Markets for daily wage labor are ubiquitous in poor countries, providing employment for hundreds of millions of workers in India alone. In an exploration of how nominal wages in these markets respond to changing economic conditions, this research finds strong evidence of limited downward adjustment in the face of a negative shock. A key part of the explanation lies in perceptions that wage cuts are unfair and reduce worker productivity. The higher unemployment that results from nominal wage rigidity could be addressed by counter-cyclical employment programs, and by modest levels of inflation that allow real wages to adjust in a way that avoids too much harm to workers.
We report on research that concerns the education and training people receive, the amount that they work, what they do, and what they earn. Topics of interest include:
• The wage and employment response to unemployment insurance, disability insurance, and income taxes and transfers
• School quality, educational attainment, and economic outcomes
• Regulations governing minimum wages, overtime pay, hiring and firing, and collective bargaining
• Discrimination in employment and pay
• The labour market effects of immigration
• The decision to retire
• Inequality and intergenerational mobility
• Marriage, fertility, and labour market behavior
Civil servants constitute a key element of state capacity, with the responsibility for raising government revenues, providing public services and implementing reforms. But what happens to their performance when they are appointed to office less on the basis of their talents than on their social connections to powerful patrons? This research examines the costs of patronage through the lens of a historical bureaucracy that spanned the globe: Britain’s Colonial Office. The research combines newly digitized personnel and public finance data from the administration of the British Empire over the period 1854-1966 to show how patronage influenced the promotion and performance of colonial governors.
Trade relations between the United States and China have grown increasingly tense, spurred by concerns that growing imports from China have led to plant closures and job loss in the United States. We find a link between the sharp decline in U.S. manufacturing employment after 2000 and the granting of Permanent Normal Trade Relations (PNTR) to China, which eliminated uncertainty about China‘s continued access to the U.S. market. Our research into the reactions of U.S. and Chinese firms to PNTR highlights the sensitivity of firm behavior to policy uncertainty.
Women are often paid less than men, they are often underrepresented in leading positions, and their careers develop at a slower pace than those of men. Here, we ask to what extent these differences can be explained by childbearing. To evaluate the career cost associated with having children, we consider women’s decisions regarding labor supply, occupation, fertility and savings. We evaluate the life-cycle career cost of children to be equivalent to 35 percent of a woman’s total earnings. We further show that part of this cost arises well before children are born through selection into careers characterized by lower wages but also lower skill depreciation.
While much attention has been paid to the education premium on the labor market, little study has been devoted to the marriage market. Looking back at four decades of US marriages, this research finds that more highly educated people are more likely to marry and that their spouses tend to be of similar academic achievement. Additionally, more educated couples invest greater time in developing their children’s potential. Meanwhile, children from less educated households enjoy fewer resources and are less likely to marry highly educated spouses, the upshot of which could be less social mobility and wider economic inequality.
Are differences in earnings between career-minded men and women the result of differences in performance – and if so, what explains the gender gaps in performance? This column explores these questions by analysing data on the careers of American lawyers who graduated at the turn of the millennium. Among these highly skilled young professionals, a key explanation of gender gaps in performance, earnings and career progression is the difference between men and women’s desire to ‘make partner’.
Quantifying who benefits from corporate tax cuts requires estimates of the effects of taxes on the local economy and on the location decisions of firms and workers. This research analyses every change in state business taxes in the United States since 1980 to show that the largest beneficiaries from a tax cut are the owners of firms (40%), with landowners and workers splitting the remaining (60%) of the economic gains. Where the benefits of corporate tax cuts fall ultimately depends on the relative mobility of firms and workers – and many factors other than tax rates influence their choice of location.
More than 100 countries have a gender quota, or an effort to increase gender equality and representation, in their political system. Many opponents of gender quotas argue that women elected via quotas are not always the most qualified candidates; the quotas may displace qualified men; and the quotas are not compatible with meritocratic principles and incentives. However, despite the years of debate, exactly how gender quotas affect the competence of elected officials – whether women or men – has rarely been studied.
Immigration policy continues to be a hotly debated issue in many developed countries around the world. A contentious point cited by many policymakers relates to the high crime rates of immigrants relative to the native population. How does work status and legal access to the labor market affect the crime rates of immigrants? This article summarizes recent research from Pinotti (2017) on the Italian immigration system and finds that a lack of legal work opportunities for immigrants contributes to higher rates of immigrant crime.
This paper shows that taxes affect the international location decisions of the best “superstar” inventors. Higher tax rates lead to a significantly lower share of superstar inventors remaining in their home country and a lower share of foreign superstar inventors who move to the country. This may have significant fiscal and innovation costs for a country that should be taken into account when setting tax policy.