Monojit Chatterji

Union Membership and Wage Bargaining When Membership is Not Compulsory

This paper develops a theoretical model of the simultaneous determination of union wages and union membership, and empirically implements the model using the 1990 Workplace Industrial Relations Survey. The empirical literature on union wage gaps has long recognized that union membership may be endogenous in equations estimating the determinants of union wages. Although some empirical studies have effectively endogenized membership to control for simultaneity, the estimated relationships have generally followed an ad hoc approach in specifying the union membership equation. Indeed, the empirical literature on union wage gaps in a simultaneous equation framework, and the small theoretical literature examining unionization, have largely proceeded separately, with so far little interaction between the two. This paper aims to rectify this imbalance. The innovation of the paper is that it provides a formal model of union wage and membership determination where the union is recognized for bargaining purposes, where membership of the union is not compulsory, and where the union faces a budget constraint in its organization activities. This simultaneous equation model is then used as the basis for estimation of manual wages and union density for the private sector. The results reveal that for our particular data set, union density significantly increases the hourly manual wage rate, and that union wages have a significant impact on the membership decision. Moreover, other union-provided goods (apart from the wage rate) affect union membership, suggesting that in the absence of coercion, unions may still retain some membership providing they can continue to provide non-wage benefits which accrue exclusively to their membership.

The public-private sector gender wage differential in Britain: evidence from matched employee-workplace data

This article shows that little of the gender earnings gap in the public and private sectors in Britain are explained by differences in employee characteristics. The differences in workplace characteristics, however, make a significant, sizeable contribution. It is shown that performance related pay and company pension schemes are associated with higher relative earnings in the private sector, whilst increased provision of family-friendly employment practices in the public sector is associated with higher relative earnings for women.

Redundancy Payments and Firm-Specific Training

This paper attempts to provide an economic rationale for the existence and pattern of redundancy payments. A model of firm-specific training with uncertain returns to training and uncertainty about the outside options of workers is constructed for this purpose. The central result is that an optimal contract will involve the firm in bearing only a part of the training costs because workers may quit. Since workers bear part of the cost of training, they will have to be compensated by a redundancy payment if dismissed. Furthermore, the optimum level of this redundancy payment will vary across firms, with large payments being offered by firms where the returns to training are highly variable. These insights into the nature of redundancy payments differ from those of other models, where they are viewed either as a transfer fee or as representing the difference between inside and outside wages for contracted workers. Copyright 1989 by The London School of Economics and Political Science.

Political Shocks and Investment: Some Evidence from the 1930s

There has been some dispute about the impact of New Deal policies on the business climate. Some historians have argued that the New Deal frightened business, and others that it encouraged business. This paper analyzes the impact of the New Deal on business investment by looking at the response of investment to the outcome of the 1934, 1936, and 1938 elections, as well as the passage of certain New Deal legislation. The data reject the hypothesis that the New Deal frightened off business investment.

A note on progressive taxes and the supply of labour

Abstract It is widely held popular belief that the more progressive the tax system, the greater the disincentive to work effort. This paper seeks to examine the popular belief, and in particular to find circumstances when it may be false. The main conclusion of the paper is that the conditions under which the popular belief is false are stricter than those suggested by previous authors.

Research Assessment Exercise Results and Research Funding in the United Kingdom: A Comparative Analysis

Abstract A considerable sum of money is allocated to UK universities on the basis of Research Assessment Exercise performance. In this paper we analyse the two main funding models used in the United Kingdom and discuss their strengths and weaknesses. We suggest that the benchmarking used by the two main models have significant weaknesses, and propose an alternative benchmark. It is shown that the different models have quite different implications for the focus of UK research.

Research Assessment Exercise Results and Research Funding in the United Kingdom: A Regional–Territorial Analysis

Abstract A considerable sum of money is allocated to UK universities on the basis of Research Assessment Exercise performance. In this paper we analyse the impact of the two main funding models on the intra‐territorial and intra‐regional allocation of funds. We also examine the effect of the present system of territorial safety nets and discuss the impact of their removal. The major conclusion is that the safety net implicit in the current funding arrangements delivers well for Wales but poorly for Scotland and is broadly neutral for England and Northern Ireland. However, this broad neutrality for England masks quite considerable variation across the nine regions of England.

On forecasting UK consumption

This paper is concerned with the search for the appropriate methodology for constructing an econometric model for forecasting aggregate consumption. Forecasts of the various national income categories such as consumption, investment, exports, etc. is an important pre-requisite of macroeconomic policy. It is such forecasts welded within the framework of a macroeconomic model which provide the policy makers with the information on which to base economic policy. Ideally a good forecasting model should have the properties of: 1. being parsimonious in the use of information, especially current information on endogenous variables, 2. be simple to manipulate, and 3. should ‘work well’ in the econometric sense. A fourth criterion, namely, being strongly founded in economic theory is more open to dispute. For example, the time-series forecasting models developed by Box and Jenkins need not rely on economic theory at all. Without pushing the point too far, one could argue that, at least to economists, economic theo...

Determinants of public education expenditure: Evidence from Indian states

Public education expenditure varies significantly across Indian states. Using data on sixteen Indian states from 2001-2010, the paper tries to identify the determinants of per capita education expenditure of state governments in India. The econometric findings indicate that richer states spend more on education compared to the poorer states. A lower share of child population (0-14 years) is found to significantly enhance education expenditure at the state level. We do not find any evidence that political factors such as political ideology of the ruling party and level of corruption affect education expenditure of state governments.

Liberalization and the Changing Inter‐industry Wage Structure of the Organized Manufacturing Sector in India, 1973/74–2003/04

This paper examines the inter-industry wage structure of the organized manufacturing sector in India for the period 1973/74–2003/04 by estimating the growth of average real wages for production workers by industry. Using wage data on 51 three-digit industries, our estimation procedure obtains estimates of growth of real wages per worker that are wholly deterministic in nature by accounting for any potential structural break(s) associated with the reforms. Our paper identifies three distinct regimes—pre-reform, first phase reforms and second phase reforms, over which real wages have grown at varying rates for each industry. Our findings suggest that the inter-industry wage differences have become more pronounced in the post-reform periods. The paper provides new evidence from India on the need to consider seriously the hypothesis that industry affiliation is potentially an important determinant of wages when studying any relationship between reforms and wages.