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The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure*
Abstract
The nature of the relationship between employers and employees has been changing over the past three decades, with firms increasingly relying on contractors, temp agencies, and franchises rather than hiring employees directly. We investigate the impact of this transformation on the wage structure by following jobs that are moved outside the boundary of lead employers to contracting firms. We develop a new method for identifying outsourcing of food, cleaning, security, and logistics services in administrative data using the universe of social security records in Germany. We document a dramatic growth of domestic outsourcing in Germany since the early 1990s. Event-study analyses show that wages in outsourced jobs fall by approximately 10-15% relative to similar jobs that are not outsourced. We find evidence that the wage losses associated with outsourcing stem from a loss of firm-specific rents, suggesting that labor cost savings are an important reason firms choose to contract out these services. Finally, we tie the increase in outsourcing activity to broader changes in the German wage structure, in particular showing that outsourcing of cleaning, security, and logistics services alone accounts for around 9% of the increase in German wage inequality since the 1980s. © The Author(s) 2017. Published by Oxford University Press on behalf of the President and Fellows of Harvard College.
... Within sectors and workplaces, both technological change (Autor, Katz, and Kearney 2006) and offshoring to low-wage countries (Alderson 1999;Kollmeyer 2009) have favored the disappearance of low-skill routine jobs. Firms concentrating on their core activities and outsourcing noncore activities to subcontractors and service-to-business firms leads to fissured workplaces (Zuckerman 1999;Weil 2014;Goldschmidt and Schmieder 2017). ...
... For instance, in most large US firms, food, cleaning, security, and logistics workers, formerly regular firm employees, are now outsourced and provided by large low-wage service firms (Dube and Kaplan 2010). In Germany, Goldschmidt and Schmieder (2017) establish that the share among cleaning workers of those employed in cleaning firms moved from 10% in 1975 to 40% in 2008. During the same period, as a result of outsourcing, the share of retail establishments hiring at least one cleaning worker declined from 82% to 20%. ...
... More generally, processes at the heart of workplace restructuring, such as downsizing, outsourcing, subcontracting, franchising, subsidiarizing, offshoring, and layoffs, contribute to increased inequality between workplaces and diminish chances of upward wage mobility within them (Weil 2014;Davis 2016;Goldschmidt and Schmieder 2017;Bergeaud et al. 2021;Bilal and Lhuillier 2022). Workplace restructuring along these lines potentially increases income segregation, separating the top earners who remain in powerful organizations from externalized low earners in low exchange power firms. ...
... In this Section, I show that the interaction between skill-biased technological change and relative concerns helps to explain a number of seemingly disconnected but well-documented empirical trends. Namely, and starting with the least obvious (a) the marked increase in domestic outsourcing (Goldschmidt and Schmieder, 2017;Bergeaud et al., 2024), (b) the increase in workers' sorting, that is, the probability that high-skill workers' co-workers are high-skill (Freund, 2022), (c) the disproportionately large increases in between-compared to within-firm inequality (Song et al., 2018;Tomaskovic-Devey et al., 2020) and (d) the strong increase in overall wage inequality (Bound and Johnson, 1992;Katz and Murphy, 1992;Juhn et al., 1993). ...
... As a result, the marginal team now strictly prefers to outsource, and the number of outsourcing teams increases. Furthermore, the wages of the newly outsourced low-skill workers fall in comparison to non-outsourced low-skill workers, which is consistent with the empirical findings from Goldschmidt and Schmieder (2017) and Bergeaud et al. (2024). ...
This paper explores team formation when workers differ in skills and their desire to out-earn co-workers. I cast this question as a two-dimensional assignment problem with imperfectly transferable utility and show that equilibrium sorting optimally trades off output maximisation with the need to match high-skill workers to co-workers with weak relative concerns. This can lead to positive (negative) assortative matching in skill even with submodular (supermodular) production functions. Under supermodular production, this heterogeneity in preferences benefits all workers and reduces wage inequality. With submodular production, the distributional consequences are ambiguous, and some workers become worse off. The model reveals that skill-biased technological change (SBTC) incentivises domestic outsourcing, as firms seek to avoid detrimental social comparisons between high- and low-skill workers, thus providing a compelling explanation for the long-term increase in outsourcing. Finally, the benefits of SBTC can trickle down to low-skill workers-but only those whose relative concerns are weak.
... Following Goldschmidt and Schmieder (2017), my focus primarily rests on low-wage outsourcing occupations, namely food, cleaning, security, and logistics occupations, 30 as the minimum wage has the most substantial impact on these low-skilled jobs. Moreover, I exclude potential business service firms that provide outsourcing services. ...
... 31 The occupations eligible for outsourcing are classified using a 3-digit occupation code, while business service firms are categorized based on the 3-digit industry code. All classification codes are provided by Goldschmidt and Schmieder (2017). Firms are split based on whether their share of outsourceable occupations is larger than the sample median value (13.6%) of the year 2013. ...
This paper evaluates the impact of the German minimum wage policy on firms' financial leverage. By using a comprehensive firm-establishment-employee linked dataset and a difference-in-differences estimation with firm-level variation in treatment intensity, the analysis shows that the average minimum wage level reduces firms' financial leverage by about 0.5 to 0.9 percentage points, corresponding to 1 to 2 percent of the mean of financial leverage. Further investigation of the mechanism shows that the minimum wage does not lead to significant capital-labor substitution; therefore, the labor share increases. Firms react to the increased labor share by deleveraging. The results suggest that while the minimum wage benefits workers by allocating more earnings to the labor force, it also introduces greater operating risks and encourages conservative financial behavior among firms.
... Using administrative social security data from Germany, Goldschmidt and Schmieder (2017) studied subcontracting in the food, cleaning, security and logistics sectors. The advantage was the availability of integrated employment biographies (IEB) data from 1975 to 2009 that contained information regarding duration of employment, total payment at the end of the period worked, type of employment and a large number of demographic variables. ...
... In a context in which data do not have a specific subcontracting variable, Goldschmidt and Schmieder (2017) applied an on-site outsourcing method that focused on personnel flow between establishments, i.e., firms hire a part of their workforce to work as legally independent subcontractors even though the employees continue their work in the same physical location. According to these authors, it is likely that there is underreporting and many cases where subcontracted workers do not change locations. ...
Labor flexibility policies have increased temporary and subcontracted jobs. These types of employment are associated with lower quality jobs. In this paper, five-year economic census data and social security administrative data were collected to estimate, in non-census years, out-of-sample the percentage of subcontracted jobs. This evidence is relevant for assessing the impact of a legislation that banned subcontracting. Predictor variables such as time fixed effects, industry, and the rate of temporary workers were used. The results show a significant decrease in subcontracting, particularly in the secondary sector. These findings raise the need for future research on improvements in post-reform well-being in the labor market.
... While this trend may have the benefit of reducing labor costs for large employers, study after study finds that it worsens labor market conditions for workers who serve as outsourced manpower. Dube and Kaplan (2010), Goldschmidt and Schmieder (2017), Drenik et al. (2021), Bilal and Lhuillier (2021), and Spitze (2022) find that these workers enjoy lower wages or benefits, such as employer-financed health insurance, than non-outsourced workers. These results are worrying as they raise a concern with some grounding in the literature: the rise of domestic outsourcing is likely to foster income inequality (Dorn et al., 2018;Deibler, 2021). ...
... One plausible explanation for the lack of impact on wages and formality may be attributed to Peru's remarkably low collective bargaining coverage of 2.6%, in stark contrast to Brazil's 64.8% and Argentina's 49.4% (International Labor Organization, 2023). This aspect is pivotal as collective bargaining agreements among in-house workers appear to notably influence wage disparities between in-house and outsourced workers (Drenik et al., 2021;Felix and Wong, 2021;Katz, 2017;Goldschmidt and Schmieder, 2017). Consequently, our findings, which indicate no wage or formality effects resulting from restricting outsourcing, align with the scarcity of collective bargaining agreements in Peru. ...
... With the opening of organizational boundaries, using externalized labor has become a key strategy for enterprises to address the scarcity of specialized knowledge and respond quickly to market changes (Deborah and Schmieder, 2017). Among various forms of externalized employment, interorganizational teams are temporary multi-organizational cooperative arrangements aimed at achieving project goals (Donati et al., 2020;Wang et al., 2024). ...
Purpose
Outsourcing has become a crucial avenue for companies to acquire external knowledge. To better understand how dual organizational supports influence the knowledge sharing behavior of outsourced employees within triangular employment relationships, grounded in social exchange theory, this study explores the effect and mechanism of differentiation in perceived organizational support (DPOS) on knowledge sharing of outsourced employees.
Design/methodology/approach
A two-wave survey was conducted to test the hypotheses, and data were collected from 271 outsourced employees and their leaders (from client organizations) in 52 interorganizational teams.
Findings
Results show that DPOS positively affect the knowledge sharing of outsourced employees and has a stronger predictive value than that of client organizational support. Outsourced employees’ psychological ownership to the interorganizational team mediates this relationship. Task interdependence plays a positive cross-hierarchy moderating role in the relationship between DPOS and psychological ownership to the interorganizational team.
Practical implications
This research provides practical advice for support strategies of client and supplier organizations.
Originality/value
Results provide further understanding for outsourced employees’ psychological and behavioral mode in triangular employment contexts.
... For example, some scholars found that AI has had an important impact on the audit industry [10]. Through the use of AI technology, enterprises can effectively enhance intelligent manufacturing, promote internal information communication, help reduce costs, and improve total factor productivity through a variety of mechanisms [11][12][13]. ...
The aim of this study was to study the impact of artificial intelligence (AI) on enterprises in terms of strategy, technology, business operations, and organizational management. This study used grounded theory analysis to identify the influencing factors of AI technology application maturity in Chinese enterprises. Taking Chinese film and television enterprises as an example, this study constructed an AI technology application maturity evaluation index system for enterprises based on the analytic network process (ANP) and evaluated the application maturity of AI technology in enterprises in terms of enterprise strategy, technology, business operations, and organizational management. To comprehensively evaluate and empirically analyze the application maturity of enterprise AI technology, this study calculated the index weight based on the ANP, and combined it with the fuzzy comprehensive evaluation method to construct a comprehensive evaluation model. The research results showed that intelligence strategy was the element that was believed to be most affected by the maturity of enterprise AI technology. For technology, intelligence technology and equipment were the elements that were believed to be affected the most. For business operations, smart shooting was the element that was believed to be affected the most. With respect to organizational management, corporate culture was the element that was believed to be most affected. The results showed that the proposed methods for evaluating the application maturity of enterprise AI technology are scientific and effective. The results of this study provide a reference for promoting the application of AI, implementing the intelligence transformation, and enhancing the core competitiveness of enterprises.
... Similarly, the probability of occupational switching after 6 years is 24% for displaced workers in high-emission industries, about 6 percentage points higher than in low-emission industries. Sectoral and occupational changes are likely to be costly due to the loss of industry-or occupation-specific human capital, contributing to the earnings losses of displaced workers (Huckfeldt, 2022[38]; Barreto, Grundke and Krill, 2023 [8]; Kambourov and Manovskii, 2009[39]; Neal, 1995[40]; Gathmann and Schönberg, 2010 [41]). Consequently, such changes reflect the difficulties that displaced workers in high-emission industries face in finding a job in the same industry and occupation. ...
The net-zero transition will create new job opportunities in low-emission activities but also increase the risk of job loss in high-emission activities. Concerns about job loss are understandable given the persistent earnings losses associated with displacement. In addition, these concerns risk undermining public support for climate change mitigation policies. Developing effective policies to support displaced workers is therefore not only crucial to alleviate the consequences of job displacement but also to ensure that concerns about job loss do not result in a backlash stalling progress towards net-zero emissions. To inform the development of such policies, this chapter provides an in-depth analysis of the consequences of job displacement in high greenhouse gas (GHG) emission industries using harmonised linked employer-employee data from 14 OECD countries and provides a detailed discussion of policies to support workers who lose their job as a result of the net-zero transition.
... The other strand of literature conducts a comprehensive theoretical and empirical exploration of the potential factors influencing inter-firm wage disparities. These investigations have revealed that factors such as export expansion (Verhoogen 2008), domestic outsourcing (Goldschmidt and Schmieder 2017), technological advancements (Cortes et al. 2023), institutional conditions (Dustmann et al. 2009), labor unions (Biewen and Seckler et al. 2019;Hirsch and Mueller 2020), and market concentration (Autor et al. 2020;Cortes and Tschopp 2024) significantly impacted inter-firm wage disparities. ...
While Big Data is driving high-quality firm development, it will also have a new impact on wage differences among firms, which is a less discussed topic in the literature. A theoretical model indicates that Big Data as an element-enhancing factor could influence inter-firm wage disparities by altering differences in productivity and the labor skill structure across firms. Taking data from Chinese A-share listed companies spanning from 2008 to 2022 and leveraging the establishment of National Comprehensive Big Data Pilot Zones (NCBDPZ) in China as an exogenous event, we employ a staggered DID model to empirically investigate the relationship between Big Data and inter-firm wage disparities. Our findings reveal that Big Data significantly reduces inter-firm wage disparities within the city. This conclusion remains robust after undergoing rigorous tests like parallel trend analysis and placebo tests. Mechanism analysis indicates that Big Data can narrow the inter-firm wage disparities by mitigating labor productivity and labor skill structure disparities among firms. Furthermore, our further analysis demonstrates that the reducing effect of Big Data on inter-firm wage disparities is primarily observed in the Secondary sector, with the most pronounced impact being within western regions in China. In addition, it is noteworthy that Big Data primarily enhances intra-distribution of labor income by alleviating wage disparities between firms rather than within. This study contributes to understanding how data elements can reshape income distribution structures, offering valuable insights for government entities seeking to strengthen the role of Big Data in reducing income disparities.
... Reinforcing these tendencies, the proliferation of "opening clauses" in collective agreements have become more important, permitting an opting out or deviating (2019) conclude that the dramatic decline in union coverage is reponsible for the observed inequality trends, coupled with a shrinking of sectors in which collective settlements were used. At the same time, many large firms have outsourced their lowest paid work (such as cleaning, security, logistics and food jobs) to uncovered firms (Goldschmidt and Schmieder 2017). Yet robotisation in German manufacturing, while highly advanced, has not led to employment declines . ...
Earnings inequality in Germany has increased dramatically. Measuring inequality locally at the level of cities annually since 1985, we find that behind this development is the rapidly worsening inequality in the largest cities, driven by increasing earnings polarisation. In the cross-section, local earnings inequality rises substantially in city size, and this city-size inequality penalty has increased steadily since 1985, reaching an elasticity of .2 in 2010. Inequality decompositions reveal that overall earnings inequality is almost fully explained by the within-locations component, which in turn is driven by the largest cities. The worsening inequality in the largest cities is amplified by their greater population weight. Examining the local earnings distributions directly reveals that this is due to increasing earnings polarisation that is strongest in the largest places. Both upper and lower distributional tails become heavier over time, and are the heaviest in the largest cities. We establish these results using a large and spatially representative administrative data set, and address the top-coding problem in these data using a parametric distribution approach that outperforms standard imputations.
... On a micro level, work digitalization has produced the following effects (González et al. 2019, 55;Katz and Krueger 2017;Goldschmidt and Schmieder 2017;Aubert et al. 2006;Bresnahan et al. 2002). First are greater standardization and disintermediation of tasks, while reducing monitoring and supervision (or surveillance) costs, especially for jobs that take place virtually. ...
This essay inquires whether digitally transformed work can be virtuous and under what conditions. It eschews technological determinism in both utopian and dystopian versions, opting for the premise of free human agency. This work is distinctive in adopting an actor-centric and explicitly ethical analysis based on neo-Aristotelian, Catholic social teaching (CST), and MacIntyrean teachings on the virtues. Beginning with an analysis of digital disruption, it identifies the most salient human advantages vis-à-vis technology in digitally transformed work and provides philosophical anthropological explanations for each. It also looks into external, organizational characteristics on both the macro and the micro levels of digitally transformed work, underscoring their ambivalence (efficiency and profits vs. exclusion and exploitation, flexibility and freedom vs. standardization and dependency) and the need to mitigate their polarizing effects for the sake of shared flourishing. The article presents standards for virtuous work according to neo-Aristotelian, CST, and MacIntyrean frames and applies them to digitally transformed work, giving rise to five fundamental principles. These basic guidelines indicate, on one hand, actions to be avoided and, on the other, actions to be pursued, together with their rationales.
... Yurt içi dış kaynak kullanımının etkisi, ölçülmesi daha zor olduğundan daha az kapsamlı olarak incelenmiştir. Goldschmidt ve Schmieder (2017), Almanya'da yurt içi dış kaynak kullanımında 1990'ların başlarından bu yana dramatik bir büyüme olduğunu belgeleyerek, dış kaynak kullanımıyla sağlanan işlerdeki ücretlerin, dış kaynak kullanımı olmayan benzer işlere göre yaklaşık %10-15 oranında düştüğünü ortaya çıkarmıştır. Dış kaynak kullanımı aynı zamanda Almanya'daki ücret eşitsizliğinin artmasına da katkıda bulunmuştur; temizlik, güvenlik ve lojistik hizmetlerinde dış kaynak kullanımı tek başına 1980'lerden sonraki eşitsizlik artışının yaklaşık %10'unu oluşturmaktadır. ...
Bu bölümün amacı DKK uygulamasının ortaya çıkardığı etik sorunları literatür incelemesi yoluyla ele almaktır. Bu amacı gerçekleştirmek üzere öncelikle DKK hakkında temel kavram ve tartışmalara yer verilecek, ardından DKK türleri açıklanacaktır. Daha sonra işletmelerin faaliyetlerini etik bir çerçevede sürdürebilmesi için çoğulcu perspektif olarak tanımlanan Kurumsal Sosyal Sorumluluk (KSS) ele alınacaktır. KSS yaklaşımından yola çıkılarak DKK uygulamasının ortaya çıkardığı ve etik bir iş hayatını sürdürmeyi zorlaştıran sorunlara değinilecektir. Sonuç ve öneriler kısmında yüksek rekabet ve küreselleşmenin de etkisiyle neredeyse stratejik bir tercihten ziyade norma dönüşmekte olan DKK uygulamalarının etik bir şekilde nasıl sürdürülebileceği kurumsal sosyal sorumluluk piramidi çerçevesinde cevaplanacaktır.
... The analysis combines matching with a differences-in-differences approach to estimate effects in units that receive treatments at different periods (Goldschmidt & Schmieder, 2017;Jaravel et al., 2018). First, each entry-level contract worker who had positive sales in at least three campaigns before completing the entry-level general skills training was matched to a "counterfactual" entry-level contract worker with the same pre-training performance trend, educational background and "effective" or a "laggard" status as an entry-level contract worker. ...
Research Summary
This article examines a firm's investment in the general skills of contract workers in flexible work arrangements. It theorizes that this investment may prolong a productive firm‐worker collaboration even when workers’ mobility barriers are low. It also proposes that achieving such benefits requires that the firm frames the relational benefits of the investments both to managers and workers. Such a “relational framing” mitigates worker concerns about subsequent productivity demands and manager concerns about worker mobility. Experimental and non‐experimental studies conducted in a multinational cosmetics direct sales company support the theory. Investments in the general skills of workers—even those in flexible work arrangements—can benefit both firms and workers by deepening the firm‐worker relationship while increasing value creation.
Managerial Summary
Should companies train workers in general skills if the workers can easily leave and transfer productivity gains to competing firms? A common answer to this question is “no,” especially when targeting workers hired under flexible arrangements, such as gig workers and direct sales representatives. This article offers a different perspective. It predicts that these investments signal a company's commitment to nurture workers’ development. In turn, workers reciprocate by prolonging a more productive collaboration. Training thus benefits workers and companies. Using relational terms to frame training programs enables the promotion by managers of training opportunities, and uptake by workers. This framing overcomes managerial concerns about worker exit and worker concerns about subsequent productivity demands. Studies conducted in a multinational cosmetics direct sales company support these arguments.
... The result that employers use wage differentiation in their workforce complements a vast body of literature on wage differences among similar workers in Germany. The literature concentrates on wage differentiation among employee groups for the entire economy Goldschmidt & Schmieder, 2017) or for employer wage premia (Card et al., 2013;Gürtzgen, 2009). However, these articles do not consider workers' outside options (Hirsch & Müller, 2020) and they do not analyse wage differentials within employers. ...
We provide evidence that suggests that a reduction in outside wage options reduces wage increases in retained jobs. We use the natural experiment of a reform that reduced outside wage options for employees in deregulated crafts occupations in comparison to employees in not reformed crafts occupations. To avoid estimation biases from general reform effects on wages, we concentrate on employees active in crafts occupations who worked for employers in the industry and commerce sectors and exclude employees in the crafts sector. Four years after the reform, the wages of treated employees in deregulated crafts were 5 per cent lower than wages of employees in not reformed occupations (control group). The reform, therefore, led to wage differentiation between comparable employees. The wage effects are concentrated in employers with high general wage increases after the reform and they can be found even at individual employers.
The impact of wages on productivity growth has continued to be a topic of widespread economic research. The study investigates the relationship between wage rate and labour productivity in southwest Nigeria with a view to seeing how these productivity indicators can be used in the context of collective bargaining to improve productivity. The research design adopted the expost facto type. The
study sample consisted of 1000 worker from 20 industries in southwestern Nigeria. Findings reveal that wage rate determine labour productivity to some extent as some other cogent factors such as educational level, years of experience, motivation of worker and leadership style of management also influence productivity as current wage stagnation is partly a function of low productivity and vice versa. The study recommends that minimum wage policies should be strongly advocated and strictly adhered to by industries while also reducing wage dispersion which could benefit long-run growth for the purpose of minimum wage fixing .More so, wages setting process should be fixed depending on the qualification and experience of the employee.
While firms in many developed countries increasingly rely on workers with nonstandard contracts, the underlying economic factor distinguishing workers on standard contracts from those on nonstandard contracts is poorly understood. Thus, we explore the asymmetric employment and wage adjustments of these two groups to examine whether differences in the importance of firm-worker relation specificity between the two types of workers is a fundamental source of the heterogeneity. We use unique firm-level panel data that records the number of dispatched workers from temporary help agencies, matched with payroll records. Leveraging the exogenous shock that stems from exchange rate fluctuation and heterogeneous trade exposure among firms, we find that firms absorb temporary shocks by adjusting the number of dispatched workers while refraining from changing the employment of in-house workers. Instead, firms opt to change the wages of in-house workers by adjusting their yearly bonuses, rather than their monthly wages.
The value of a firm’s service lies both in its workers and its relationship with clients. In this paper, we study the interaction between the client-specific experience accumulated by workers, poaching behaviour from clients, and strategic rotation of workers by firms. Using detailed personnel data from a security service firm, we show that an increase in client-specific experience increases both the productivity of workers and their probability of being poached. The firm reacts to this risk by rotating workers across multiple clients, and more frequently so for those workers more likely to be poached. Furthermore, we find that after a policy change that prohibited poaching, the firm sharply decreased the frequency of rotation, which in turn increased workers’ productivity. We propose a theoretical model that guides the empirical patterns and allows us to argue their external validity beyond our specific empirical setting. Finally, we provide survey evidence from the security service sector, demonstrating the consistency between our findings and industry observations.
This paper was accepted by Lamar Pierce, organizations.
Funding: S. Liu acknowledges financial support from the National Natural Science of China [Grants 72192844 and 72322006].
Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.02275 .
This paper studies the long-run economic impact of dismissing city councils infiltrated by organized crime. Applying a matched difference-in-differences design to the universe of Italian social security records, we find that city council dismissals (CCDs) increase employment, the number of firms, and industrial real estate prices. The effects are concentrated in Mafia-dominated sectors and in municipalities where fewer incumbents are reelected. The dismissals generate large economic returns by weakening the Mafia and fostering trust in local institutions. The analysis suggests that CCDs represent an effective intervention for establishing legitimacy and spurring economic activity in areas dominated by organized crime. (JEL D73, H77, K42, R11, R23)
The growth of nonemployer businesses as a share of the working‐age population has been little studied relative to the decline of employer business rate in the United States. We show that local labor markets specializing in routine task‐intensive jobs have experienced a higher adoption of information technology as well as the growth of nonemployer businesses primarily through increasing self‐employment in nonroutine manual task‐intensive jobs that are less frequently outsourced to business service firms.
Using the Chinese A-share listed enterprises from 2015 to 2022, this paper investigates the impact of labor outsourcing on the cost of debt. I find that labor outsourcing reduces the cost of debt. The research conclusion is still valid after a series of robustness tests. In terms of economic significance, labor outsourcing reduces the cost of debt by 9.43%. The mechanism tests suggest that labor outsourcing can reduce the cost of debt by improving corporate performance and information transparency. Further analyses find that the relationship between labor outsourcing and the cost of debt is more prominent for non-state-owned enterprises and firms located in regions with lower banking competition. This paper is the first empirical study on the impact of labor outsourcing on the cost of debt, which has important theoretical and practical significance.
Trends in the transport and storage industry's labor markets in Europe have significantly impacted changes in labor costs. Technological advancements, increased privatization and deregulation, and changes in global capital flows are among the key reasons that have resulted in significant changes in labor costs in the logistics sector during the last few decades, especially in Europe. The amount of remuneration for logistics personnel and its pace of change over time are essential aspects influencing not just capital investment choices but also country competitiveness. The clusters of countries with similar wage increases over time are also impacted by their economic, social, and ecological problems to a similar extent. The existence of probable trends in labor costs in transport and storage on a country level, as well as cluster analysis over the countries where the trend is found, will aid in revealing significant similarities and contrasts concerning the sector and the countries involved in the research. The Labor Cost Index (LCI), according to NACE Rev. 2 Activity-nominal value, quarterly data released by Eurostat was utilized for this research. Sixty-four quarterly periods have been covered between the first quarter of 2007 and the fourth quarter of 2022. The research was based on data collected from 23 different European countries. The Mann-Kendall trend test and Sen's slope test were used for trend analysis, and the K-means clustering algorithm was used for cluster analysis.
We investigate the effects of offshoring on female employment in a developing country as a recipient. We utilise unique data on outsourcing revenues from Indonesia's manufacturing plants. After correcting for offshoring's endogeneity through an instrument variable, we find substantial positive effects on the share of female workers, primarily driven by the increase in female workers without adversely affecting male employment. These positive effects are evident in production occupations but not in non‐production ones. Furthermore, these effects are more pronounced in industries with a sizeable low‐educated workforce, low‐technology sectors or light industries. Finally, we find that international outsourcing, rather than domestic outsourcing, is the key factor for female employment.
Lower-skilled workers face increasing pressures. Their bargaining position is declining under the twin pressures of globalisation and technological change; and they risk losing access to better positions as firms’ pay and conditions arrangements increasingly drift apart. Rising between-firm differences partly come about through increasing separation of lower-skilled workers into lower-paying firms with worse conditions, thereby reducing their opportunities further. Such polarisation is partly driven by (domestic) outsourcing where main firms take certain tasks that are seen as non-core out of their payroll, instead purchasing those same tasks from another official employer or temporary employment agency while retaining control. Outsourcing generally brings worse conditions and lower pay. This paper uses cross-national European data from the Labour Force Survey (LFS) along with contextual data to study how outsourcing – proxied by moves to business services providers or temporary employment agencies – contributes to a worse labour market position of lower-educated workers over time. I find that (1) domestic outsourcing is increasing over time across Europe; (2) outsourced workers are working under generally worse conditions than their counterparts; and (3) this process is not universal: it hits harder in sectors with greater technological innovation and can be alleviated by union density and worker representation.
The Gig economy has had an enormous impact on the nature and status of employment. The Fourth Industrial Revolution, adoption of Exponential Technologies and digital platform have changed the traditional full-time, stable individual employment system but also bring tremendous job opportunities in the form of on-demand freelance contractor work to unemployed workforce especially Millennials. It is disrupting the way in which we work, who we work with and where we work from. This paper explained what the gig economy is, what are the challenges facing by workforce and Indian Economy and its impact on nature and status of employment. This paper is tried to analyze the millenials" perspective regarding the gig jobs, employment status under gig economy and also tried to explore the factors which should be included in overall employment system. This paper also gives an overview for Best Practices to be adopted for framing policies and regulations of workers under gig economy. A total of 124 gig workers from taxi aggregator services of Bhopal District have been selected for this Study. Our study concluded that the most of the gig workers earn their primary income through gig job and they would like to continue this gig job on permanent basis.
We examine how changes in foreign labor regulations affect U.S. multinationals’ operating strategies. We show that firms with integrated operations in countries where labor regulations become tighter tend to establish arm’s-length relations with local business partners in that nation. The substitution between integrated and arm’s-length operations is stronger toward joint ventures than suppliers and weaker in the presence of financial constraints. Our findings are consistent with the idea that when firms find it harder to terminate their workers in integrated operations, they change to an operating model where it is easier to replace or discontinue business partners instead of employees.
We study the impact of a reform that extended employment protection to temporary agency workers. Using a difference-in-difference research design, we show that plants more exposed to the regulation experienced a decrease in revenues and total employment, and that the latter effect was attenuated in industries with high elasticity of substitution between agency and nonagency workers. We also find that labor misallocation increased as a consequence of the regulation. A model of labor demand in the presence of agency work rationalizes these results. (JEL J22, J23, J31, K31, L60, M51, O15)
In countries with strict employment protection legislation, firms may seek to replace regular by atypical jobs in order to cut wages or to become more flexible. In Germany, the number of unprotected temporary jobs is comparatively low. During the past decades, temporary agency employment, however, has increased considerably and the share of agency workers is now above the EU average. Using German establishment data, the analysis draws on longitudinal (generalized method of moments) and cross-sectional (matching and difference in differences) methods to evaluate whether agency workers replaced or supplemented regular workers during and after the Great Recession of 2008/2009. The study finds that hiring (more) agency workers made it possible for user firms among Germany’s core manufacturing industries to employ a larger number of regular workers at the same time. In specific sectors and regions, temp agencies therefore provided an alternative to government-sponsored instruments such as short-time work schemes. Obviously, from the view of workers, many disadvantages remain, even more so as it is rare for temp spells to offer a stepping stone into regular employment.
In this paper, I examine the relationship between a basic income as a policy tool and the functioning of the labour market. I focus on three key areas where a basic income has been hypothesized to relate to labour markets: (i) through altering work decisions, (ii) as a response to predicted changes in work arising from technological change and (iii) as backstop that would allow workers to demand better working conditions and higher wages. I provide answers on the role or impact of a basic income in each area in the context of the current Canadian labour market. But a key focus in the paper is on the ways we could alter our labour market models to provide a better basis for debating the impacts of policies like a basic income in the context of a goal of moving toward a more just society.
In this paper, we link every police report in Finland to administrative data to identify violence between colleagues, and the economic consequences for victims, perpetrators, and firms. This new approach to observe when one colleague attacks another overcomes previous data constraints limiting evidence on this phenomenon to self-reported surveys that do not identify perpetrators. We document large, persistent labor market impacts of between-colleague violence on victims and perpetrators. Male perpetrators experience substantially weaker consequences after attacking female colleagues. Perpetrators’ relative economic power in male-female violence partly explains this asymmetry. Turning to broader implications for firm recruitment and retention, we find that male-female violence causes a decline in the proportion of women at the firm, both because fewer new women are hired and current female employees leave. Management plays a key role in mediating the impacts on the wider workforce. Only male-managed firms lose women. Female-managed firms exhibit a key difference relative to male-managed firms: male perpetrators are less likely to remain employed after attacking their female colleagues.
In this paper I discuss what can be learned about ‘trickle-down’ ideas from recent empirical evidence on tax incidence, or the effect of tax policies on the distribution of welfare. I underscore three lessons. First, recent research suggests that business income taxes affect the earnings of workers, but these effects largely derive from taxing rents and rent-sharing, highlighting the importance of these channels for determining the ultimate incidence. Second, when workers are affected by these taxes, the burden is not borne equally by all workers, but predominantly by those at the top of the earnings distribution. Third, across different tax policies that statutorily affect the rich, the burden is largely borne by the rich, but heterogeneity in responses across tax incentives and taxpayers provides context for incidence analyses. Throughout, I discuss the value of analysing heterogeneous responses, particularly how tax incidence depends on labour markets, product markets, and tax systems.
The employment-to-population ratio among prime-aged adults aged 25–54 has fallen substantially since 2000. The explanations proposed for the decline in the employment-to-population ratio have been of two broad types. One set of explanations emphasizes cyclical factors associated with the recession; the second set of explanations focuses on the role of longer-run structural factors. In this paper, we argue that while the decline in manufacturing and the consequent reduction in demand for less-educated workers put downward pressure on their employment rates in the pre-recession 2000–2006 period, the increased demand for less-educated workers because of the housing boom was simultaneously pushing their employment rates upwards. For a few years, the housing boom served to "mask" the labor market effects of manufacturing decline for less-educated workers. When the housing market collapsed in 2007, there was a large, immediate decline in employment among these workers, who faced not only the sudden disappearance of jobs related to the housing boom, but also the fact that manufacturing's steady decline during the early 2000s left them with many fewer opportunities in that sector than had existed at the start of the decade.
We study the role of establishment-specific wage premiums in generating recent increases in West German wage inequality. Models
with additive fixed effects for workers and establishments are fit into four subintervals spanning the period from 1985 to
2009. We show that these models provide a good approximation to the wage structure and can explain nearly all of the dramatic
rise in West German wage inequality. Our estimates suggest that the increasing dispersion of West German wages has arisen
from a combination of rising heterogeneity between workers, rising dispersion in the wage premiums at different establishments,
and increasing assortativeness in the assignment of workers to plants. In contrast, the idiosyncratic job-match component
of wage variation is small and stable over time. Decomposing changes in mean wages between different education groups, occupations,
and industries, we find that increasing plant-level heterogeneity and rising assortativeness in the assignment of workers
to establishments explain a large share of the rise in inequality along all three dimensions. JEL Codes: J00, J31, J40.
Nonstandard employment relations—such as part-time work, tempo-rary help agency and contract company employment, short-term and contingent work, and independent contracting—have become increasingly prominent ways of organiz-ing work in recent years. Our understanding of these nonstandard work arrangements has been hampered by inconsistent definitions, often inadequate measures, and the paucity of comparative research. This chapter reviews the emerging research on these nonstandard work arrangements. The review emphasizes the multidisciplinary nature of contributions to this field, including research by a variety of sociologists, economists, and psychologists. It also focuses on cross-national research, which is needed to in-vestigate how macroeconomic, political, and institutional factors affect the nature of employment relations. Areas for future research are suggested.
"Economists have long been interested in the determinants and components of job creation and destruction. In many countries administrative datasets provide an excellent source for detailed analysis on a fine and disaggregate level. However, administrative datasets are not without problems: restructuring and relabeling of firms is often poorly measured and can potentially create large biases. We provide evidence of the extent of this bias and provide a new solution to deal with it using the German Establishment History Panel (BHP). While previous research has relied on the first and last appearance of the establishment identifier (EID) to identify openings and closings, we improve on this approach using a new dataset containing all worker flows between establishments in Germany. This allows us to credibly identify establishment births and deaths from 1975 to 2004. We show that the misclassification bias of using only the EID is very severe: Only about 35 to 40 percent of new and disappearing EIDs with more than 3 employees correspond unambiguously to real establishment entries and exits. Among larger establishments misclassification is even more common. We show that many new establishment IDs appear to be 'Spin-Offs' and these have become increasingly more common over time. We then demonstrate that using only EID entries and exits may dramatically overstate, by as much as 100 percent, the role of establishment turnover for job creation and destruction. Furthermore correcting job creation and destruction measures for spurious EID entries and exits reduces these measures and aligns them closer with the business cycle." (Author's abstract, IAB-Doku) ((en))
We use a simple theoretical framework and a randomized manipulation of access to information on peers' wages to provide new evidence on the effects of relative pay on individual job satisfaction and job search intentions. A randomly chosen subset of employees of the University of California (UC) was informed about a new website listing the pay of University employees. All employees were then surveyed about their job satisfaction and job search intentions. Our information treatment doubles the fraction of employees using the website, with the vast majority of new users accessing data on the pay of colleagues in their own department. We find an asymmetric response to the information treatment: workers with salaries below the median for their pay unit and occupation report lower pay and job satisfaction, while those earning above the median report no higher satisfaction. Likewise, below-median earners report a significant increase in the likelihood of looking for a new job, while above-median earners are unaffected. Our findings suggest that job satisfaction depends directly on relative pay comparisons, and that this relationship is non-linear.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
Drawing on case studies from the telecommunications and auto industries, the authors argue that the vertical disintegration of major German employers is contributing to the disorganization of Germany’s dual system of in-plant and sectoral negotiations. Subcontractors, subsidiaries and temporary agencies often have no collective bargaining institutions or are covered by different firm-level and sectoral agreements. As core employers move jobs to these firms, they introduce new organizational boundaries across the production chain and disrupt traditional bargaining structures. Worker representatives are developing new campaign approaches and using residual power at large firms to establish representation in new firms and sectors, but these have not been successful at rebuilding co-ordinated bargaining.
A firm's decision to contract out for business support services may be influenced by the wage and benefit savings it could realize, the volatility of its output demand, and the availability of specialized skills possessed by the outside contractor. Analysis of newly available establishment-level data shows that all three of these factors help to explain observed contracting behavior. The reported empirical findings are relevant both for understanding the recent growth in business support service contracting and for understanding firms' relationships with their own employees. Copyright 1996 by University of Chicago Press.
This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
A recent "revisionist" literature characterizes the pronounced rise in U.S. wage inequality since 1980 as an "episodic" event of the first half of the 1980s driven by nonmarket factors (particularly a falling real minimum wage) and concludes that continued increases in wage inequality since the late 1980s substantially reflect the mechanical confounding effects of changes in labor force composition. Analyzing data from the Current Population Survey for 1963 to 2005, we find limited support for these claims. The slowing of the growth of overall wage inequality in the 1990s hides a divergence in the paths of upper-tail (90/50) inequality-which has increased steadily since 1980, even adjusting for changes in labor force composition-and lower-tail (50/10) inequality, which rose sharply in the first half of the 1980s and plateaued or contracted thereafter. Fluctuations in the real minimum wage are not a plausible explanation for these trends since the bulk of inequality growth occurs above the median of the wage distribution. Models emphasizing rapid secular growth in the relative demand for skills-attributable to skill-biased technical change-and a sharp deceleration in the relative supply of college workers in the 1980s do an excellent job of capturing the evolution of the college/high school wage premium over four decades. But these models also imply a puzzling deceleration in relative demand growth for college workers in the early 1990s, also visible in a recent "polarization" of skill demands in which employment has expanded in high-wage and low-wage work at the expense of middle-wage jobs. These patterns are potentially reconciled by a modified version of the skill-biased technical change hypothesis that emphasizes the role of information technology in complementing abstract (high-education) tasks and substituting for routine (middle-education) tasks. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Economic impacts of unionization on employers are difficult to estimate in the absence of large, representative data on establishments
with union status information. Estimates are also confounded by selection bias, because unions could organize at highly profitable
enterprises that are more likely to grow and pay higher wages. Using multiple establishment-level data sets that represent
establishments that faced organizing drives in the United States during 1984–1999, this paper uses a regression discontinuity
design to estimate the impact of unionization on business survival, employment, output, productivity, and wages. Essentially,
outcomes for employers where unions barely won the election (e.g., by one vote) are compared with those where the unions barely lost. The analysis finds small impacts on all outcomes that we examine; estimates for wages are close to zero. The evidence
suggests that—at least in recent decades—the legal mandate that requires the employer to bargain with a certified union has
had little economic impact on employers, because unions have been somewhat unsuccessful at securing significant wage gains.
This paper provides evidence that the decline in the real value of the minimum wage and in the rate of unionization account for a significant share of the increase in wage inequality in the United States between 1979 and 1988. The role of the minimum wage is particularly important for women, while deunionization has the largest impact on men. The authors develop a semiparametric procedure that applies kernel density methods to appropriately weighted samples. The procedure provides a visually clear representation of where in the density of wages institutional and labor market forces exert the greatest impact. Copyright 1996 by The Econometric Society.
This paper provides empirical assessments of the two leading explanations of measured inter-industry wage differentials: (1)
true wage differentials exist across industries, and (2) the measured differentials simply reflect unmeasured differences
in workers' productive abilities. First, we summarize the existing evidence on the unmeasured-ability explanation. Second,
we construct a simple model which shows that if matching is important then endogenous job-change decisions can create important
self-selection biases even in first-differenced estimates of industry wage differentials. Third, we analyze a sample that
approximates the experiment of exogenous job loss. We find that (i) the wage change experienced by a typical industry switcher
closely resembles the difference in the relevant industry differentials estimated in a cross-section, and (ii) pre-displacement
industry affiliation plays an important role in post-displacement wage determination.
The high purpose of these sessions is symbolized by a passage from Michael Polanyi:
Science is not conducted by isolated efforts like those of the chess players or shellers of peas and could make no progress that way. If one day all communications were cut between scientists, that day science would practically come to a standstill. … The co-ordinative principle of science … consists in the adjustment of each scientist’s activities to the results hitherto achieved by others. In adjusting himself to the others each scientist acts independently, yet by virtue of these several adjustments scientists keep extending together with a maximum efficiency the achievements of science as a whole.1
Over the past 3 decades, the U. S. Temporary Help Services (THS) industry grew five times more rapidly than overall employment. Contemporaneously, courts in 46 states adopted exceptions to the common law doctrine of employment at will that limited employers' discretion to terminate workers and opened them to litigation. This article assesses the contribution of "unjust dismissal" doctrine to THS employment specifically, and outsourcing more generally, finding that it is substantial-explaining 20% of the growth of THS between 1973 and 1995 and contributing 500,000 additional outsourced workers in 2000. States with smaller declines in unionization also saw substantially more THS growth.
This paper analyzes the role of establishments in the upward trend in dispersion of earnings that has become a central topic in economic analysis and policy debate. It decomposes changes in the variance of log earnings among individuals into the part due to changes in earnings among establishments and the part due to changes in earnings within establishments. The main finding is that much of the 1970s– 2010s increase in earnings inequality results from increased dispersion of the earnings among the establishments where individuals work. Our results direct attention to the role of establishment-level pay setting and economic adjustments in earnings inequality.
There is growing evidence that firm-specific pay premiums are an important source of wage inequality. These premiums will
contribute to the gender wage gap if women are less likely to work at high-paying firms or if women negotiate (or are offered)
worse wage bargains with their employers than men. Using longitudinal data on the hourly wages of Portuguese workers matched
with income statement information for firms, we show that the wages of both men and women contain firm-specific premiums that
are strongly correlated with simple measures of the potential bargaining surplus at each firm. We then show how the impact
of these firm-specific pay differentials on the gender wage gap can be decomposed into a combination of sorting and bargaining
effects. We find that women are less likely to work at firms that pay higher premiums to either gender, with sorting effects
being most important for low- and middle-skilled workers. We also find that women receive only 90% of the firm-specific pay
premiums earned by men. Importantly, we find the same gender gap in the responses of wages to changes in potential surplus
over time. Taken together, the combination of sorting and bargaining effects explain about one-fifth of the cross-sectional
gender wage gap in Portugal.
For much of the twentieth century, large companies employing many workers formed the bedrock of the U.S. economy. Today, on the list of big business's priorities, sustaining the employer-worker relationship ranks far below building a devoted customer base and delivering value to investors. As David Weil's groundbreaking analysis shows, large corporations have shed their role as direct employers of the people responsible for their products, in favor of outsourcing work to small companies that compete fiercely with one another. The result has been declining wages, eroding benefits, inadequate health and safety conditions, and ever-widening income inequality.From the perspectives of CEOs and investors, fissuring--splitting off functions that were once managed internally--has been a phenomenally successful business strategy, allowing companies to become more streamlined and drive down costs. Despite giving up direct control to subcontractors, vendors, and franchises, these large companies have figured out how to maintain quality standards and protect the reputation of the brand. They produce brand-name products and services without the cost of maintaining an expensive workforce. But from the perspective of workers, this lucrative strategy has meant stagnation in wages and benefits and a lower standard of living--if they are fortunate enough to have a job at all.Weil proposes ways to modernize regulatory policies and laws so that employers can meet their obligations to workers while allowing companies to keep the beneficial aspects of this innovative business strategy.
In the late 1990s and into the early 2000s, Germany was often called "the sick man of Europe" (for example, Economist 2004), a phrase usually attributed to comments by Czar Nicholas I of Russia about the troubles faced by the Ottoman Empire in the mid-19th century. Indeed, Germany's economic growth averaged only about 1.2 percent per year from 1998 to 2005, including a recession in 2003, and unemployment rates rose from 9.2 percent in 1998 to 11.1 percent in 2005 (according to World Bank data). Today, after the Great Recession, Germany is described as an "economic superstar" (for example, in the movie "Made in Germany: Europe's Economic Superstar," http://films.com/ItemDetails.aspx?TitleId=29218). Germany's number of total unemployed fell from 5 million in 2005 to about 3 million in 2008, and its unemployment rate had declined to 7.7 percent in 2010 (according to data from Germany's Federal Employment Agency, the Bundesagentur für Arbeit). In contrast to most of its European neighbors and the United States, Germany experienced almost no increase in unemployment during the Great Recession, despite a sharp decline in GDP in 2008 and 2009 (an episode discussed in Möller 2010; Burda and Hunt 2011). Germany's exports reached an all-time record of $1.738 trillion in 2011, which is roughly equal to half of Germany's GDP, or 7.7 percent of world exports. Even the euro crisis seems not to have been able to stop Germany's strengthening economy and employment.
This paper investigates the impact of outsourcing on sectoral reallocation in the U.S., which, over the period 1948-2007, mainly coincides with the remarkable rise in services. The service sector accounts today for more than 83% of total employment, while the same share was 60% in 1947. Roughly 40% of this growth comes from a single industry within services, namely Professional and Business Services. This is an unusual sector, given that more than 90% of its output is used by other firms as an intermediate input or investment; and it is where most of the service outsourcing activity is concentrated. The same evidence appears in the structure of the input-output tables: the rise of the share of Professional and Business Services is in fact the main change that has taken place over the past 60 years. Using a simple accounting framework, which is capable of capturing the fully-fledged input-output structure of the economy, I calculate the contribution of outsourcing to the reallocation of employment across sectors. I find that Professional and Business Services outsourcing alone accounts for 14% of the total increase in the share of services in total employment.
Germany is known as one of the countries where the collective representation of interests through associations (‘corporatism’) is particularly strong. However, after the tripartite Alliance for Jobs, Training and Competitiveness failed to agree on solutions for combating high unemployment, an independent commission established by the government (the ‘Hartz commission’) has currently set the agenda for labour market reform. This article addresses the question of whether these events signal the end of corporatism in labour market policy in Germany. An analysis of temporary agency work, an atypical form of employment addressed by the Hartz reforms, shows that fundamental reform in Germany must be initiated outside the system of tripartite interest negotiation. However, the implementation of such reforms depends on the traditional structures of interest negotiation between the social partners.
Using a comprehensive linked employer-employee database from Brazil for the period 1995-2001, we are able for the first time to compare firms founded as employee spinoffs to new firms without parents and to diversification ventures of existing firms entering a new industry. Employee spinoffs are defined either as the director/manager having moved from a parent in the same industry or as one-quarter of the employees having shifted from a common parent. Depending on definition, employee spinoffs account for between one-sixth and one-third of the new firms in Brazil’s private sector during this period. Regardless of definition, size at entry is larger for employee spinoffs than for new firms without parents but smaller than for diversification ventures of existing firms. Similarly, exit rates for employee spinoffs are less than for new firms without parents and comparable to those for diversification ventures of existing firms. These results suggest that we can think of some part of a firm’s productivity draw in the Jovanovic (1982) model as embodied in the firm’s employees and portable by them to a new firm.
This paper shows that wage inequality in West Germany has increased over the past three decades, contrary to common perceptions.
During the 1980s, the increase was concentrated at the top of the distribution; in the 1990s, it occurred at the bottom end
as well. Our findings are consistent with the view that both in Germany and in the United States, technological change is
responsible for the widening of the wage distribution at the top. At the bottom of the wage distribution, the increase in
inequality is better explained by episodic events, such as supply shocks and changes in labor market institutions. These events
happened a decade later in Germany than in the United States.
"The IEBS is a random sample drawn from the Integrated Employment Biographies (IEB) of the IAB. The IEB are not to be understood as a self-contained dataset but as a procedure for merging data from four different sources for the purpose of data quality control and for drawing samples such as the IEBS. The four data sources are - the IAB Employee History (BeH) with observations of employment subject to social security taken from the social security notification procedure, - the Benefit Recipient History (LeH) with observations of receipt of unemployment benefit, unemployment assistance and maintenance allowance, - the Participants-in-Measures History File (MTH) with observations of participation in employment and training measures and - the Applicant Pool Data (BewA) with job-search observations. The most important changes compared with the 2005 version of the IEBS are: Updating of the loading status and inclusion of new variables; the variable 'grund' is recoded in the variable spectrum; the missing values are recoded uniformly to the value -7; reforms of district territories in Saxony-Anhalt and Thuringia result in new district numbers from 2007." (author's abstract, IAB-Doku) ((en))Additional InformationHere you can find the German version.
Neoclassical wage theory is based on the premise that a worker's utility is based on his own wage and his own hours of work, without reference to the wages and hours of others. This article reviews anecdotal evidence that the wages of others are a powerful force in determining worker satisfaction, such that utility goes down when the wages of others go up. The resulting comparisons are a powerful force in determining wage structures but do not exclude ultimate effect of neoclassical wage determinants. Copyright 1993 by University of Chicago Press.
Observed human capital explains less than half of wage variation. In BLS Industry Wage Surveys, establishment-based wage differentials
(controlling for occupation) account for 20–70 percent of intra-industry wage variation. This corresponds to a standard deviation
in wages of 14 percent of the mean, almost as large as interindustry wage variation. Investigation suggests that establishment
wage differentials are not random variations or returns to usual measures of human capital.
This paper introduces the fair wage-effort hypothesis and explores its implications. This hypothesis is motivated by equity
theory in social psychology and social exchange theory in sociology. According to the fair wage-effort hypothesis, workers
proportionately withdraw effort as their actual wage falls short of their fair wage. Such behavior causes unemployment and
is also consistent with observed cross-section wage differentials and unemployment patterns.
We find that, conditioning on industry of assignment, cleaners and security guards who participate in activities organized by contract companies earn 15 and 17 per cent less, respectively, than workers in those activities organized in-house. These estimates are hardly affected by the inclusion of a set of jointly statistically significant exogenous variables. We can expect that most of the productive traits that characterize a task are transferred to the contractor in the process of contracting out a cleaning or security task. Thus, our findings are hard to rationalize by a simple competitive labour market setting where the law of one price holds. Copyright (c) Blackwell Publishing Ltd/London School of Economics 2007.
Using a longitudinal sample of one million French workers and 500,000 employing firms, the authors decompose real total annual compensation per worker into components: observable employee characteristics, personal heterogeneity, firm heterogeneity, and residual. Unobserved personal heterogeneity is a very important source of wage variation. Unobserved firm heterogeneity, while important, is not as important as person effects. Enterprises that hire high-wage workers are more productive but not more profitable. Enterprises that pay higher wages, controlling for person effects, are more productive and more profitable. Person effects explain about 90 percent of interindustry and firm-size wage differences while firm effects explain substantially less.
This paper uses cross-sectional and longitudinal data to examine differences in pay for equally-skilled workers in different ind ustries. The major finding is that there is substantial dispersion in wages across industries, even after allowing for measured and unmeas ured labor quality, working conditions, fringe benefits, transitory d emand shocks, the threat of union-ization, union bargaining power, fi rm size, and other factors. In addition, evidence is presented demons trating that turnover has a negative relationship with industry wage differentials. These findings suggest that workers in high-wage indus tries receive noncompetitive rents. Copyright 1988 by The Econometric Society.
“Union Diversity and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany,”
- Fitzenberger
“Why Employers Use Flexible Staffing Arrangements: Evidence from an Establishment Survey,”
- Houseman
“Outsourcing the Cuts: Pay and Employment Effects of Contracting Out,”
- Smith Institute
“What Do We Know about Contracting Out in the United States? Evidence from Household and Establishment Surveys,”
“Lower-Paid Workers at Harvard University,”
- Harvard Committee on Employment Contracting Policies
“Course Correction: Reversing Wage Erosion to Restore Good Jobs at American Airports,”
- Dietz
“Does Outsourcing Reduce Wages in the Low-Wage Service Occupations? Evidence from Janitors and Guards,”
- Dube
“The Rise and Nature of Alternative Work Arrangements in the United States, 1995–2015,”
- Katz
“Restructuring the Employment Relationship: The Growth of Market-Mediated Work Arrangements,”
- Abraham
“Firming Up Inequality,”
- Song
“Managing Export Complexity: The Role of Service Outsourcing,”
- Berlingieri
“Firms and Labor Market Inequality: Evidence and Some Theory,”
- Card