Abstracts » Business, international

Why wages do not fall in recessions

Article Abstract:

Truman Bewley has interviewed a wide range of economic actors to assess why wages tend not to drop in nominal terms during recessions, and may not fall sufficiently in real terms either. Neoclassical economists argue that people leave employment in a recession and this leads to apparent inflexibility, while Keynesians are uncertain about why wages are sticky. economic actors may lack understanding, or may lie, but they can provide insights. He does not see labor unions as the problem. Companies are concerned that wage cust could hit morale, which could affect staff turnover and productivity. Job shedding affects fewer people than pay cuts, so companies may shed jobs as less damaging to morale.

Research, Management research

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The wages of fear

Article Abstract:

There has been a fear of job losses arising from international trade, with workers from poorer countries replacing those from richer countries. Earnings inequality has increased in the US between 1973 and 1993, while average hourly earnings have dropped in real terms. Pay differentials in manland Europe have increased less, but unemployment has risen, while the United Kingdom shows a similar pattern to the US. Workers who are affected by free trade could be compensated in order to tackle political issues arising from free trade policies.

Administration of General Economic Programs, Trade Relations, International economic relations, International trade, Trade policy

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The politics of envy

Article Abstract:

Pay and wealth inequality are seen as less of a problem in the US than in many rich countries, and globalization means that inequality is likely to increase outside the US. Public sector pay is less unequal in Britain than is private sector pay. There is resistence to inequality in the public sector in many countries, but the quality of staff can be affected by lower pay. Companies may penalize good team workers by rewarding individual performance. Training and education are also important in order to ensure equality of opportunity.

Compensation and benefits, Equality, Public sector

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