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Disaggregated data from 30 two-digit manufacturing industries in the east and west parts of unified Germany are used to estimate employment for three skill categories of blue collar workers. Employment elasticities are uniformly higher in the east, and for unskilled labor. The former result contradicts union claims that wages had little relevance for east German job losses, while the latter confirms the capital-skill complementarity hypothesis.

Labor --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Labor Demand --- Wages, Compensation, and Labor Costs: General --- Labour --- income economics --- Labor demand --- Wage adjustments --- Real wages --- Economic theory --- Labor market --- Germany --- Income economics

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Changes in economic systems provide a rare opportunity to redesign basic institutional structures in labor markets. This paper attempts to provide guidance for such institutional choice by drawing on the findings of recent labor market research in market economies on the links between institutional structure and labor market performance. After considering the suitability of research from market economies for the labor market problems faced by economies in transition from central planning, the paper considers the effects of alternative institutions for wage determination (collective bargaining structures and minimum wage and indexation legislation), employment security, income security, and active labor market policy.

Labor --- Demand and Supply of Labor: General --- Wages, Compensation, and Labor Costs: General --- Unemployment: Models, Duration, Incidence, and Job Search --- Labor Economics Policies --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Labour --- income economics --- Labor markets --- Active labor market policies --- Labor market --- Manpower policy --- Economic theory --- United States --- Income economics

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This paper extends the equilibrium business cycle framework to incorporate ex ante skill heterogeneity among workers. Consistent with the empirical evidence, skilled and unskilled workers in the model face the same degree of cyclical variation in real wages although unskilled workers are subject to substantially higher procyclical variation in employment. Systematic cyclical changes in the average skill level of employed workers are shown to induce bias in aggregate measures of cyclical variation in the labor input, productivity, and the real wage. The introduction of skill heterogeneity improves the model’s ability to match the empirical correlation between total hours and the real wage but the correlation between total hours and labor productivity remains higher than in the data.

Labor --- Macroeconomics --- Production and Operations Management --- Business Fluctuations --- Cycles --- Demand and Supply of Labor: General --- Wage Level and Structure --- Wage Differentials --- Wages, Compensation, and Labor Costs: General --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Labor Economics: General --- Macroeconomics: Production --- Labour --- income economics --- Real wages --- Productivity --- Production --- Economic theory --- Labor economics --- Industrial productivity --- United States --- Income economics

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Central government wage expenditures accounted for 7 percent of GDP in 99 countries during 1980-90 (unweighted average). Regression analysis indicates that federations, countries with high populations and high per capita incomes, heavily indebted countries, and small low-income economies tend to have lower central government wage expenditures as a percent of GDP. Access to private nonguaranteed foreign financing is associated with higher wage expenditures, while public and publicly guaranteed foreign financing is not; the public and publicly guaranteed foreign financing is often provided for government capital projects. Medium-term structural adjustment programs, on average, have a negative association with wage expenditures, while short-term stabilization programs do not. The negative correlation between central government wage expenditures and per capita income appears related to the level of centralization of government expenditures. General government wage expenditures are higher in industrial countries than in developing countries.

Budgeting --- Labor --- Public Finance --- National Budget --- Budget Systems --- National Government Expenditures and Related Policies: General --- Wages, Compensation, and Labor Costs: General --- Budgeting & financial management --- Public finance & taxation --- Labour --- income economics --- Central government spending --- Total expenditures --- Expenditure --- Wages --- Public sector wages --- Public financial management (PFM) --- Budget --- Expenditures, Public --- Belgium --- Income economics

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Although conventional wisdom suggests that reducing military spending may improve a country’s economic growth performance, empirical studies have produced ambiguous results. This paper extends a standard growth model and estimates it using techniques that exploit both cross-section and time-series dimensions of available data to obtain consistent estimates of the growth-retarding effects of military spending via its adverse impact on capital formation and resource allocation. Model simulations suggest that a substantial long-run “Peace Dividend”--in the form of higher capacity output--may result from: (i) markedly lower military expenditure levels achieved in most regions during the late 1980s; and (ii) further military spending cuts that would be possible in the future if a global peace could be secured.

Exports and Imports --- Labor --- Macroeconomics --- Public Finance --- Production and Operations Management --- National Security and War --- Macroeconomics: Production --- Human Capital --- Skills --- Occupational Choice --- Labor Productivity --- Trade Policy --- International Trade Organizations --- Public finance & taxation --- Labour --- income economics --- International economics --- Defense spending --- Capacity utilization --- Production growth --- Human capital --- Trade barriers --- Expenditure --- Production --- International trade --- Expenditures, Public --- Industrial capacity --- Economic theory --- Commercial policy --- Germany --- Income economics