I am working on wage differential between immigrants and natives and I see in the literature mostly hourly wage has been used to identify the earnings of individual I am just curious if there is any theory or intuition behind that.
Dear Taghi Ghadiri Abkenar ,
The idea behind is that we control for the differences in working time in this way.
Best,
José-Ignacio
The measurement we use in workload analysis is man hour. A working unit is considered as more efficient when it completes a particular task by using the same number of labor on less hour. Naturally, when we talk about labor cost we refer to hourly wage. In the same manner, a working unit is considered as more efficient when it completes a particular task by using the same number of labor at lower total labor cost.
Dear Taghi,
In the case of economic history the following considerations may be relevant for hourly wage:
We come to man-hours from several considerations. It a more stable measure than say a day’s labor. It appears as a more standard measure of value than say an ounce of gold to measure/price different skills such as:
2 hour work of a jeweler = 1 hour work of a common laborer. Again:
Beaver killed per hour of hunting = Deer killed per hour of hunting.
It appear that Marx would argue that that capitalist buys labor power, and then decides how many man-hours the workman should work.
The classics/neo-classics moved from a wage-fund theory to a marginal productivity theory (MPT). If appears that the MPT would breakdown if a fall in man-hour leads to an increase in efficiency.
In the case where immigrants are low-income, the use of wage-hour might be pragmatic, that is, the minimum wage rate is per hour.
Dear Taghi, I doe agree with Yudhi Dharma Nauly,
The hourly wage is the most neutral wage when estimating the existence of a gap between groups. When using weekly and yearly earnings it is more difficult for research to control for factors such as differences of hours worked for employees with different contract arrangements such as full-time or flexible workers.
The hourly wage is the most neutral wage when estimating the existence of a gap between groups. When using weekly and yearly earnings, it is more difficult for research to control for factors such as differences of hours worked for employees with different contract arrangements such as full-time or flexible workers.
Dear Lall B. Ramrattan ,
Thank you for your historical interpretation of hourly wages. That was clear and very instructive. Only one question, how is wage-hour defined and used in Keynesian/new Keynesian models? What are the differences with classics/neo-classic understanding of wage-hour based on MPT?
Dear Taghi,
I provide some answers.
In his “General Theory,” Keynes use Money-value and hour’s employment of ordinary labor as units of quantity. He therefore spoke of labor-unit and money-wage of labor unit, or simply wage-unit. Thus he has the equation Wages = Employment x the wage-unit.
This wage-unit allows us to eliminate price effects in his system. Recall that Leon Walras in his “Elements of Pure Economics” use a commodity as a numeraire, that is “The commodity in terms of which the prices of all the others are expressed is the numeraire [or standard commodity]”. Then he goes on to say that “The standard of measure of value thus becomes the monetary standard.”
For post-Keynesians it depends on which group you look at. For instance Samuelson and Modigliani claimed to be post-Keynesians.
Post-Keynesians of the Piero Sraffa kind, I urge you to study Sraffa’s “Production of Commodities by Means of Commodities” and related literature. We find there that price-ratios are determined by technical conditions of production. Only the condition of production of “basics” enter into the determination of prices and profits. The production of luxuries goods do not. Sraffa proceeded to express his price equations by a series of labor-terms—“Reduction to dated quantities of labor”. This lead to price of production in terms of labor expenditure per unit of output. For the rest of the story, I leave you to the mercy of the literature.
- Badges
- Science topic
- Similar topics
- Geoscience
- Asia
- India