Wages or Fringes? Some Evidence on Trade-offs and Sorting

The two key predictions of hedonic wage theory are that there is a trade-off between wages and nonmonetary rewards and that the latter can be used as a sorting device by firms to attract and retain the kind of employees they desire. Empirical analysis of these topics are scarce as they require detailed data on all monetary as well as nonmonetary rewards, not only for the job chosen but also for alternative offers. In this paper this data predicament is solved by the use of the vignettes method to estimate individuals\u27 willingness to pay for fringe benefits and job amenities. We find clear negative wage-fringe trade-offs, considerable heterogeneity in willingness to pay for fringe benefits, and signs of sorting. The findings imply that personnel economics models can be applied also to the analysis of nonmonetary rewards

Do minimum wages in Latin America and the Caribbean matter ? Evidence from 19 countries

Despite the existence of minimum wage legislation in most Latin American countries, there is little empirical evidence demonstrating its impact on the distribution of wages. In this study the authors analyze cross-country data for 19 Latin American and Caribbean (LAC) countries to gain an understanding of if and how minimum wages affect wage distributions in LAC countries. Although there is no single minimum wage institution in the LAC region, the authors find regional trends. Minimum wages affect the wage distribution in both the formal and, especially, the informal sector, both at the minimum wage and at multiples of the minimum. The minimum does not uniformly benefit low-wage workers: in countries where the minimum wage is relatively low compared to mean wages, the minimum wage affects the more disadvantaged segments of the labor force, namely informal sector workers, women, young and older workers, and the low skilled, but in countries where the minimum wage is relatively high compared to the wage distribution, it primarily affects wages of the high skilled. This indicates that the minimum does not generally lift the wages of all, but instead, it offers a wage into which employers can"lock in"wages that are already near that level. Thus, minimum wage legislation is more far-reaching than originally thought, affecting both the uncovered informal sector and those earning above the minimum. In addition, the relative level of the minimum wage is important for determining whose wages are affected.Labor Markets,Income,Wages, Compensation&Benefits,Corporate Social Responsibility,Child Labor

Wages or Fringes? Some Evidence on Trade-offs and Sorting

The two key predictions of hedonic wage theory are that there is a trade-o¤ between wages and nonmonetary rewards and that the latter can be used as a sorting device by …rms to attract and retain the kind of employees they desire. Empirical analysis of these topics are scarce as they require detailed data on all monetary as well as nonmonetary rewards, not only for the job chosen but also for alternative o¤ers. In this paper this data predicament is solved by the use of the vignettes method to estimate individuals’ willingness to pay for fringe bene…ts and job amenities. We …nd clear negative wage-fringe trade-o¤s, con- siderable heterogeneity in willingness to pay for fringe bene…ts, and signs of sorting. The …ndings imply that personnel economics models can be applied also to the analysis of nonmonetary rewards.Fringe benefits; Nonmonetary rewards; Trade-off; Sorting; Heterogeneity

Wages or Fringes? Some Evidence on Trade-offs and Sorting

The two key predictions of hedonic wage theory are that there is a trade-off between wages and nonmonetary rewards and that the latter can be used as a sorting device by firms to attract and retain the kind of employees they desire. Empirical analysis of these topics are scarce as they require detailed data on all monetary as well as nonmonetary rewards, not only for the job chosen but also for alternative offers. In this paper this data predicament is solved by the use of the vignettes method to estimate individuals' willingness to pay for fringe benefits and job amenities. We find clear negative wage-fringe trade-offs, considerable heterogeneity in willingness to pay for fringe benefits, and signs of sorting. The findings imply that personnel economics models can be applied also to the analysis of nonmonetary rewards.fringe benefits, nonmonetary rewards, trade-off, sorting, heterogeneity

Labor market distortions in Cote d'Ivoire : analyses of employer-employee data from the manufacturing sector

The authors investigate the extent and nature of distortions in the labor market in the Republic of Côte d'Ivoire by using quantile regression analysis on employer-employee data from the manufacturing sector. They find that the labor markets in Côte d'Ivoire do not seem to be much distorted. Unions may influence employment through tenure but do not seem to influence wages directly except for vulnerable minorities that seem protected by unions. Establishment-size wage effects are pronounced and highest for white-collar workers. This may be explained by the efficiency wage theory, so that, even in the absence of unions, segmentation and inefficiencies will still be present as long as firms seek to retain their employees by paying wages above the market clearing level. The inefficiency arising from establishment-size wage effects can be mitigated by education. Furthermore, the authors find that the premium to education is highly significantly positive only for higher education, and not for basic education, indicating that educational policies should also focus on higher education.Labor Markets,Tertiary Education,Access&Equity in Basic Education,Labor Standards,Work&Working Conditions

Will the Euro create a bonanza for Africa?

In considering how the euro will affect Sub-Saharan Africa, the authors examine the transmission channels through which the euro could affect economies in the region. They examine the risks and opportunities the euro presents for Sub-Saharan African countries. They especially examine the effects from the trade channel, through changes in European economic activity and the real exchange rate. Because of the relatively low income elasticity for primary commodities - which is what Sub-Saharan Africa mainly exports - an increase in activity in Europe is considered to have a marginal impact on Africa. Exchange rate regimes and geographical trade patterns point to large differences in exposure to changes in the real exchange rate. Capital flows to Sub-Saharan Africa can be affected through portfolio shifts or through changes in foreign direct investment. Changes in competitiveness in Europe are not expected to influence foreign direct investment, so the euro is not expected to affect foreign direct investment significantly. Portfolio diversification could increase greatly. But Sub-Saharan Africa is not expected to realize the increased potential from portfolio diversification because of its severely underdeveloped domestic capital markets. It is vitally important that Sub-Saharan African countries strengthen their financial integration into global markets. How the euro will affect such parts of the financial system as banks and debt and reserve management varies across countries. Generally the effect is expected to be limited.Fiscal&Monetary Policy,Payment Systems&Infrastructure,Banks&Banking Reform,Economic Theory&Research,Environmental Economics&Policies,Environmental Economics&Policies,Banks&Banking Reform,Fiscal&Monetary Policy,Macroeconomic Management,Economic Theory&Research

Estimating complementarity between education and training

In this paper, we formulate and estimate a structural model of post-schooling training that explicitly allows for possible complementarity between initial schooling levels and returns to training. Precisely, the wage outcome equation depends on accumulated schooling and on the incidence of training. The effect of training on wage growth depends on individual permanent endowments as well as on education. We find evidence of statistically significant complementarity, i.e. the higher educated receive the highest return to the MBA-type training considered here.Skill Complementarity ; Dynamic Treatment Effects ; Dynamic Programming ; Random Coefficients

Estimating Complementarity between Education and Training

In this paper, we formulate and estimate a structural model of post-schooling training that explicitly allows for possible complementarity between initial schooling levels and returns to training. Precisely, the wage outcome equation depends on accumulated schooling and on the incidence of training. The effect of training on wage growth depends on individual permanent endowments as well as on education. We find evidence of statistically significant complementarity, i.e. the higher educated receive the highest return to the MBA-type training considered here.dynamic programming, dynamic treatment effects, skill complementarity, random coefficients

External Validation of the Use of Vignettes in Cross-Country Health Studies

Cross-country comparisons of subjective assessments are rendered difficult if not impossible because of sub-population specific response style. To correct for this, the use of vignettes has become increasingly popular, notably within cross-country health studies. However, the validity of vignettes as a means to re-scale across sample populations critically rests on the assumption of "response consistency" (RC): that vignettes and self-assessments are evaluated on the same scale. In this paper, we seek to test this assumption by applying objective measures of health along with subjective measures and vignettes. Our results indicate that the assumption of RC is not innocuous and that our extended model relaxing this assumption improves the fit and significantly changes the cross-country rankings of health vis-à-vis the standard Chopit model.cross-country health comparison, vignettes, subjective and objective measures

Economic Satisfaction and Income Rank in Small Neighbourhoods

We contribute to the literature on well-being and comparisons by appealing to new Danish data dividing the country up into around 9,000 small neighbourhoods. Administrative data provides us with the income of every person in each of these neighbourhoods. This income information is matched to demographic and economic satisfaction variables from eight years of Danish ECHP data. Panel regression analysis shows that, conditional on own household income, respondents report higher satisfaction levels when their neighbours are richer. However, individuals are rank-sensitive: conditional on own income and neighbourhood median income, respondents are more satisfied as their percentile neighbourhood ranking improves. A ten percentage point rise in rank (i.e. from 40th to 20th position in a 200-household cell) is worth 0.11 on a one to six scale, which is a large marginal effect in satisfaction terms.income comparisons, neighbours, satisfaction, geo-coded data