This paper shows that in the Baltic countries, commuting reduces urban- rural wage and employment disparities and increases national output. To quantify the effect of commuting on wage differentials, two sets of earnings functions are estimated (based on Estonian, Latvian, and Lithuanian Labor...

Foreign-owned firms account for a significant part of output in many industrialized countries. However, compared to international trade linkages, relatively little is known about the role of foreign direct investment linkages and multinational firm behavior in the transmission of disturbances...

Do employers and workers underbid prevailing wages if there is unemployment? Do employers take advantage of workers’ underbidding by lowering wages? We hypothesize that under conditions of incomplete labor contracts wage levels may positively affect workers’ propensity to cooperate. This, in...

This paper investigates the relationship between bilateral FDI positions and cross-country business cycle correlations in the period 1982–2001. We find that countries that have comparatively intensive FDI relations also have more synchronized business cycles during 1995–2001. Before 1995, we...

A number of theories (search and efficiency wages) have been developed, in part, to explain why identically able workers are often paid different wages. However, when there is a minimum wage, they do not explain the resulting ``spike" in the wage distribution. Our model's predictions are...

This paper uses multiple comparison methods to perform inference on labor market wage gap estimates from a regression model of wage determination. The regression decomposes a sample of workers' wages into a human capital component and a gender specific component; the gender component is called...