Efficiency Wages and the Economic Effects of the Minimum Wage: Evidence from a Low-Wage Labour Market

We exploit a natural experiment provided by the 1990 introduction of the UK National Minimum Wage (NMW) to investigate the relationship between wages and monitoring and to test for Efficiency Wages considerations in a low-wage sector, the UK residential care homes industry. Our findings seem to support the wage-supervision trade-off prediction of the shirking model, and that employers didn't dissipate minimum wage rents by increasing work intensity or effort requirements on the job. Estimation results suggest that higher wage costs were more than offset by lower monitoring costs, and thus the overall evidence imply that the NMW may have operated as an Efficiency Wage. These findings support Efficiency Wage models used to explain a non-negative employment effect of the Minimum Wage and provide an explanation of recent evidence from the care homes sector that although the wage structure was heavily affected by the NMW introduction, there were moderate employment effects.Efficiency Wages, National Minimum Wage, Wage-supervision trade-off

Is there a Wage-Supervision Trade-Off? Efficiency Wages Evidence From the 1990 British Workplace Industrial Relations Survey

Efficiency Wages cannot be ruled out on a priori theoretical grounds and evidence is needed. Direct evidence on the effects of wages on productivity and indirect evidence from the wage structure does not seem persuasive. In this paper we offer an indirect test of the efficiency wage theory, by testing the prediction of the ‘shirking’ and ‘gift-exchange’ models of efficiency wages of a wage-supervision trade-off, using data from the 1990 British Workplace Industrial Relations Survey. We highlight the main empirical problems that hinder the estimation of the wage-supervision relationship, and we offer a novel theoretical explanation of the wagesupervision trade-off in terms of union bargaining power. We find evidence that wages and supervision are substitutes in eliciting effort for unskilled manual workers. This evidence supports principal-agent models, many of which do not have the efficiency wage property. Finally, after we test whether wages are set optimally above the market clearing level we fail to find any evidence that can rule out efficiency wages in favour of incentive contracts.Efficiency Wages, Wage-supervision trade-off, Endogeneity bias, private and Non-Unionised establishments

Is the Minimum Wage Efficient? Evidence of the Effects of the UK National Minimum Wage in the Residential Care Homes Sector

In this paper we exploit a natural experiment provided by the 1999 introduction and 2001 increase of the UK National Minimum Wage (NMW) to investigate the relationship between wages and supervision and to test for efficiency wages considerations in a low-wage labour market, the UK residential care homes sector. We also provide evidence of the effects of the UK National Minimum Wage introduction and increase on the main labour market outcomes in the sector. We find evidence supporting a wage-supervision trade-off for the 1999 NMW introduction but no evidence of a trade-off for the 2001 NMW increase. We also find that the 1999 NMW introduction caused significant growth in average home hourly wages but only moderate negative employment effects and no significant effect on other outcomes as prices and profits. Finally, we find that the 2001 NMW increase generated higher wage growth than the 1999 introduction but had no employment effect, which can be possibly explained by the fact that homes increased the price of care to offset the increased wage costs generated by the NMW increase.Efficiency Wages, National Minimum Wage, Difference-in-Differences, Insrumental Variables.

Theory of Values

Economists have a well-developed theory of value but the theory of why people hold the values they do is rudimentary at best. In spite of the fact that it is common to argue that values are important, most work on values is normative and the positive theory of values is relatively under- developed. In this paper we propose a simple yet general way to think about values - they are about how one trades-off one own's utility against that of others - and argue that we can draw on the large literature on pro-social behavior for hypotheses on how people will choose values. Then, using data from the UK's Citizenship Survey we show how models of self-interest, fairness, reciprocity and identity, can explain many of the patterns that we observe in the data across a wide variety of values.Values, Pro-Social Behaviour

Spend It Like Beckham? Inequality and Redistribution in the UK, 1983-2004

A main activity of the state is to redistribute resources. Models of the political process generally predict that a rise in inequality will lead to more redistribution. This paper shows that, for the UK in the period 1983-2004, a plausibly exogenous rise in income inequality has not been associated with increased redistribution. We then explore this further using attitudinal data. We show that the demand for redistribution, having shown considerable variation over time, is at an all-time low. We argue that the decline in the demand for redistribution can mostly be accounted for by an increasing belief in the importance of incentives though changes in preferences over the distribution of income have been important in some sub-periods.Taxation, Inequality, Redistribution

One Nation Under a Groove? Identity and Multiculturalism in Britain

There is a lot of evidence that identity matters for behavior. There is a widespread belief that societies will function better if they manage to establish a common sense of identity among the population. And there are also contemporary fears that this common identity is threatened in several countries. In this paper we investigate the correlates of various measures of identity in the UK, a country currently greatly concerned about a perceived failure to build a common identity from a collection of diverse cultures. We find that the alleged failure to establish a British identity among ethnic minorities is exaggerated - for most their ethnicity and religion seem no barrier to a British identity. But there is a segment of the white population that clearly feels neglected and alienated, and are hostile to the multicultural agenda.Identity, Multiculturalism

The volatility of earnings: evidence from high-frequency firm-level data

The first contribution of this paper is to use UK monthly firm-level data to show that there is a large amount of transitory volatility in firm-level average earnings from month to month. We conclude that this cannot all be explained away as the consequence of measurement error, composition effects or variation in remunerated hours i.e. we suggest this volatility is real. The second contribution of the paper is to argue that this volatility cannot be interpreted as high flexibility in the shadow cost of labour to employers because of sizeable frictions in the labour market. Indeed we point out that it is the existence of frictions that allow the volatility to exist. Consequently we argue that this volatility would be expected to have only small allocational consequences and that measures of base wages are more useful in drawing conclusions about wage flexibility

Efficiency wages in low-wage labour markets and the economic effects of the minimum wage

EThOS - Electronic Theses Online ServiceGBUnited Kingdo

Towards a Back-End Framework for Supporting Affective Avatar-Based Interaction Systems

Avatar-based systems provide an intuitive way of interacting with users in the context of Ambient Assisted Living (AAL). These systems are typically supported by a diverse set of services for, e.g, social daily activities, leisure, education and safety. This paper studies the importance of specific services for two organizations, namely MRPS in Geneva, Switzerland and ORBIS in Sittard, Netherlands. Based on this study, we present the design of a backend framework that supports Avatar interaction by means of a comprehensive set of services for safe and independent living

Linear Growth through 12 Years is Weakly but Consistently Associated with Language and Math Achievement Scores at Age 12 Years in 4 Low- or Middle-Income Countries.

BackgroundWhether linear growth through age 12 y is associated with language and math achievement at age 12 y remains unclear.ObjectiveOur objective was to investigate associations of linear growth through age 12 y with reading skill, receptive vocabulary, and mathematics performance at age 12 y in 4 low- or middle-income countries (LMICs).MethodsWe analyzed data from the Young Lives Younger Cohort study in Ethiopia (n = 1275), India (n = 1350), Peru (n = 1402), and Vietnam (n = 1594). Age 1, 5, 8, and 12 y height-for-age z scores (HAZ) were calculated. Language and math achievement at age 12 y was assessed with the use of country-specific adaptations of the Peabody Picture Vocabulary Test, the Early Grades Reading Assessment, and a mathematics test; all test scores were standardized by age within country. We used path analysis to examine associations of HAZ with achievement scores. Twelve models were examined at each age (3 tests across 4 countries).ResultsMean HAZ in each country was <-1.00 at all ages. Overall, linear growth through age 12 y was associated with 0.4-3.4% of the variance in achievement scores. HAZ at 1 y was positively and significantly associated with the test score in 11 of the 12 models. This association was significantly mediated through HAZ at 5, 8, and 12 y in 9 of the models. HAZ at 5, 8, and 12 y was positively and significantly associated with test scores in 8, 8, and 6 models, respectively. These associations were mediated through HAZ at older ages in 6 of the HAZ at 5-y models and in 6 of the HAZ at 8-y models.ConclusionChild relative linear growth between ages 1 and 12 y was weakly but consistently associated with language and math achievement at age 12 y in 4 LMICs