scholarly journals Workforce Composition, Productivity, and Labor Regulations in a Compensating Differentials Theory of Informality

2020 ◽  
Author(s):  
Daniel Haanwinckel ◽  
Rodrigo R. Soares
Keyword(s):  
Compensating Differentials ◽  
Labor Regulations ◽  
Workforce Composition

Workforce Composition, Productivity, and Labor Regulations in a Compensating Differentials Theory of Informality

2021 ◽  
Author(s):  
Daniel Haanwinckel ◽  
Rodrigo R Soares
Keyword(s):  
Firm Size ◽  
Cost Effective ◽  
Skilled Workers ◽  
Informal Labor ◽  
Labor Regulations ◽  
Wage Premiums ◽  
Unskilled Workers ◽  
Policy Simulations ◽  
Workforce Composition ◽  
Skilled And Unskilled Workers

Abstract We develop a search model of informal labor markets with realistic labor regulations, including minimum wage, and heterogeneous workers and firms. Smaller firms and lower wages in the informal sector emerge endogenously as firms and workers decide whether to comply with regulations. Because skilled and unskilled workers are imperfect substitutes in production, the model uniquely captures the informality consequences of shocks that affect returns to skill, such as rising educational levels. The model also reproduces empirical patterns incompatible with other frameworks: the presence of skilled and unskilled workers in the formal and informal sectors, the rising share of skilled workers by firm size, and formal and firm-size wage premiums that vary by skill level. We estimate the model using 2003 data from Brazil and show that it successfully predicts labor market changes observed between 2003 and 2012. Under a range of different assumptions, changes in workforce composition appear as the main drivers of the reduction in informality over this period. Policy simulations using the estimated model suggest that progressive payroll taxes are a cost-effective way to reduce informality.

Minimum Wage Effects Under Weak Compliance with Labor Regulations: The Case of Bolivia

2017 ◽  
Author(s):  
Marcelo Claure ◽  
Jorge DDvalos ◽  
Alejandra Leyton ◽  
Vanessa SSnchez ◽  
Christian Valencia
Keyword(s):  
Minimum Wage ◽  
Labor Regulations ◽  
Wage Effects

Male-Female Wage Differences: The Importance of Compensating Differentials

ILR Review ◽  
1985 ◽  
Vol 38 (3) ◽  
pp. 426-437 ◽  
Author(s):  
Randall K. Filer
Keyword(s):  
Working Conditions ◽  
Compensating Differentials ◽  
Wage Differences ◽  
Men And Women ◽  
Female Wage ◽  
Wage Equations ◽  
Employment Survey

This study investigates the extent to which differences in average earnings between men and women may be the result of sorting by the sexes into jobs with different average levels of disagreeable and agreeable working conditions. An analysis of data from the 1977 Quality of Employment Survey shows that, on average, men and women hold jobs with substantially different working conditions and that these differences are of a pattern suggesting the need to pay higher wages to attract employees to the jobs held by men. Estimation of wage equations shows that these differences in working conditions contribute significantly to the ability to explain average earnings for each sex.

scholarly journals Income Taxes, Compensating Differentials, and Occupational Choice: How Taxes Distort the Wage-Amenity Decision

2012 ◽  
Vol 4 (1) ◽  
pp. 224-247 ◽  
Author(s):  
David Powell ◽  
Hui Shan
Keyword(s):  
Occupational Choice ◽  
Income Taxes ◽  
Compensating Differentials ◽  
Tax Rates ◽  
Occupational Choices ◽  
Tax Rate ◽  
Welfare Impacts ◽  
Percent Increase

The link between taxes and occupational choices is central for understanding the welfare impacts of income taxes. Just as taxes distort the labor-leisure decision, they may also distort the wage-amenity decision. Yet, there have been few studies on the full response along this margin. When tax rates increase, workers favor jobs with lower wages and more amenities. We introduce a two-step methodology which uses compensating differentials to characterize the tax elasticity of occupational choice. We estimate a significant compensated elasticity of 0.03, implying that a 10 percent increase in the net-of-tax rate causes workers to change to a 0.3 percent higher wage job. (JEL H24, H31, J22, J24, J31)

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