Volume 68, Issue 1 -

A theoretical analysis examines the relationship between intra-firm wage dispersion and employment at establishments. The analysis relies on the absence of a theoretical consensus regarding the influence of wage dispersion on labor demand. To prove the theoretical considerations, regressions were conducted on German linked employer-employee data from the Institute for Employment Research (LIAB) for 1996 through 2008. More specifically, fractional probit models for the panel data and a fixed effects regression with a log-odds transformation of the dependent variable were used to estimate the share equations of a labor demand model, including different measures of wage dispersion. The results illustrate a negative influence of the residual wage inequality that takes into account the composition of the workforce in the establishment. In addition, an increasing wage dispersion at the lower end of the wage distribution decreases the labor demand of the establishment; however, this leads to the estimates of the overall wage dispersion becoming insignificant.

This paper addresses the issue of impacts of the banking market structure on debt dynamics. Using a simple theoretical model, we analytically find a positive link between number of banks and growth rate of debt. By applying panel data analysis on a set of Eurozone countries, sufficient evidence for this positive relationship is provided. In case of Portugal, Italy, Greece, Spain (PIGS countries) the effects are more pronounced. More specifically, the dominant effects on debt were the GDP growth rate, the primary balance over debt ratio and the number of banks. Therefore, bank regulation should pay attention on theses linkages, implying significant benefits for debt stability.

This paper attempts to provide an explanation to the debate whether infrastructure development is more effective than direct cash transfer to reduce wage disparity between skilled and unskilled workers. We use a simple general equilibrium structure to argue that in presence of symmetric productivity effects direct cash transfer meets the target when such transfer is financed by tax revenue collected from skilled wage bill. Nevertheless, in case of asymmetric productivity effects the arguments boil down to how different sectors absorb infrastructural facility to improve their productivity.