider models. It argues that none of these theories have been successful in providing a persuasive explanation of the rise in unemployment across the OECD and that the main contribution of Labor Market Theory has been to show that intuitions that seemed to be important insights into the workings of the Labor Market turn out to have much more modest contributions when formalized. Copyright 1995 by Scottish Economic Society.

Alvaro A. Novo - One of the best experts on this subject based on the ideXlab platform.

  • Paying for Others' Protection: Causal Evidence on Wages in a Two-Tier System
    2014
    Co-Authors: Mário Centeno, Alvaro A. Novo
    Abstract:

    In a segmented Labor Market, Theory predicts that employment protection has an asymmetric impact on entry and incumbent wages. We explore a reform that increased the protection of open-ended contracts for a well-defined subset of firms, while leaving it unchanged for other firms. The causal evidence points to a reduction in wages for new open-ended and fixed-term contracts and no impact for more tenured workers. The reductions estimated for entrants oscillate between -0.9 and -0.5 p.p., covering a significant part of the expected increase in firing costs. Firms with larger shares of fixed-term contracts shifted the burden to these workers.

  • ABSTRACT Paying for Others' Protection: Causal Evidence on Wages in a Two-Tier System *
    2014
    Co-Authors: Alvaro A. Novo
    Abstract:

    In a segmented Labor Market, Theory predicts that employment protection has an asymmetric impact on entry and incumbent wages. We explore a reform that increased the protection of open-ended contracts for a well-defined subset of firms, while leaving it unchanged for other firms. The causal evidence points to a reduction in wages for new open-ended and fixed-term contracts and no impact for more tenured workers. The reductions estimated for entrants oscillate between -0.9 and -0.5 p.p., covering a significant part of the expected increase in firing costs. Firms with larger shares of fixed-term contracts shifted the burden to these workers.

Carolina Silva - One of the best experts on this subject based on the ideXlab platform.

  • MINIMUM WAGE AND SEVERANCE PAYMENTS IN A FRICTIONAL Labor Market: Theory AND ESTIMATION
    Macroeconomic Dynamics, 2017
    Co-Authors: Carolina Silva
    Abstract:

    Wage dispersion is a critical factor in determining the impact of a minimum wage and severance payments on job creation and destruction in a general equilibrium model with search frictions. When wage dispersion is low, the minimum wage and severance payments behave as substitutes. However, as dispersion in wages increases, these policies become complements. The model is estimated using data from Chile and used to perform quantitative welfare analysis.

  • MINIMUM WAGE AND SEVERANCE PAYMENTS IN A FRICTIONAL Labor Market: Theory AND ESTIMATION
    Macroeconomic Dynamics, 2017
    Co-Authors: Carolina Silva
    Abstract:

    We analyze the effects of minimum wage and severance payments on endogenous job creation and destruction decisions by using a general equilibrium model with search frictions. We then structurally estimate the model using data from Chile, and perform a quantitative welfare analysis. We find that the level of wage dispersion of the sample becomes a critical factor in determining the equilibrium relationship between the policies. When wage dispersion is low, the minimum wage and severance payments behave as substitutes. However, as dispersion in wages increases, these two policies become complements.

  • The interaction of minimum wage and severance payments in a frictional Labor Market: Theory and estimation
    2010
    Co-Authors: Carolina Silva
    Abstract:

    We introduce a minimum wage and severance payments in an equilibrium Labor Market model with search frictions. We analyze how these policies affect endogenous job creation and destruction decisions and, more generally, the general equilibrium allocation. We structurally estimate the model's parameters and, with the resulting sets of estimates, we perform a quantitative welfare analysis. We conclude that when the dispersion in wages found in the sample is low and the share that workers receive from the surplus their job generates is below a particular level, the maximum level of welfare can be attained using either any of the two policies by themselves or an appropriate combination. However, as dispersion in wages increases, the minimum wage, by itself, can no longer reach the economy's maximum level of welfare; and when it is high enough, no policy in isolation can attain the economy's maximum level of welfare, a combination is required.

Jeeyeon K Lehmann - One of the best experts on this subject based on the ideXlab platform.

  • racial discrimination in the Labor Market Theory and empirics
    Journal of Economic Literature, 2012
    Co-Authors: Kevin Lang, Jeeyeon K Lehmann
    Abstract:

    We review theories of race discrimination in the Labor Market. Taste-based models can generate wage and unemployment duration differentials when combined with either random or directed search even when strong prejudice is not widespread, but no existing model explains the unemployment rate differential. Models of statistical discrimination based on differential observability of productivity across races can explain the pattern and magnitudes of wage differentials but do not address employment and unemployment. At their current state of development, models of statistical discrimination based on rational stereotypes have little empirical content. It is plausible that models combining elements of the search models with statistical discrimination could fit the data. We suggest possible avenues to be pursued and comment briefly on the implication of existing Theory for public policy. (JEL J15, J31, J64, J71)

Stephen Machin - One of the best experts on this subject based on the ideXlab platform.

  • a test of competitive Labor Market Theory the wage structure among care assistants in the south of england
    Industrial and Labor Relations Review, 2004
    Co-Authors: Stephen Machin, Alan Manning
    Abstract:

    This paper examines the structure of wages in a very specific Labor Market: care assistants in residential homes for the elderly on England's “sunshine coast.†This sector corresponds closely to economists' notion of what should be a competitive Labor Market, both because it has a large number of small firms undertaking a very homogeneous activity in a concentrated geographical area, and because the workers are neither unionized nor covered by any minimum wage legislation, so that there are effectively no external constraints on the wage-setting process. The authors find that the wage structure deviates in important respects from what would be expected in a competitive Labor Market. In particular, wage dispersion is small within firms, but large between firms; and the wage dispersion that is present does not seem to be closely related to workers' productivity-related characteristics. A test rejects the hypothesis that unobserved Labor quality can explain these findings.