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61. The Roots of Global Wage Gaps: Evidence from Randomized Processing of U.S. Visas

Author:
Michael Clemens
Publication Date:
06-2010
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This study uses a unique natural experiment to test a simple model of international differences in workers' wages and productivity. Large differences in wages across countries could arise from several sources. These include barriers to trade in outputs, differences in technology, differences in workers, or differences in the other factors of production accessible in different countries. To measure the relative importance of these sources in one setting, this study exploits the randomized processing of U.S. visas for a group of Indian workers who produce software within a single multinational firm. In this setting, international barriers to trade in outputs, barriers to technology transfer, and all observable or unobservable differences between workers are extremely low. The results indicate that location outside of India causes a sixfold increase in the wages of the same worker using the same technology to produce a highly tradable good. Under plausible assumptions about competition in the industry, this suggests that country-of-work by itself is responsible—in this industry—for roughly three-quarters of the gap in productivity between workers in India and workers in the richest countries. These findings have implications for open questions in labor, growth, international, and development economics.
Topic:
Economics and Labor Issues
Political Geography:
United States and India

62. US Trade and Wages: The Misleading Implications of Conventional Trade Theory

Author:
Robert Z. Lawrence and Lawrence Edwards
Publication Date:
06-2010
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Conventional trade theory, which combines the Heckscher-Ohlin theory and the Stolper-Samuelson theorem, implies that expanded trade between developed and developing countries will increase wage equality in the former. This theory is widely applied. It serves as the basis for estimating the impact of trade on wages using two-sector simulation models and the net factor content of trade. It leads naturally to the presumption that the rapid growth and declining relative prices of US manufactured imports from developing countries since the 1990s have been a powerful source of increased US wage inequality.
Topic:
Economics, Political Theory, and Labor Issues
Political Geography:
United States

63. Do Developed and Developing Countries Compete Head to Head in High Tech?

Author:
Robert Z. Lawrence and Lawrence Edwards
Publication Date:
06-2010
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Concerns that growth in developing countries could worsen the US terms of trade and that increased US trade with developing countries will increase US wage inequality both implicitly reflect the assumption that goods produced in the United States and developing countries are close substitutes and that specialization is incomplete. In this paper we show on the contrary that there are distinctive patterns of international specialization and that developed and developing countries export fundamentally different products, especially those classified as high tech. Judged by export shares, the United States and developing countries specialize in quite different product categories that, for the most part, do not overlap. Moreover, even when exports are classified in the same category, there are large and systematic differences in unit values that suggest the products made by developed and developing countries are not very close substitutes—developed country products are far more sophisticated.
Topic:
Development, Emerging Markets, International Trade and Finance, Markets, Science and Technology, and Labor Issues
Political Geography:
United States

64. Hobbling Exports and Destroying Jobs

Author:
Gary Clyde Hufbauer and Theodore H. Moran
Publication Date:
06-2010
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The US House of Representatives has just passed the American Jobs and Closing Tax Loopholes Act (HR 4213). This bill will hurt American workers, reduce American exports, and make American companies less competitive in the international marketplace. Since the US Senate has already passed companion legislation, the American Workers, State, and Business Relief Act (S 3336), these ill-considered bills could soon be reconciled in conference and become the law of the land. If so, American firms and workers will pay the price.
Topic:
Economics, International Trade and Finance, Markets, and Labor Issues
Political Geography:
United States and America

65. Protection by Stealth: Using the Tax Law to Discriminate against Foreign Insurance Companies

Author:
Gary Clyde Hufbauer
Publication Date:
04-2010
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
These are difficult times. Not only are 10 percent of Americans unemployed but the federal budget is out of whack thanks to the specter of rising entitlement outlays. A natural impulse in difficult times is to protect domestic products and domestic producers. The tone of political economy during the global recession of 2007–09 is no different from that in past recessions—but louder because the economic damage is more severe. Emblematic of this spirit is a proposal to discriminate against foreign-owned insurance companies, using the tax code.
Topic:
Economics, Labor Issues, and Financial Crisis
Political Geography:
United States

66. Obama Appointees with Strong Union Ties Could Push National Labor Relations Board in Wrong Direction

Author:
Thomas P. Gies
Publication Date:
04-2010
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
How might recess appointments to the National Labor Relations Board (NLRB) affect federal labor law? Controversial appointee Craig Becker is known for advocating policies that fall outside the mainstream view of labor laws. Although the views of one member of the NLRB will not automatically translate into dramatic policy changes, concerns that members of the NLRB may rewrite important principles of federal labor laws through litigation are not unfounded. Whether President Barack Obama's NLRB would be able to enact key provisions of the Employee Free Choice Act through litigation rather than congressional action remains to be seen.
Topic:
Labor Issues and Law
Political Geography:
United States

67. The Effect of Wage-Payment Reform on Workers' Labor Supply and Welfare

Author:
Esther Redmount, Arthur Snow, and Ronald S. Warren Jr.
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Department of Economics and Business, Colorado College
Abstract:
We analyze the effects of a largely ignored 1885 legislative reform in Massachusetts requiring that firms provide workers the option of receiving weekly wage payments. Using an inter-temporal model of deferred compensation, we derive conditions on elasticities of labor supply that determine the effects of the reform on workers' effective wage and utility. We then examine empirically the effects of the reform, using weekly data on mill workers in Lowell. Given the implications of our theoretical analysis, the empirical findings of positive wage and reform elasticities imply that the switch to weekly payment increased workers' effective wage and well-being.
Topic:
Economics, Markets, and Labor Issues
Political Geography:
United States

68. The Value of International Education to U.S. Business and Industry Leaders: Key Findings from a Survey of CEOs

Publication Date:
10-2009
Content Type:
Policy Brief
Institution:
Institute of International Education
Abstract:
Study abroad experience is widely recognized among senior management as having the potential to cultivate valued skills and desirable personal qualities in new recruits. In a recent survey, ninety percent of senior management who reported studying abroad during their own careers also reported a hiring or promotion strategy that actively sought out and rewarded study abroad experience. This suggests that individuals with personal experience studying abroad are more likely to place a higher value on the study abroad experience of a potential employee. However, appreciation of study abroad experience in recruitment is not limited to management with personal study abroad experience: 60 percent of all respondents reported that the hiring and promotion strategy of their companies acknowledge the importance of a study abroad experience.
Topic:
Education, International Trade and Finance, Markets, and Labor Issues
Political Geography:
United States

69. Flexible Employment, Flexible Families, and the Socialization of Reproduction

Author:
Wolfgang Streeck
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The progress of markets erodes traditional relations of social solidarity that are essential for the stability and performance of societies. As markets advance, pressures build on the state to replace informal social obligations with formal ones. Regulation may fail, however, which tends to give rise to demands for public services substituting for private reciprocity and compliance with institutionalized normative expectations. As a result, demands on public finances increase. The paper demonstrates this sequence by describing how the pressures and attractions of labor markets undermined the “Fordist family” of the 1960s; how the complex interaction between increasingly more flexible employment and loosening family structures resulted in declining fertility in a variety of modern societies; and how providing for societies' physical reproduction increasingly became a matter of public policy in some countries but not in others. Parallels are drawn to active labor market policy and the recent rescue of the money-making industry by Western governments. Moreover, special attention is paid to differences between countries, especially Sweden on the one hand and the United States on the other, in particular to the conditions under which governments apparently can afford not to heed calls for ever deeper and ever more expensive intervention in social relations. Exploring the increasingly negative relationship between fertility and “familialism,” the paper also shows how advanced commodification of labor and individualization of social life has effectively made it impossible to return to traditional social arrangements, such as the postwar family.
Topic:
Economics, Markets, Labor Issues, Sociology, and Governance
Political Geography:
United States

70. Off-Shoring: New Challenges and Opportunities in an Expanding Global Economy

Publication Date:
02-2007
Content Type:
Working Paper
Institution:
The National Academy of Public Administration
Abstract:
The impact of shifting U.S. business operations to foreign countries on the nation's workforce and economy is not a new or unstudied issue. For decades, it has been central to the debate about the benefits and costs of economic growth and trade expansion. However, this debate has not produced consensus on the magnitude and significance of off-shoring, which occurs when companies contract out activities abroad, either to their own affiliates or to other firms.
Topic:
Economics, International Trade and Finance, and Labor Issues
Political Geography:
United States