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Wage Inequalities under Real Competition

Wage Inequalities under Real Competition published on No Comments on Wage Inequalities under Real Competition

Mokre Patrick (2021): The Quantile Impacts of Real Competition on Industrial Wage Inequality in the United States, 1998-2018. Accepted at the Eastern Economics Association 2023 Meeting, Eastern Economics Association.

Abstract
Wages are set in bargaining between workers and capitalists, with wage increases rather than levels the bargaining subject. The ability and willingness of firms to increase wages co-determines the bargaining outcomes. Both are subject to the competition of firms between and within industries. The literature on real competition and wage inequality (Botwinick 1993; Shaikh 2020; Mokre and Rehm 2020) poses (1) that this links profit rates and wage growth, (2) both behave as turbulent processes, and (3) the dynamics contain both determinate and stochastic components. In this paper, we attempt to explain the wage distribution and wage inequality as an outcome of turbulent wage growth dynamics.

We present a multi-sector model of turbulent wage growth and persistent wage inequality. In real
competition, when a sector realizes above-average profit rates on new capital and this induces accelerating investment streams. Increased labor demand as well as higher profit rates shift the limits to wage growth. The subsequent fall below the average in later periods, which is characteristic for turbulent equalization, also translates into reversed wage dynamics. In the model, we distinguish between direct labor mobility (coaxing) and indirect mobility (recruitment from unemployment). Finally, we formalize a wage growth model in stochastic differential equation form of a Cox, Ingersoll, and Ross (1985) – style drift – diffusion process, and derive analytically the corresponding cross – sectional distribution parameters (Fischer 2018).

We also present a novel Bayesian approach to estimate the parametersof drift-diffusion equations as
well as the corresponding wage distribution. When we apply the model to US wage growth data (1998 –
2018), the estimation explains about 93 % of the wage distribution below the top percentile, and 86 %
of total sample inequality.

Besonders beunruhigend: die “Inflationsungleichheit” (German)

Besonders beunruhigend: die “Inflationsungleichheit” (German) published on No Comments on Besonders beunruhigend: die “Inflationsungleichheit” (German)

Published in German on Nationalökonomische Gesellschaft and Die Presse’s Blog “Der Ökonomische Blick”.

Ärmere sind von einer höheren Inflationsrate betroffen. Diese Art der Ungleichheit hat besonders beunruhigende Konsequenzen und wird in der aktuellen Politik nur unzureichend berücksichtigt.

Read full blog post on diepresse.com

Die Vermögensungleichheit in Europa wird massiv unterschätzt (German)

Die Vermögensungleichheit in Europa wird massiv unterschätzt (German) published on No Comments on Die Vermögensungleichheit in Europa wird massiv unterschätzt (German)

Published in German on Nationalökonomische Gesellschaft‘s and Die Presse’s “Der Ökonomische Blick” Blog, with Franziska Disslbacher, Michael Ertl, Emanuel List and Matthias Schnetzer.

Vermögen sind in ganz Europa sehr ungleich verteilt und das Vermögen der Reichsten wird fast überall unterschätzt. Österreich gehört in gleich zwei Kategorien zu den Extremfällen.

Read Full Blog Post on diepresse.com

On Top of the Top – Adjusting wealth distributions using national rich lists

On Top of the Top – Adjusting wealth distributions using national rich lists published on

Disslbacher Franziska, Ertl Michael, List Emanuel, Mokre Patrick and Schnetzer Matthias (2021): On Top of the Top – Adjusting wealth distributions using national rich lists. INEQ Working Paper Series, 20. WU Vienna University of Economics and Business, Vienna.

Abstract
Poor coverage of the top in wealth surveys conceals the extent of wealth inequality. The literature mitigates this shortcoming by enriching survey data with rich lists and estimating the top tail with a Pareto distribution. However, recent studies rely on ad-hoc assumptions for some of the required parameters. We suggest a unified regression approach to estimate all parameters of a Pareto distribution jointly and extend our analysis with a more flexible three-parameter Generalized Pareto estimation. We introduce a new database of national rich lists (ERLDB) as an alternative to commonly used global rich lists to combine with survey data from the Household Finance and Consumption Survey (HFCS 2017). Our findings for 14 European countries show that wealth is more concentrated than surveys suggest, with almost doubling Top 1% shares in the most extreme cases. In contrast, countries with successful oversampling strategies tend to experience only minor changes in inequality metrics.

The Quantile Impacts of Real Competition on Industrial Wage Inequality in the United States, 1998-2018

The Quantile Impacts of Real Competition on Industrial Wage Inequality in the United States, 1998-2018 published on

Mokre Patrick (2021): The Quantile Impacts of Real Competition on Industrial Wage Inequality in the United States, 1998-2018. Accepted the Ninth ECINEQ Meeting, July 8-10 2021, ECINEQ The Society for the Study of Economic Inequality.

Abstract
Competition between firms has a substantial impact on wage inequality between workers. The classical political economics literature proposes that turbulent dynamics of real competition within and between industries provide the framework for wage bargaining between workers and firms. Practial limits to wage growth are given turbulently equalizing (incremental profit rates and within-industry cost differentials) and persistently different factors (capital intensity and share of labor cost in total cost). The former provide the link between competition and wage growth, while the latter are responsible for persistent industrial wage premiums. We combine employee level data from the CPS and industry level data from BEA industry accounts from 1998-2018 and find that these impacts are substantial and of unambiguous signs but differential magnitude between income quantiles in those industries where both incremental profit rates and wage growth participate in turbulent equalization.

Price-Value Deviations and the Labor Theory of Value. Evidence from 42 Countries, 2000-2017

Price-Value Deviations and the Labor Theory of Value. Evidence from 42 Countries, 2000-2017 published on

Işıkara Güney and Mokre Patrick (2021): Price-Value Deviations and the Labor Theory of Value. Evidence from 42 Countries, 2000-2017. Review of Political Economy, DOI: 10.1080/09538259.2021.1904648.

Abstract
The relationship between prices and labour values has been the source of fruitful controversy since the earliest Classical Political Economists. The alleged refutation of the labour theory of value was an integral part of the marginalist attack against Classical and Marxist analysis. However, statistical analysis of price-value relationships made possible by the data available since the later 20th century suggest considerable empirical strength of the labour theory of value.

We trace the intellectual history of the price-value relationship and its inseparable link to capitalist competition through Smith, Ricardo, Marx and Sraffa. Following Shaikh and Ochoa, we present an empirical model of testing their hypotheses that (1) labour values regulate prices of production and (2) serve as gravitational centers for market prices. The analysis of a large dataset of 42 countries and 15 years reveal only small and stable deviations and thus lend support to the Classical Political Economic analysis. With a sample of over 36,000 price vectors, we provide the most comprehensive empirical application of its class and generalize the results that have been established in the relevant literature.

Keywords: price, value, input-output, classical political economics, labour theory of value

JEL Classification: B12, B51, C67, O57, P16 

Erwerbslosigkeit in Österreich 2020 – die Branche macht den Unterschied (German)

Erwerbslosigkeit in Österreich 2020 – die Branche macht den Unterschied (German) published on

Published in German on awblog.at.

Die Corona-Krise hat den Arbeitsalltag fast aller Menschen in Österreich komplett auf den Kopf gestellt. Das gilt besonders für die Hunderttausenden, die ihren Job verloren haben. Von Februar auf März stiegen die Arbeitslosenzahlen um 225.000, und noch im August waren 92.000 mehr Menschen arbeitslos als im Vorjahr. Wie bei allen Krisen lohnt es sich, etwas genauer hinzuschauen: Besonders viele Jobs gingen zunächst in der Bau- und Tourismusbranche verloren.

HFCS: Licht im Dunkeln der Vermögensverteilung (German)

HFCS: Licht im Dunkeln der Vermögensverteilung (German) published on

Published in German on MAKRONOM Blog (Paywall).

Die Verteilungsfrage wird durch die Corona-Pandemie noch einmal an Bedeutung gewinnen. Da kommt es sehr gelegen, dass kürzlich die umfassendste statistische Grundlage zur Untersuchung der Vermögensverteilung in Europa aktualisiert wurde. Ein Beitrag von Franziska Disslbacher und Patrick Mokre.

Econometrics beyond OLS (Winter 2020/21)

Econometrics beyond OLS (Winter 2020/21) published on

Selected slides from my course at the University of Duisburg-Essen’s Institute for Socio-Economics (IFSO) in Winter 2020/21.

Lab 1: Ordinary Least Squares
Lab 2: Time Series
Lab 3: Static Panels
Lab 4: Dynamic Panels
Lab 5: Conditional Quantile Regression
Lab 6: Unconditional Quantile Regression/RIF
Lab 7: Estimating Inequality (Semiparametric Distributional Analysis)

Advanced Econometrics (Fall 2020)

Advanced Econometrics (Fall 2020) published on

Selected slides from the lab session for Professor Koohi-Kamali‘s PhD level course on panel data econometrics.

Lab 1: Regression Analysis
Lab 2: Discrete Choice
Lab 3: Panel Data
Lab 4: Panel Endogeneity
Lab 5: Dynamic Panels 1
Lab 6: Stationarity
Lab 7: Dynamic Panels 2
Lab 8: ARMA
Lab 9: VAR and ARDL
Lab 10: Panel Cointegration
Lab 11: Seemingly Unrelated Regressions (SUR)

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