Regional wage differentials in the public sector

Masayuki Morikawa 23 November 2014

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After the global financial crisis, some European countries reduced their public sector wages to ensure fiscal sustainability. In Japan, after the Great East Japan Earthquake, the wages of the central government officials were cut for two years to finance the reconstruction expenses. Even in normal times, the appropriate level of public sector wages is debated frequently in every country. Because wages are an important incentive for workers, appropriate wage levels and their structure in the public sector are essential for ensuring the quality and efficiency of public services.

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Topics:  Labour markets

Tags:  fiscal sustainability, global crisis, Public sector wages, public-sector pay, Public sector, private sector, Great East Japan Earthquake, Japan, Europe, agglomeration, spatial equilibrium, wages, wage premia, regional wage differentials

Monetary policy and long-term trends

Charles A.E. Goodhart, Philipp Erfurth 03 November 2014

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Introduction

There has been a long-term downward trend in the share and strength of labour in national income, which is depressing both demand and inflation. This has prompted ever more expansionary monetary policies. While understandable, indeed appropriate, within a short-term business cycle context, this has exacerbated longer-term trends, increasing inequality and financial distortions. Perhaps the most fundamental problem has been over-reliance on debt finance (leverage).

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Topics:  Financial markets Macroeconomic policy Monetary policy

Tags:  monetary policy, Inequality, debt, leverage, wages, labour share, globalisation, consumption, propensity to consume, fiscal policy, Ageing, interest rates, investment, asset prices, housing, house prices, exchange rates, global crisis, mortgages, sub-prime crisis, Macroprudential policy, structural reforms, balance sheets, deleveraging, equity, shared-equity mortgages, Help to Buy

The cleansing effect of the minimum wage in China

Florian Mayneris, Sandra Poncet 13 October 2014

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Can higher minimum wages ensure that economic development benefits the poorest without hindering growth? The question is controversial in both academic and policy circles. The recent riots in Bangladesh and Cambodia show that the social demand for a more equal distribution of the benefits of growth is high in developing countries. In China, polls reveal that concerns about inequality have grown as "roughly eight-in-ten have the view that the rich just get richer while the poor get poorer'' (Pewresearch Center 2012). The debate is also heated in developed economies.

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Topics:  Industrial organisation Labour markets

Tags:  China, wages, firms, productivity

The labour market effects of immigration and emigration in OECD countries

Frédéric Docquier, Çağlar Özden, Giovanni Peri 06 October 2014

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The basis of the debate about migration into European countries is the perception that immigrants are unskilled and poor. Hence, the narrative goes, their arrival hurts the wages and employment prospects of less educated natives. At the same time, very little discussion is devoted to the patterns and economic consequences of emigration from European countries to other developed countries. The recent high-profile book by Collier (2013) is a typical example of this approach. Yet, the data indicate this might all be misguided.

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Topics:  Education Labour markets Migration

Tags:  OECD, migration, immigration, emigration, wages, complementarities, education

Offshoring and skill-biased technical change

Daron Acemoglu, Gino Gancia, Fabrizio Zilibotti 30 September 2014

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Offshoring, the demand for skill, and biased innovations

The rapid rise of offshoring has been one of the most visible trends in the US labour market over the last three decades. Despite its prevalence, the implications for wages and skill premia are still debated (see, for instance, Grossman and Rossi-Hansberg 2008 and Baldwin and Robert-Nicoud 2014).

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Topics:  International trade Labour markets Poverty and income inequality Productivity and Innovation

Tags:  offshoring, skill-biased technical change, Inequality, wages, technological progress, innovation

Real wages continue to fall in the UK

David Blanchflower, Stephen Machin 29 September 2014

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Real wages continue to fall in the UK and elsewhere (Jowett et al. 2014). Yet this striking feature of the labour market still fails to register properly with some commentators. On 9 September 2014, Mark Carney, the Governor of the Bank of England, gave a speech at the 146th annual Trades Union Congress in Liverpool, where he argued as follows:

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Topics:  Europe's nations and regions Labour markets Productivity and Innovation

Tags:  wages, UK, productivity, unions, union membership

Finance sector wages: explaining their high level and growth

Joanne Lindley, Steven McIntosh 21 September 2014

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Individuals who work in the finance sector enjoy a significant wage advantage. This wage premium has received increasing attention from researchers following the financial crisis, with focus being put onto wages at the top of the distribution in general, and finance sector wages in particular (see Bell and Van Reenen 2010, 2013 for discussion in the UK context). Policymakers have also targeted this wage premium, with the recent implementation of the Capital Requirements Directive capping bankers’ bonuses at a maximum of one year of salary from 2014.

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Topics:  Financial markets Microeconomic regulation

Tags:  Bankers’ bonuses, banking, wages, Inequality, UK, regulation, asymmetric information, Executive compensation, Finance, task-biased technological change, ICT

Which factors shape the relationship between manufacturing and government wages?

Benedicta Marzinotto, Alessandro Turrini 05 September 2014

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During the crisis, numerous Eurozone countries have introduced public wage freezes or cuts as part of an attempt to contain rising fiscal deficits and debts. Some of these countries also had to rebalance their economies, and improve price competitiveness. The relevant question is therefore whether government wages, whilst relevant for fiscal outcomes, may also exert some impact on private-sector labour costs and price competitiveness.

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Topics:  Labour markets

Tags:  wages, government, public-sector pay, collective bargaining, manufacturing, Public sector, private sector, competitiveness

How immigration benefits natives despite labour market imperfections and income redistribution

Michele Battisti, Gabriel Felbermayr, Giovanni Peri, Panu Poutvaara 08 August 2014

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A fierce policy debate with little insight from economists

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Topics:  Labour markets Migration

Tags:  Labour Markets, unemployment, wages, immigration, redistribution, welfare, Skill Complementarities

Sourcing foreign inputs to improve firm performance

Maria Bas, Vanessa Strauss-Kahn 14 July 2014

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Should trade policy fight or promote imports of intermediate inputs? While several studies have shown the recent increase in imports of intermediate goods, their role in shaping domestic economies is not yet completely understood. Following the work of Feenstra and Hanson (1996), a large literature focuses on the impact of imported intermediate inputs on employment and inequality. It concludes that, like outsourcing, imported intermediate inputs have a role (although limited) in explaining job losses and wage reductions.

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Topics:  International trade

Tags:  employment, productivity, wages, Inequality, trade, exports, outsourcing, imports, global value chains, Intermediate inputs

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