Exploring the Link Between Wages and Psychological Capital

Traditional Mincer-type hedonic wage equations typically fail to account for the effect of psychological capital, in part because such factors are often regarded as unobservable. This article incorporates a measure of psychological capital (specifically, self-esteem) that has been validated in the psychology literature into an otherwise typical hedonic wage model. Then, the sample is divided into race and gender subgroups and estimates are compared. The results suggest that self-esteem does play a role in determining wages for Whites (White men, in particular), but it has no detectable effect on the wages of African-Americans. Data are drawn from the 1979 National Longitudinal Study of Youth. JEL: D (‘Microeconomics’), J (‘Labor and demographic economics’), J31 (‘Wage levels and structure, wage differentials’)

Gender Differences in Earnings Rewards to Personality Traits in Wage-employment and Self-employment Labour Markets

In an extensive review of wage determination papers, it is concluded that the standard demographic and human capital factors explain little of earning differentials. Consequently, there is a growing interest among economists to include non-cognitive skills measured by personality traits in recent empirical literature to explain variations in earnings. In a bid to contribute empirical evidence to this strand of literature, this study examines the associations between the Big-Five personality traits (i.e., agreeableness, conscientiousness, openness, extraversion and neuroticism) and earnings, using the World Bank’s Skills towards Employment and Productivity (STEP) data on Ghana. The study employed regression techniques to estimate a series of semi-logarithmic wage equations that include demographic and human capital factors and the Big-Five personality traits to determine how important these factors are in explaining wage and self-employment earnings. Furthermore, the estimations of the wage equations are done separately for males and females to highlight any gender differences in the way personality traits contribute to earnings. Findings are largely consistent with the literature but uniquely demonstrate that in a power-distant culture like Ghana, where, traditionally, girl-child education has been relegated to the background, agreeable females, and not males, are rewarded in the formal wage employment labour market. However, in the informal self-employment labour market, conscientious males, and not females, are positively rewarded with higher earnings. These unique findings contribute to our understanding of the gender differences in the relative importance of non-cognitive skills in the formal and informal labour markets. JEL Codes: J31, J24

Interregional Wage Differentials in Russia: Examining the Role of Long-term Factors

This study analyses wage differentials between Russian regions. We focus on two long-term factors shaping them: different regional economic structures and living conditions. To examine the role of these factors we use micro-data from the Rosstat’s enterprise sample surveys conducted in 2005-2015, combined with data from the aggregated regional-level statistics. By estimating mincer-type wage equations extended with regional-level variables we show that cross-regional differences in employment composition are able explain no more than one third of the total interregional variation in nominal wages. Wage compensations for relatively worse living conditions (higher price levels, colder winter, and worse environmental conditions) account for about half of the remaining variation. Both factors together explain about 60% of the total variation. These findings contribute to a better understanding of the nature of interregional wage differentials in Russia and have important implications.

About sad legacies: a study of the intergenerational occupational legacy in Brazil

PurposeThis article aims to analyze the workers' probabilities of following their parents’ occupational legacy and whether these individuals are paid differently compared to those who opted for occupations different from their parents, in Brazil.Design/methodology/approachTo that end, the occupational legacy probability equation was estimated as the quantile wage equations with sample selection bias correction and the wage decomposition for Brazil from the microdata of the National Household Sample Survey (PNAD) of 2014. It was found that families have a strong influence on the process of choosing the careers of their children. The average probability of a young person following the occupational legacy of their parents was 41.63%. This percentage is different when analyzing different groups of individuals, such as being male or female, being in a traditional or single parent family, being in an income household lower or higher per capita.FindingsThe results also confirm the hypothesis that workers who tend to follow the occupational legacy have lower wages than individuals who choose other occupations and that this may cause a “poverty trap” since the lower the salary quantile, the stronger the “trap” as economically disadvantaged young people tend to follow in their parents' footsteps and to contribute to family income they face a tradeoff, opt between work or study, which ends up disrupting their education and forcing young people to entering the job market early, performing secondary occupations with lower income and arduous work, generating a “vicious cycle of poverty”.Research limitations/implicationsGiven the database, we are comprised to its most recent version.Practical implicationsThis is the first work on Latin American problem of occupational legacy.Originality/valueThis is the first work on Latin American problem of occupational legacy.

DETERMINATION OF THE URBAN WAGE PREMIUM IN ECUADOR

This paper aims to determine the urban wage premium in Ecuador. It estimates two wage equations with the nominal and real wage, using instrumental variables to control endogeneity. Four indicators are applied to measure up the urban premium: area, classification by size of a city, cantonal population, and number of firms per capita. The latter is used for the first time and proves to be a better measure to reflect the urban premium. The results show that workers located in metropolis and big cities earn wages 14% and 4% higher than those workers located in small towns, respectively. The wage elasticity is 0.03% with respect to cantonal population, and 0.06% with respect to the number of firms.

Pecuniary Returns to Working Conditions

Using matched worker-firm data from three waves of the Vietnam Small and Medium Enterprises data, we examine whether workers are compensated with higher wages for working in vulnerable jobs and unfavourable working conditions. Wage equations indicate that there are no clear compensating mechanisms for working in poor conditions, for having an informal contract, and for having few financial benefits. Quantile regressions show that workers in the upper tail of the wage distribution are more likely to be penalized for working in adverse working conditions. Employees recruited through official hiring channels with an informal contract earn less than employees hired through social networks. Upon estimating mean decompositions of wage gaps based on working conditions, we find that the gap is almost entirely explained by the conjunction of worker, job, and firm characteristics in 2015, in contrast to the previous survey year of 2013.

Parental migration and young migrants’ wages in urban China: An exploratory analysis

Since the initiation of the economic reforms in 1978, generations of Chinese migrants have moved from the countryside to cities to seek job opportunities. As a result of financial constraints and institutional obstacles, many migrants leave their children at the place of origin, to be taken care of by partners, grandparents or other caregivers. Whilst previous studies primarily focus on the impacts of parental migration on children’s education and health, very few studies have examined its longer-term impacts on labour market income when children reach adulthood. Yet parental migration is likely to influence children’s human capital accumulation and skill development. Drawing on data from the 2011 Chinese Migrant Dynamics Monitoring Survey, this article fills the gap by exploring the relationship between different types of parental migration and their children’s wages when the children have grown up and migrated to work in cities. Structural models are employed to estimate both education and wage equations simultaneously to capture the direct effect of parental migration on wages, together with the mediating effect of education. The results show significantly negative relationships between parental migration and young migrants’ educational attainment and wages. Those who experienced the out-migration of both parents are most disadvantaged in the urban labour market. The study is important for policies aimed at improving migrants’ life prospects and enhancing social mobility and equality.

The lack of wage growth and the falling NAIRU

In this note, we argue that a considerable part of the explanation for the benign wage growth in the advanced world is the rise in underemployment. In the years after 2008 the unemployment rate understates labour market slack. Underemployment is more important than unemployment in explaining the weakness of wage growth in the UK. The Phillips curve in the UK has now to be rewritten into wage underemployment space. Underemployment now enters wage equations while the unemployment rate does not. There is every reason to believe that the NAIRU has fallen sharply since the Great Recession. In our view the NAIRU in the UK may well be nearer to 3 per cent, and even below it, than around 5 per cent, which other commentators including the MPC and the OBR believe.