CITIES,WAGES, AND THE URBAN HIERARCHY

In this paper, we estimate the size of the wage premium necessary to compensate for remoteness incurred by workers compared to the city size productivity effects. We construct five urban hierarchy tiers for cities in Chile based on their level of remoteness from the urban system. We then contrast the effect generated by these variables on worker wages. We report a positive gradient of wages the higher the size of the urban tier and a loss in wages that can reach 35 percent for more remote cities.     

Minimum Wage Policy,Rural Development and Poverty Alleviation in Malawi

This article examines the pattern of minimum wage changes in Malawi and some of their effects, and considers more generally the appropriateness of a minimum wage policy in developing country situations similar to that of Malawi. After a progressive decline in the real value of the minimum wage during the 1970s there is evidence that the government is attempting, through periodic and rather erratic corrective action, to maintain something like a constant real wage. Data from a Ministry of Labour survey demonstrate that such changes in the minimum wage do have a direct effect on wages paid, but that this is concentrated in specific sectors: outside these, minimum wage policy is ineffectual, and the effective coverage achieved in terms of the national work-force is very narrow. Since the most significant influence on the wages of hired workers is the elastic supply of unskilled labour available at very low wages from the smallholder sector, efforts need to be concentrated on raising the supply price of labour through positive policies pursued in the rural sector. Some special features of the rural labour market are therefore examined. Various measures could be taken here: one which seems likely to be effective in producing immediate results is the progressive transfer of burley tobacco quotas to smallholders.     

The Paradox of Narrowing Wage Differentials and Widening Wage Inequality in Mexico

This article examines the parallel phenomena of narrowing wage differentials among major groups of workers and widening wage inequality in general in Mexico during the 1980s and 1990s. In trying to understand this paradox, it finds that a human-capital model cannot explain wage determination in the 1990s. Although employees with higher skills and education have enjoyed increasingly higher relative returns to their human capital, much of the variance in wages is not attributable to differences in human capital or rates of return. Discriminatory wage policies have combined with policies of trade liberalization to markedly widen the wage gap between lower-paid and higher-paid workers.     

Do Urban Agglomeration Effects and Household Amenities have a Skill Bias?*

There are several hypotheses why urban scale affects wages. Most focus on agglomeration economies that increase labor demand, especially for high‐skilled workers (e.g., dynamic externalities stress knowledge transfers, and imply the urban wage gap favors skilled workers). Others stress urban amenities that increase labor supply and decrease wages. Amenities should have a stronger influence on affluent households if they are normal goods. By examining whether urban‐scale affects net returns to education, it can be determined whether skilled workers are influenced more by urban productivity or amenities. Empirical results suggest net returns to education decline with urban scale, implying a key role for urban amenities in affecting skilled workers.     

SOMETIMES CLOSE IS GOOD ENOUGH: THE VALUE OF NEARBY ENVIRONMENTAL AMENITIES*

ABSTRACT An extensive empirical literature exists, showing that variations in region‐specific amenities can account for persistent differences in real wages across regions. However, this literature has considered only amenities in the same location as the household. This paper argues that environmental amenities at some distance from but accessible to urban areas may lead to negative compensating wage differentials. We use a general equilibrium framework and data from the 1995 Current Population Survey to calculate implicit amenity prices based on measures of distance to environmental amenities. Our results suggest that amenities outside the metropolitan area do generate compensating wage differentials, as workers are willing to accept lower wages to live in accessible proximity to “nice” places. This implies that these places provide a positive externality to those communities that find them accessible. The estimated effects are quantitatively important, suggesting that these externalities should be taken into account in policy making.     

THE EFFECTS OF AGGLOMERATION ON WAGES: EVIDENCE FROM THE MICRO‐LEVEL

This paper estimates individual wage equations to test two rival non‐nested theories of economic agglomeration, namely New Economic Geography (NEG), as represented by the NEG wage equation and urban economic (UE) theory, in which wages relate to employment density. In the U.K. context, we find that for male respondents, there is no significant evidence that wage levels are an outcome of the mechanisms suggested by NEG or UE theory, but this is not the case for female respondents. We speculate on the reasons for the gender difference.     

Child loss and maternal wages in China

Using data from a random sample of the 2005 National Population Survey of China, we investigate the association between child death and maternal hourly wages. Approximately 1.6 per cent of the population has experienced at least one child death. Such bereaved mothers’ hourly wages are 53 per cent lower than those of non-bereaved mothers. We find that child death carries a significant wage penalty. Son death has a larger impact than daughter death and its effect decreases as the number of children in the household increases. Our decomposition results show that number of children, maternal education and regional characteristics are the three most important contributors to the wage gap, yet unexplained differences remain large, especially at the lower end of the wage distribution.     

Land Markets in the Harris-Todaro Model: A New Factor Equilibrating Rural-Urban Migration

Recent research in the Harris-Todaro (HT) tradition has added an important new element to the model by incorporating an urban land market. Brueckner and Zenou (1999) (hereafter BZ) argue that a model where migration equalizes expected wages between city and countryside may overlook another important force that equilibrates the process of rural-urban migration. This force is the migration-induced rise in the urban cost of living, which occurs principally through escalation of urban land rents as the city population expands. Land-rent escalation, which tends to limit rural-urban migration, provides an important additional force that may help determine city sizes in developing countries. The present paper provides a simpler alternative to BZ's analysis by assuming that urban residents smooth their income as they cycle between formal and informal employment. This allows migration decisions to be based on the expected wage, as in the usual HT framework, in a model that includes a land market. The analysis shows that this modified framework generates results slightly different from those of BZ.     

REGIONAL HETEROGENEITY IN WAGE DISTRIBUTIONS: EVIDENCE FROM SPAIN*

ABSTRACT Regional differences in real wages have been shown to be both large and persistent in the United States and the U.K., as well as in the economies of other countries. Empirical evidence suggests that wage differentials adjusted for the cost of living cannot only be explained by the unequal spatial distribution of characteristics determining earnings. Rather, average wage gap decomposition reveals the important contribution made by regional heterogeneity in the price assigned to these characteristics. This paper proposes a method for assessing regional disparities in the entire wage distribution and for decomposing the effect of differences across regions in the endowments and prices of the characteristics. The hypothesis forwarded is that the results from previous studies obtained by comparing average regional wages may be partial and nonrobust. Empirical evidence from a matched employer–employee dataset for Spain confirms marked differences in wage distributions between regions, which do not result from worker and firm characteristics but from the increasing role of regional differences in the return to human capital.     

WAGES,RENTS, UNEMPLOYMENT,AND THE QUALITY OF LIFE: A CONSISTENT THEORY‐BASED MEASURE

Combining a spatial equilibrium model with a search‐matching unemployment model, this paper analyzes the willingness to pay for regional amenities and the regional quality of life when wages, rents, and unemployment risk compensate for local amenities and disamenities. The results are compared with those obtained from the Rosen‐Roback approach. We demonstrate that the traditional approach gives too much weight to the wage differential if search frictions are significant. Furthermore, the paper confirms that the wage curve is negatively sloped for quasi‐linear utility. Specifically, the wage rate increases and the unemployment rate decreases in response to an increase in the amenity level if the amenity is marginally more beneficial to producers than to consumers.     

Medical versus social work-places: constructing and compensating the personal support worker across health care settings in Ontario,Canada

This article explores the role of place in explaining variation in caregiver compensation. Using the labour category of Personal Support Worker (PSW) in Ontario, Canada, it contrasts wage rates across three health care settings: hospitals, long-term care facilities and private homes. An evaluation of current literature from disciplines spanning geography, gender studies, political science and sociology is combined with a critical analysis of policy documents and wage data to reveal that, despite holding similar qualifications and performing comparable job duties, hospital-based workers receive higher wages than home-based workers. I theorize that this wage disparity is partially attributable to the historical privileging of hospital settings in Canada, based on a medical-social continuum of health care valuation. Given that the hospital is constructed as a highly medical place, whereas the home is considered to be a social place, caregiving work enjoys greater financing protection in the former. I argue that these constructions stem from deeply gendered historical roots which view the marketplace as a male-dominated setting for productive waged labour, and the home as a female-dominated setting for unpaid social pursuits. Thus, when personal support services shift from public institutions into private homes, these activities become invisible to the state, and their provision beyond its purview. I conclude that the medical versus social nature of the duties performed by PSWs has become secondary to the medical versus social nature of the setting in which these activities take place. This has translated into lower wages for home-based PSWs, effectively resulting in wage discrimination.     

MIGRATION,SKILL FORMATION,AND THE WAGE STRUCTURE*

ABSTRACT We analyze the impacts of migration and of labor market integration on the distribution of skills and the wage structure in both the short and the long run. To do so, we develop a framework where workers have heterogeneous skills and where in‐migration expands the range of available skills in the economy. In the short run, this expansion leads to productivity gains, which may more than offset the negative endowment effects of a larger labor supply so that all workers may be better off. In the long run, in‐migration impacts wages further by altering the workers' incentives to acquire skills, thereby affecting the wage structure indirectly by changing the economy's skill composition. Since the short and the long‐run effects of in‐migration on wages may differ, compositional changes may be an important element to take into consideration. A numerical illustration calibrated on U.S. data suggests that the immigration of skilled workers negatively affects the incentives for domestic skill formation, thereby suggesting that endowment effects dominate externalities. We finally extend the model to cope with the simultaneous impacts that migration and skill formation have on the host and the source region, and we show that more migration increases wage disparities and the skill gap across regions.     

Migration and market wage risk

The author presents an approach to the analysis of labor migration that incorporates the role of market wage variability as a source of information in individual migration decisions. "The focus...is on quantifying the effects of the origin market acting through amenities and the share of market-specific wage variability as it affects forecasts of alternative wages and forecast precision. A subsample of employed males...from the [U.S.] National Longitudinal Survey of Youth (NLS) age 16 to 22 years is used for estimation. The empirical results are consistent with the theoretically predicted relationship between migration propensities and regional differences in the information content of wages. In addition, the results provide evidence that risk aversion deters migration given uncertainty, measured by forecast precision, about alternative market wage levels."     

A Very Moderate Socialist Indeed? R. H. Tawney and Minimum Wages

R. H. Tawney has been placed alongside G. D. H. Cole and HaroldLaski as one of the most important contributors to British socialistthought this century. But, on the issue of poverty wages, Tawneywas circumspect and conventional. In supporting such a modestreform as the 1909 Trade Boards Act, he was concerned with pragmaticconsiderations. His two studies of chainmaking and tailoring,funded by the Ratan Tata foundation and carried out at the LondonSchool of Economics, show him to be more concerned with moderate(and, in his opinion, workable) policies rather than radicalideas. In order to prove the boards a success, Tawney exaggeratedtheir advantages. It can be argued that what was required toend low pay was not industry-based trade boards, but a nationalminimum wage based on an agreed living income. Whilst Tawneyrejected Beatrice and Sidney Webb's national minimum wage asbeing overly based at the subsistence level, he also dismisseda more generous minimum on the grounds that it might be abovewhat an individual trade could bear. Although Tawney's ideaswere highly influential, they were an inadequate guide to solutionsto the problems of low pay in the twentieth century.     

Migration and implicit amenity markets: does incomplete compensation matter?

We first develop an empirical approach for generating measuresof wage over or under compensation (incomplete compensation)for location attributes. We then devise a method to test whethermigration is influenced by incomplete compensation in wagesfor location characteristics. An intercity wage regression isestimated where fixed effects capture the impact of site characteristicson wages. We then regress the fixed effects on a comprehensivevector of site attributes, where the residuals from this stagecapture incomplete compensation in wages. The derived measuresof incomplete compensation are included in a standard microdata-baseddiscrete choice model of migration. The results suggest thatincomplete wage compensation for site characteristics mattersin migration decisions, and the findings are consistent withtendencies toward spatial equilibrium in the distribution ofpopulation.     

The minimum wage and seasonal employment: Evidence from the US agricultural sector

Nearly 40% of agricultural workers in the United States earn an hourly wage that is within 10% of the prevailing state-level minimum wage. We evaluate the impact of the minimum wage on farm employment using county-level data from the United States Census of Agriculture. We employ long-differences specifications and find evidence of a dynamic, negative effect of the minimum wage on seasonal agricultural employment, but no effect on year-round agricultural employment. We estimate a long-run elasticity of total agricultural employment with respect to the minimum wage of about −0.40, which is both statistically and economically significant. Employers’ total expenditures on hired agricultural workers are not affected by the minimum wage. Finally, our analysis suggests that increases in minimum wages may lead to higher capital investment as well as the consolidation of farming operations in the agricultural sector.     

The Geography of Economic Development and Racial Discrimination in Brazil

This study investigates the relationship between unequal resource and population distribution and racial wage inequality in Brazil. Using sample data from the 1980 Brazilian census, monthly wages were estimated for white and Afro-Brazilian men working in nine metropolitan areas. Estimates showed that racial disparities in wages existed across all regional labour markets. Regression-based decomposition analysis found that a substantial portion of the racial wage gap was due to discrimination (unequal pay), while estimates of the magnitude of labour market discrimination indicated considerable variation by geographical area. Discrimination was higher in the predominantly white and highly developed areas of the South than in the former slave and underdeveloped regions of the Northeast.     

RURAL–URBAN MIGRATION AND UNEMPLOYMENT: THEORY AND POLICY IMPLICATIONS*

ABSTRACT We develop a regional model where, in the city, unemployment prevails because of too high (efficiency) wages, while, in the rural area, workers are paid at their marginal productivity. We characterize the steady‐state equilibrium and show that it is unique. We then consider two policies: decreasing urban unemployment benefits and subsidizing urban employment. We find that decreasing the unemployment benefit in the city creates urban jobs and reduces rural–urban migration since new migrants have to spend some time unemployed before they can find a job in the city. On the other hand, raising employment subsidies increases urban employment but may also increase urban unemployment because it triggers more rural–urban migration. In this respect, the employment subsidy policy can backfire by raising rather than reducing urban unemployment.     

The Determinants of Policy Introduction and Bill Adoption: Examining Minimum Wage Increases in the American States, 1997–2006

Faced with long intervals between federal minimum wage increases in recent years, state legislatures are increasingly likely to take action. Motivated by the relative dearth of empirical work on minimum wages in the American states, this article considered various explanations to determine which factors are associated with legislative efforts to pass wage increases. Taking seriously the view that disagreements over the effects of minimum wage increases enhances the influence of political factors, we drew on the policy adoption and diffusion literature to examine how internal determinants (political and economic variables) and regional diffusion pressures relate to both the introduction and adoption of minimum wage legislation in the American states in the years between the last two federal minimum wage increases (1997–2006). Employing negative binomial regression to analyze annual bill introductions, we found that a number of political variables are related to the consideration of minimum wage increases. However, using event history analysis to examine annual adoptions of minimum wage increases, we found few of the same variables matter. We concluded with a discussion of the empirical results within the context of the broader policy literature and cautioned future scholars to consider seriously whether political factors exert distinct influences at different stages of the policy process.     

The peasantariat and politics: migration,wage labor,and agriculture in Botswana

This article examines Botswana's wage labor migration in terms of 2 reigning theories: 1) as a dichotomy between traditional and modern society, with workers viewing agriculture as an alternative to more desirable wage employment; or 2) as a subordination of colonial society to capitalist society, with workers drawn from the resulting underdeveloped and impoverished areas and divorced from their agricultural potential. Approximately 90% of Botswanan households have a wage worker; less than 1/4 of households rely on the agricultural economy alone. 80% of the population works in agriculture in some way, but agriculture contributes only 35% of total rural income. Over 50% of households are below the poverty level, and most must rely on a variety of income sources for subsistence. 68% of rural households (Botswana is 84% rural) have absent wage earners while 45% have 1 or more wage earners present. Absent wage earners work mainly in unskilled and semi-skilled jobs in Botswanan towns (44%) and villages (22%), and lands and cattlepost locations (5%) in South African mines (19%), and other jobs in South Africa (8%). Individuals with low socioeconomic status tend to migrate to South Africa; those with higher status move to Botswanan towns. Working for wages has become customary for most Botswanans. This article undermines conventional development theories by showing the close interweaving of the modern and traditional societies, and arguing that traditional retention of communal land rights and cattle ownership served the capitalistic system by becoming the basis for wage earning; previous income source (agriculture) did not disappear, but their use was altered. South African mining returns to the Botswanan government since 1965 largely benefited a growing petty-bourgeois class and marginally improved the life styles of the peasant labor class. Botswana's development depends on the relationship between the peripherial laboring class and the dominating petty-bourgeois and its internal structure.