Work Contracts and Earnings Inequality: The Case of Chile

Great social inequality has been one of the worrisome features of economic development in Latin America. This study focuses on Chile, one of Latin America's fastest growing economies with one of the highest levels of income inequality during the 1990s. Using micro-level data from the 1994 and 2000 Encuestas de Caracterización Socio-Económica, this article examines the role of work contracts in explaining male and female earnings and earnings inequality among wage and salary workers over the second half of the 1990s. The analysis distinguishes between wage and salary work without a work contract – referred to as ‘informal’ work, and wage and salary work with a work contract. Within the latter group, the study further differentiates by the type of work contract held, such as permanent and a variety of contingent work contracts. The findings reveal that the majority of employees in informal and contingent wage and salary work arrangements earned significantly less than their permanent counterparts. Additionally, informal and contingent wage and salary work arrangements accounted for a small, although increasing, fraction of male and female earnings inequality from 1994 to 2000. Finally, the proliferation of seasonal, fixed-term, and informal wage and salary work arrangements has been one of the few economically significant factors in explaining changes in male and female earnings inequality over the second half of the 1990s.     

How Accurate is Food-for-Work Self-Targeting in the Presence of Imperfect Factor Markets? Evidence from Ethiopia

Effective targeting of transfers is a key issue in public policy to combat poverty. Much faith is presently placed in self-targeting mechanisms such as public employment schemes supported by food-for-work transfers. Where targeting errors have been observed, these are usually attributed to mismanagement of key operational details, such as the project's wage rate. Using a unique data set from rural Ethiopia, we demonstrate that targeting errors may also have structural causes in some low-income countries. We hypothesise that imperfect factor markets generate a predictable dispersion across households in reservation wage rates that breaks down the unconditionally positive relation between income and shadow wages on which the theory of self-targeting public employment programmes rests. Our results confirm that the inaccuracy of FFW targeting stems from the fact that, in rural Ethiopia, higher income households are endowed with more labour per unit of land or animal. Due to poor factor markets in land and livestock these labour-abundant households have lower marginal labour productivity on farm, thereby depressing the reservation wage rates they find acceptable for FFW participation.     

Earnings and Caste: An Evaluation of Caste Wage Differentials in the Nepalese Labour Market

This paper examines the sources of wage differentials among castes in Nepal, a country which had, until 1963, an age-old caste-based social division of labour. We use an extended Oaxaca decomposition model with occupation and firm size augmenting the conventionally used measures of human capital endowments. Our results indicate that caste wage differentials in Nepal are large and that human capital endowments and lack of access to better paying occupations and larger firms have a significant impact. Furthermore, we find mixed evidence that the government policy of affirmative action has narrowed down the caste wage differential.     

Industrial Wage Inequality in Latin America in Global Perspective, 1900–2000

Standard economic theories of wage inequality focus on the factor-biased nature of technological change and globalization. This paper examines the long-run development of industrial wage inequality in Latin America from a global comparative perspective. We find that wage inequality was comparatively modest during the first half of the twentieth century, but rising much faster during the post-war era than in other industrial countries. In-depth analyses of wage inequality trends in Argentina, Brazil, and Chile confirm this pattern, but also reveal notable country peculiarities. In Argentina and Chile, trend breaks coincided with large political–institutional shocks while in Brazil, wage inequality increased unabated under the wage regulation policies of successive post-war administrations. We argue that without taking national policies with respect to education and the labor market into account, economic theory cannot explain “Latin American” patterns of wage inequality.     

Wage Differentials in Brazil: Theory and Evidence

The investigation of wage determination and wage differentials in developing countries has concentrated on the effects of human capital and different sources of segmentation associated with institutional arrangements and structural characteristics on earnings. In this article, we use micro-data for Brazil for the 1980s and 1990s to test several competitive theories, and models with segmentation explained by efficiency wages. We find that unmeasured abilities and efficiency wage models seem to play a role in wage determination, while compensating differentials and transitory difference theories were found to be irrelevant to wages formation.     

Regional wages and economic development: A case study of manufacturing wages in India, 1950–1960

This paper examines some hypotheses with respect to the interregional wage variations in Indian manufacturing from 1950 to 1960. The choice of this period was determined by the availability of relevant data. It was found in an earlier study that the regional wage structure tended to be flexible during the period under consideration. In this paper, an attempt has been made to explain the inter‐regional wage differentials by analysing the data on trade unionism, per capita income, productivity, capital intensity, non‐primary employment and consumer prices. It is argued that the level of regional wage differentials can be explained by relative differentials in productivity and in trade unionism, but the change in wage differentials depends upon the changing capital intensity in respective regions.     

Raising wages in the controlled sector: A general equilibrium analysis

The likelihood of the possibility pointed out by Stewart and Weeks, that a rise in wages in the ‘controlled’ sector of an underdeveloped country might raise total employment, is reexamined using an alternative model which facilitates consideration of the impact of such a wage rise on output and potential welfare as well as on employment. It is argued that Stewart and Weeks may have been overly sanguine in their appraisal of the impact of a controlled sector wage rise: the impact of this on real income and employment looks more likely to be adverse than not.     

Gender wage inequality and export‐led growth in South Korea

This article investigates the relationship between gender, wage inequality, and export‐led growth in South Korea. The persistent gender wage gap in Korea's manufacturing sector is found to be linked to women's segregation in the country's major export industries where real wage growth has lagged productivity growth, despite favorable market conditions that might drive up women's wages relative to those of men. The interaction of state‐ and firm‐level hiring, training, and promotion practices that structure women's and men's employment opportunities differently appear to have resulted in a relatively weaker fall‐back position for women in labour markets. Econometric results are consistent with the hypothesis that women's weaker fall‐back position limits their ability to bargain for wage increases commensurate with productivity growth. Further, evidence is presented which links gender wage inequality to the growth of Korean exports.     

Trade Openness and Wage Inequality: Evidence for Malaysia

This article examines the impact of trade openness on wage inequality in Malaysia during the period 1984–1997. Malaysia has operated a very open trade regime since the 1960s and has pursued aggressive import substitution and export supporting policies. This development strategy is very different to that adopted in many other emerging economies where trade liberalisation has been associated with greater wage inequality. The aim of the present study is to examine whether Malaysia's more open approach to international trade has had a similar effect on wage inequality. The results suggest, in fact, that this is not the case.     

Women and Organized Racial Terrorism in the United States

Racial terrorism—violence perpetrated by organized groups against racial minorities in pursuit of white and Aryan supremacist agendas—has played a significant role in U.S. society and politics. Women have been important actors in much of this violence. This article examines women's involvement in racial terrorism from the immediate post-Civil War period to the present. Although organized racial violence by women has increased over time, this trend may not continue. The strategic directions and tactical choices of Aryan and white supremacist groups are likely to alter the extent and nature of women's involvement in racial terrorism in the future.     

Gender differences in the incidence of rural to urban migration: Evidence from Kenya

This article examines gender differences in the incidence of rural to urban migration in developing countries, particularly those of Sub‐Saharan Africa. The study distinguishes itself from current migration literature by suggesting that the gain in returns to observable attributes, as a result of migration, may differ by gender and could provide an explanation for gender differences in migration. Using data from Kenya, we estimate the urban‐to‐rural wage gap, separately for each gender, and decompose the gap into the components due to urban to rural differences in observable attributes and differences in returns to observable attributes. We find that the portion of the wage gap that is due to the gain in returns to observable attributes is larger for males, suggesting that males receive larger monetary returns as a result of migration and, consequently, have greater incentive to migrate to urban areas.     

The Invisibility of Wage Employment in Statistics on the Informal Economy in Africa: Causes and Consequences

Abstract

This article challenges the claim, along with the statistics that support it, that self-employment is by far the dominant employment status in the informal economy. The article begins by reviewing key insights from relevant literature on the informal economy to argue that conventional notions of ‘wage employment’ and ‘self-employment’, while unfit for capturing the nature and variety of employment relations in developing countries, remain central to the design of surveys on the workforce therein. After putting statistics on Tanzania’s informal economy and labour force into context, the analysis reviews the type of wage employment relationships that can be found in one instance of the informal economy in urban Tanzania. The categories and terms used by workers to describe their employment situation are then contrasted with those used by the latest labour force survey in Tanzania. The article scrutinises how key employment categories have been translated from English into Swahili, how the translation biases respondents’ answers towards the term ‘self-employment’, and how this, in turn, leads to the statistical invisibility of wage labour in the informal economy. The article also looks at the consequences of this ‘statistical tragedy’ and at the dangers of conflating varied forms of employment, including wage labour, that differ markedly in their modes of operation and growth potential. Attention is also paid to the trade-offs faced by policy-makers in designing better labour force surveys.     

Minimum wage effects across the private and public sectors in Brazil

Most of the available evidence on the effect of minimum wages concerns the private sector of developed countries. In this paper, we examine minimum wage effects in both private and public sectors for a key developing country. We use monthly data from a Brazilian household survey from 1982 to 2000. We find a strong compression effect in the wage distribution for both the private and public sectors. However, we find no evidence of adverse employment effects in either sector at the aggregate level or for vulnerable groups such as teenagers, women and the low educated. Hence, minimum wage policies in Brazil appear to be a potentially viable anti-poverty instrument.     

Getting to the frontier

This article analyses a Stackelberg differential game in which households' labour supply and fertility decisions are taken assuming husbands as leaders and wives as followers. The model solution yields the optimal number of children and labour supply of male and female. In equilibrium male and female labour supply increases with wage and decreases with children costs and time preference, and the optimal number of children increases with male wage and decreases with cost of children, husband's time preference, and female's wage and time preference. We test the model using Ghana Living Standard Survey Round 4 and find that women are more sensitive to changes in the labour market conditions than males, and better labour market opportunities for women may lead to a strong reduction in fertility.     

Differential adoption of modern rice technology and regional wage differential in Nepal

In Nepal, which consists of ecologically distinct regions, the concentration of the adoption of modern rice varieties in the favourable rice growing areas of the country has raised fears that regional income disparities have widened. This study shows that greater demand for hired labour due to the adoption of modern rice varieties has induced permanent and seasonal migration from unfavourable to favourable areas. This appears to have largely equalised average wage rates across different production environments. Thus, as far as labour income is concerned, benefits from the modern varieties have been widely shared.     

Crimes of Color: Risk, Profiling, and the Contemporary Racialization of Social Control

In the United States the phenomenon of racial profiling has emerged as an important and controversial issue within political and criminal justice policy debates. For the most part, these debates have assumed a sort of racism at work in order to explain law enforcement's use of criminal profiles largely determined by racial classifications. Accordingly, many have worked to expose this allegedly racist behavior in the hopes that such exposure will bring an end to the practice. This essay argues that racial profiling is embedded in much larger social developments that must be explored in order to understand the role race now plays in the maintenance of social order in contemporary American society.     

Poverty,resource distribution and security: The impact of new agricultural technology in rural Bangladesh

Recent studies have examined the relationship between agrarian change and rural poverty in LDCs concentrating on either exchange or non‐exchange income. Neither approach employed independently is, however, adequate. Bangladeshi evidence is presented of growing concentration of control of land, of components of new agricultural technology and of ancillary resources. Increasing incidence of landlessness and near landlessness has resulted in greater dependence on wage employment for subsistence by the rural poor. It is argued that the non‐exchange component of income is important in slack periods and assumes even greater significance in abnormal years when both real wage and employment fall sharply. With rapid population growth, depletion of natural resources and greater penetration of technological and market forces, the cushioning effect of access to natural resources, in adverse circumstances, on the rural poor has become more limited and their income security has been undermined.     

Agricultural Workers,Credit Rationing and Family Networks in Rural Mexico

Abstract

We use mixed methods and first-hand household data in Mexico to investigate credit practices by households engaged in agricultural wage employment. Quantitative analysis shows evidence of rationing in the formal sector but also suggests the existence of mitigating mechanisms. Qualitative analysis provides additional insights. First, income patterns associated with agricultural wage generate income smoothing needs that are sometimes better met by the informal sector. Second, family networks can perform key functions as gateways to the formal sector, through specific informal arrangements that inject flexibility into formal rules and procedures.     

Minimum Wage Competition between Local Governments in China

The theory of fiscal and regulatory competition between jurisdictions is more advanced than its empirical testing. This is particularly true of labour regulation in general, and minimum wage regulation in particular, and especially so for developing countries. This paper utilises the spatial lag methodology to study city-level strategic interactions in setting and enforcing minimum wage standards during 2004–2012 in China. We manually collect a panel data set of city-level minimum wage standards from China’s government websites. This analysis finds strong evidence of spatial interdependence in minimum wage standards and enforcement among main cities in China. If other cities decrease minimum wage standards by 1 RMB, the host city will decrease its standard by about 0.7–3.2 RMB. If the violation rate in other cities increases by 1 per cent, the host city will respond by an increase of roughly 0.4–1.0 percentage points. The results are robust to using three estimation methods, Maximum Likelihood, IV/GMM, and a dynamic panel data model. Our findings of strategic interactions suggest the need for policy coordination in labour regulation in China.