Motivated by problems of coordination failure in organizations, we examine how overcoming coordination failure and maintaining coordination depend on the ability of individuals to observe others’ choices. Subjects’ payoffs depend on coordinating at high effort levels in a weak-link game. Treatments vary along two dimensions. First, subjects either start with low financial incentives for coordination, which typically leads to coordination failure, and then are switched to higher incentives or start with high incentives, which usually yield effective coordination, and are switched to low incentives. Second, as the key treatment variable, subjects either observe the effort levels chosen by all individuals in their experimental group (full feedback) or observe only the minimum effort (limited feedback). We find three primary results: (1) When starting from coordination failure the use of full feedback improves subjects’ ability to overcome coordination failure, (2) When starting with good coordination the use of full feedback has no effect on subjects’ ability to avoid slipping into coordination failure, and (3) History-dependence, defined as dependence of current effort levels on past incentives, is strengthened by the use of full feedback.

Exogeneous disruptions in labor demand have become more frequent in recent times. The COVID-19 pandemic has resulted in millions of workers being repeatedly laid off and rehired according to local public health conditions. This may be bad news for market efficiency. Typical employment relations—which resemble non-enforceable (implicit) contracts—rely on reciprocity (Brown et al. in Econometrica 72:747–780, 2004), and hence could be harmed when workers’ efforts no longer guarantee reemployment in the next period. In this paper we extend the BFF paradigm to include a per-period probability (0%, 10%, 50%) of publicly observable “shutdown”, where a specific firm cannot contract with any workers for several periods. A Perfect Bayesian Equilibrium exists in which these shutdowns destabilize relationships, but do not harm efficiency. Our experiment shows that, remarkably, market efficiency can be maintained even with very frequent stochastic shutdowns. However, the dynamic of relational contracts changes from one where a worker finds stable employment to one where she juggles multiple employers, laying the burden of maintaining productivity upon workers and worsening worker-side inequality.

We investigate how employee potential influences wage offers and effort exertion in a gift exchange experiment. In particular, we test if gift exchange based on a commonly accepted norm for wage differentiation can emerge in a setting where the wage demands of agents are heterogeneous. We also analyse how communication by principals responds to the unequal wage demands and how it influences agents’ decisions about working effort in the presence of varying degrees of bargaining power. We find that differences in productivity and the resulting entitlements lead to differentiation in wages. High productivity agents are offered substantially higher wages than low productivity agents. Results from a control experiment suggest that a large part of this wage markup is related to the future productivity potential of high performers. At the same time, unequal wage schemes do not substantially crowd out effort exertion: we observe no strong detrimental effects from disadvantageous relative wage positions. Certain communication patterns significantly influence effort exertion.

Using combined experimental and survey data, this paper provides empirical evidence that firm productivity is related to worker's pro-social behavior in the workplace. At the firm level, we find a strong positive relationship between firm productivity and reciprocating behavior among workers. Investigating workers’ individual behavior we find a similar, strong relationship when regressing earnings, a proxy for productivity, on reciprocity. To address simultaneity we use an instrumental variable approach and find that the initial estimate was upwards biased, presumably because it did not take into account the positive feedback from earnings to reciprocity. The new coefficient remains substantially above zero, but it is statistically insignificant.

Firms face an optimization problem that requires a maximal quantity output given a quality constraint. But how do firms incentivize quantity and quality to meet these dual goals, and what role do behavioral factors, such as loss aversion, play in the tradeoffs workers face? We address these questions with a theoretical model and an experiment in which participants are paid for both quantity and quality of a real effort task. Consistent with basic economic theory, higher quality incentives encourage participants to shift their attention from quantity to quality. However, we also find that loss averse participants shift their attention from quality to quantity to a greater degree when quality is weakly incentivized. These results can inform managers of appropriate ways to structure contracts, and suggest benefits to personalizing contracts based on individual behavioral characteristics.

We explore gender attitudes towards competition in the United Arab Emirates—a traditionally patriarchal society which in recent times has adopted numerous policies to empower women and promote their role in the labor force. The experimental treatments vary whether individuals compete in single-sex or mixed-sex groups. In contrast to previous studies, women in our sample are not less willing to compete than men. In fact, once we control for individual performance, Emirati women are more likely to select into competition. Our analysis shows that neither women nor men shy away from competition, and both compete more than what would be optimal in monetary terms as the fraction of men in their group increases. We offer a detailed survey of the literature and discuss possible reasons for the lack of gender differences in our experiment.

Statistical discrimination offers a compelling narrative on gender wage gaps among younger workers. Employers could reduce women's wages to adjust for expected costs linked to child-bearing. If this is the case, then trends toward delayed fertility should reduce the gender wage gap among young workers. We provide a novel collection of adjusted gender wage gap (AGWG) estimates among young workers from 56 countries spanning four decades and use it to test the conjecture that delayed fertility reduces gender wage inequality. We employ instrumental variables, and find that one year postponement of the first birth reduces AGWG by two percentage points (15% of the AGWG). We benchmark this estimate with the help of time-use data.

Relying upon an original (country-sector-year) measure of robotic capital ($RK$), we investigate the degree of complementarity/substitutability between robots and workers at different skill levels. We employ nonparametric methods to estimate elasticity of substitution patterns between $RK$ and skilled/unskilled labor over the period 1995–2009. We show that: i) on average, $RK$ exhibits less substitutability with skilled workers compared to unskilled workers, indicating a phenomenon of “RK-Skill complementarity”. This pattern holds in a global context characterized by significant heterogeneity; ii) the dynamic of “RK-Skill complementarity” has increased since the early 2000s; iii) the observed strengthening is more prominent in OECD countries, as opposed to non-OECD countries, and in the Manufacturing sector, compared to non-Manufacturing industries.

This study utilises panel data of 46 countries from 2005 to 2019 to examine the impact of digital service trade (DST) on inclusive growth. Inclusive growth is a growth model that promotes economic growth and development, while also building social equity and inclusiveness and balancing environmental sustainability. The findings indicate that a nation’s DST development significantly fosters domestic economic growth and development, specifically through its employment enhancement effect. DST substantially promotes social equity and inclusiveness, mainly through the inclusive innovation effect. However, DST is also found to increase carbon emissions, impeding environmentally sustainable growth, specifically via the energy demand effect. Hence, DST exerts diverse impacts on different facets of inclusiveness. The study also reveals heterogeneity in the effects of DST on the three aspects of inclusive growth related to trade’s import–export dynamics, income levels, and DST barrier intensities. This paper contributes to and refines the body of research on the relationship between DST and inclusive growth. It offers policy suggestions for crafting more open and mutually beneficial DST policies to foster social equity and inclusive global trade.

We study whether the increased adoption of available automation technologies allows economies to avoid the negative effect of aging on per capita output. We develop a quantitative theory in which firms choose to which extent they automate in response to a declining workforce and rising old-age dependency. An important element in our model is the integration of two capital types: automation capital that acts as a substitute to human labor, and traditional capital that is a complement to labor. Empirically, our model's predictions largely match data regarding automation (robotization) density across OECD countries. Simulating the model, we find that aging-induced automation only partially compensates the negative growth effect of aging in the absence of technical progress in automation technology. One reason is that automated tasks are no perfect substitutes for non-automated tasks. A second reason is that automation raises the interest rate and thus inhibits positive behavioral reactions to aging (later retirement and investment in human capital). Moreover, increased automation generates a falling net labor share of income and rising welfare inequality. We evaluate alternative policy responses to cope with this inequality.

On 1 January 2016, China further relaxed its family planning policy and adopted the universal two-child policy, which allows any Chinese couple to have two children to address the country’s increasingly severe ageing problems and low fertility. With this shift comes a direct and profound impact on society, especially women; this paper evaluates the effect of the universal two-child policy on the gender wage gap and its mechanism. Several major conclusions emerge from this analysis. The policy significantly expands the urban gender wage gap by 12.86% in the low-policy-fertility-rate (PFR) provinces versus high-PFR provinces. Evidently, it increases the gap among younger or lower-educated people. Moreover, the severity of gender discrimination in the labour market after the implementation of the universal two-child policy is rising, and deserves further attention.

This study relies on a linear programming model to estimate welfare ratios in Spain between 1600 and 1800. This method is used to find the food basket that guaranteed the intake of basic nutrients at the lowest cost. The estimates show that working families in Toledo had higher welfare ratios than in those in Barcelona. In addition, the welfare ratios of Spain were always below those of London and Amsterdam. The divergence between Northern Europe and Spain started before the Industrial Revolution and increased over time.

Several decades ago, Sig Prais concluded that the root cause of the UK’s poor industrial performance was the poor quality of education and training. In this lecture, I will make a related argument, focussing on the lack of opportunity in the United Kingdom for workers who have not succeeded in the formal education system and the long-lasting impacts this has on their economic, health and social wellbeing. I will highlight the importance of providing opportunities for continued training over a worker’s lifetime for appropriate skills that are valued in the workplace in order to achieve inclusive growth.

This study investigates the relationship between occupational skills and wages in Thailand using the Labour Force Survey from 1985 to 2020. We quantify the contribution of changes in the skill requirement and highlight the increase in the return on the ‘brain’ and the decrease in the penalty on ‘brawn’, which helps explain the wage distribution changes across periods. We further explore the polarisation in the labour market and analyse the changes in the wage distribution by applying the decomposition method proposed by Firpo et al (2009). Our results suggest that wage dispersion increases in the top end over the first two time periods but decreases in the third time period, while it continues to decrease in the lower end of the distribution.

The introduction of the 2012 Labour Code is considered ‘groundbreaking’ in industrial relations in Vietnam. However, knowledge about the effects of this law is still minimal. This study provides the first evidence of the impacts of the law on worker outcomes, disaggregated by location and migration status. The Vietnam Labour Force Survey is used as the primary dataset. Both difference-in-differences and fixed-effect models are applied in the investigation. The estimated results show a relationship between the introduction of the law and the labour supply of contracted workers in urban areas, especially long-term migrant workers. Furthermore, income for these long-term migrant contract workers was affected significantly by the introduction of the law. A link between the law and health insurance participation was also found among non-migrant contracted workers in urban areas. We also perform estimations using a short panel sample and find notable results. The study likewise reveals disadvantages of rural workers compared to urban workers in terms of earnings, and of short-term migrants compared to other workers, in terms of labour supply.

This research note documents the revision of a dataset of real wages in Argentina, Brazil, Chile, Colombia, Mexico and Venezuela during 1920-2011. This resource was originally published by this journal in Astorga (2017). The revision affected all eighteen basic wage series plus six weighted-average series, with varying degrees of modification. The revised dataset is made available as supplementary material. Regardless of changes to the data, the key findings and conclusions of the 2017 paper still hold.

The canonical income process, including autoregressive, transitory, and fixed effect components, is routinely used in macro and labor economics. We provide a guide for its estimation using quasidifferences, cataloging biases in the estimated parameters for various $N$, $T$, initial conditions, and weighting schemes. Using Danish administrative data on male earnings, estimation in quasidifferences yields divergent estimates of the autoregressive parameter for different weighting schemes, which conforms to our simulation results when the variance of transitory shocks is higher than that of persistent shocks, true persistence is high, and the persistent component’s variance in the first sample year is nonzero. We further apply quasidifferences to the data from a calibrated lifecycle model and find significant biases in the persistence of shocks and their insurance. Estimation of the income process using quasidifferences is reliable only when the variance of persistent shocks is higher than that of transitory shocks and the moments are equally weighted.

This paper focuses on the migrant pay gap in Spain. Going beyond descriptive evidence of the differences between immigrants and nationals in terms of wages, we analyse which part of the gross wage is most affected by features that cannot be captured using econometric models. Relying on microdata from the Wage Structure Survey, we divide the total gross wage into two main parts: base wage and wage supplements. Then we decompose the migrant wage gap into the explained and the unexplained terms, using a simple decomposition methodology, the Oaxaca-Blinder model. Our results show that a part of the differences in wage supplements does not seem to be explained by the set of control variables introduced in the model and that this effect is more pronounced when only men are considered. These findings offer a new perspective on the migrant pay gap in Spain and point to the importance of wage-setting practices related to wage supplements in explaining (and widening) the total migrant pay gap in our country.

The effect of trade liberalisation on the welfare of workers depends on the nature and magnitude of switching costs that workers face in moving across sectors. This paper investigates the impact of trade liberalisation on the gender wage gap in China, emphasising the role of sectoral switching costs in driving the effect. Using the local labour market approach as the identification strategy, I find that a one-standard-deviation increase in regional trade exposure is associated with a 3.2% increase in the gender wage gap during the 1992–2009 period. The emergence of the empirical pattern is mainly because the sectoral switching costs are larger for females than males. Since trade liberalisation leads to labour reallocation across sectors, the presence of asymmetric sectoral switching costs thus prevents female workers initially employed in the manufacturing sector from accessing advanced service industries, resulting in a rising gender wage gap after the trade. As a response, female manufacturing workers are forced to either be employed in low-skill service industries or exit the labour market. This paper carries strong implications for policies that both promote gender equity and help trade-displaced workers.

The compensating wage differential (CWD) for nonfatal injury and value of statistical life or injury in occupations have rarely been analysed separately by gender or race. This paper uses individual-level data from the 2012–2015 March Current Population Survey to estimate the CWD as well as the value of statistical injury (VOI) by race and gender. We find male workers command a positive risk premium, and this is higher when they are unionised. We also find a positive risk premium for White unionised workers and a slightly lower risk premium for White males. Like other investigators, we find that nonfatal risk is heterogenous, and its compensation is difficult to estimate using a standard wage equation, even with some smaller subsamples from our dataset that are gender- or race-specific. Our estimates of the VOI show us that male workers who are unionised have the highest VOI, followed by Hispanic union workers, and Black females. This last finding follows from Black females working in jobs that have the highest risk rates compared to White and Hispanic females.