Articles & Chapters

From Cointegration to Mr. Isaacs: The Employment Problem in South Africa

Gary S. Fields — Tue, 17 Nov 2009 11:17:54 PST

[Excerpt] In the summer of 1999, I first visited South Africa at the request of the South African government. The government was concerned about the nation's drastic unemployment situation, which in recent years has been estimated at 12-20% using the standard ILO definition (not working but actively looking for work) and which reached as high as 34% when account is also taken of persons who did not work, did not look for work, but who reported themselves willing to take a job if one were offered. Government believed that unemployment was caused by excessively high wages--excessive, that is, relative to market-clearing levels--so they asked us to estimate, inter alia, the wage elasticity of demand for labor. Note the role of both types of research here: government's core hypothesis came both from talking to business-people, who claimed that high wages discouraged them from employing more workers, and from prior econometric estimates.

Earnings and Employment Dynamics for Africans in Post-apartheid South Africa: A Panel Study of KwaZulu-Natal

Paul L. Cichello — Tue, 17 Nov 2009 11:07:32 PST

[Excerpt] The labour market is central in determining individual and household well-being in South Africa. Therefore, an understanding of earnings and employment dynamics is a key policy issue. However, the absence of panel data has constrained empirical work addressing these issues. This paper makes use of a regional panel data set for KwaZulu-Natal to begin the study of earnings and employment dynamics. The authors find that, on average, working-aged Africans in KwaZulu-Natal experienced large gains in earnings during the period 1993-8. These gains were progressive in nature, with the highest quintile of 1993 earners and those originally employed in the formal sector actually experiencing zero or negative growth in their average earnings. The average gain in earnings varied substantially depending on the employment transitions experienced by labour force participants. Obtaining formal sector employment is found to be an important pathway to growth in earnings, yet not exclusively so. The majority of those who get ahead do so by retaining employment in a given sector or moving into the informal sector. The dynamism of the informal sector over this period is shown to be an important contributor to the progressive growth in earnings. Government policies that seek to increase employment and earnings in the informal as well as formal sectors are recommended. Understanding the constraints preventing the vast number of unemployed from engaging in informal employment is shown to be a key issue for future work.

The Microeconomics of Changing Income Distribution in Malaysia

Gary S. Fields — Tue, 17 Nov 2009 11:03:00 PST

[Excerpt] This study uses data from Malaysia's Household Income and Expenditure Surveys to quantify the importance of different factors in accounting for the changes in Malaysia's income distribution between 1984 and 1989 ("Period 1") and between 1989 and 1997 ("Period 2"). These particular years were chosen, because 1997 is the most recent available survey, 1984 is the earliest survey comparable to 1997, and 1989 is important for three reasons: 1. Income inequality fell until 1989 and rose thereafter. 2. Economic growth was slow in 1984-89 and fast in 1989-97. and 3. 1989 is the closest year to the beginning of Malaysia's National Development Policy, which placed heightened emphasis on the eradication of hardcore poverty.

Decent Work and Development Policies

Gary S. Fields — Tue, 17 Nov 2009 11:00:11 PST

Welcoming the shift to outcomes which he perceives in the ILO's focus on decent work, the author explores the major issues thus raised. He discusses how to make the notion of decent work more precise in operational terms, and how to develop an integrated approach to economic and social policy in the decent work context, before formulating an empirical approach to assessing the effects of economic growth on decent work. Finally, he outlines a structure for the ILO's planned country reviews of progress towards decent work.

Employment in Construction and Distribution Industries: The Impact of the New Jobs Tax Credit

John H. Bishop — Fri, 30 Oct 2009 10:51:40 PDT

Excerpt] The New Jobs Tax Credit (NJTC) offers a tax credit of fifty percent of the first $4200 of wages per employee for increases in employment of more than two percent over the previous year. Economic theory predicts that such a tax credit should stimulate employment, decrease hours worked per week, and reduce product prices of the subsidized industries. A time series analysis of the construction, retailing, and wholesaling industries finds strong support for these hypotheses. Our results suggest that the NJTC was responsible for 150,000-670,000 of the more than 1-million increase in employment that occurred between mid-1977 and mid-1978 in the construction and retailing industries. Similar analysis indicates that by June 1978, NJTC had produced roughly a 1 percentage point reduction in the margin between retail and wholesale prices of commodities that saved consumers $1.9-$3.6 billion over the course of the previous year.

The Company They Keep: Founders' Models for Organizing New Firms

M. Diane Burton — Fri, 30 Oct 2009 10:48:03 PDT

[Excerpt] This chapter examines the employment models founders use as they begin to construct new firms. The empirical setting is a sample of emerging technology firms in Silicon Valley. This chapter focuses on two questions: (1) Why are new firms founded under different conceptual models? and (2) What are the factors that lead a founding team to espouse a particular employment model?

Capital Mobility and Job Loss: Corporate Restructuring, Production Shifts, and Outsourcing

Stephanie Luce — Fri, 30 Oct 2009 10:44:31 PDT

[Excerpt] This chapter examines the impact of corporate restructuring and global outsourcing on employment in the Commonwealth and the shifts in production from workplaces in Massachusetts to other countries. In particular we focus on global outsourcing, the shifting of work from Massachusetts offshore to countries in Europe and Asia, and nearshore to Canada and countries in Latin America. Given the huge media attention that outsourcing and nearshoring have garnered, and the increasing trend they represent toward corporate restructuring and capital mobility with lasting repercussions for workers, families, unions, and communities in the Commonwealth, it is important to assess their relative impact on job loss in the state.

Immigration Policy in Free Societies: Are There Principles Involved or Is It All Politics?

Vernon M. Briggs — Fri, 30 Oct 2009 10:41:01 PDT

[Excerpt] Free societies with industrialized economies such as Canada and the United States are characterized by certain unique features. Among these is the fact that they both allow their citizens to come and go across their borders with few restrictions and they annually permit millions of noncitizens to travel, to conduct business, to visit, and to study in their countries with only minimal regulation. Both nations also allow some non-citizens to enter their countries and to work in competition with their citizen work-force for temporary periods under specific conditions. Furthermore, they regularly allow a generous number of non-citizens to immigrate or to take refuge as permanent residents and eventually to become citizens. It is primarily these latter situations, where work and residence issues arise, that pose the question whether years of experience have generated any principles that can guide policy makers when debates re-surface? Or, is it always simply a matter of political power and special interests at the moment that determine immigration policy on an ad-hoc basis?

The State of U.S. Immigration Policy: The Quandary of Economic Methodology and the Relevance of Economic Research to Know

Vernon M. Briggs — Fri, 30 Oct 2009 10:36:59 PDT

[Excerpt] As the 21st Century commences, immigration has once again become a major source of the nation's labor force growth. The public policies that enable mass immigration to occur do more than simply increase the size of the nation's labor force; they also affect such key compositional matters as its human capital, demographics, and geographic attributes. Immigration policy, however, has more than just immediate economic consequences; it also helps to mold the nation's future as long-term citizenship obligations are usually involved.

Still Unjaded: Jim Atleson's Twenty-first Century Turn to International Labor Law

Lance A. Compa — Tue, 06 Oct 2009 12:34:12 PDT

[Excerpt] I came late to the academy and am still more of a trade unionist than a scholar, so I am going to start my remarks from this perspective. When Jim wrote Values and Assumptions I was in my earlier life as a union staffer with the United Electrical, Radio and Machine Workers of America (UE), a great, democratic, independent left-wing union. Like everyone else on the union staff, I was a generalist and an itinerant. I received organizing and bargaining assignments in New England, the Carolinas, and Baltimore, corporate campaign assignments in South Dakota, Pennsylvania, and California, political and legislative assignments in Washington, and a dozen other projects. It was nonstop action from the time I started working for the UE after finishing law school in 1973.