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Our course requires a textbook called Contemporary Labor Economics by McConnell, Brue, and Macpherson. EleventhEdition, McGraw- Hill and these two assignments are aimed to answer the questions according to those research articles as well as combined with what we learned in introduction to labor economics and industrial relations.I want these two assignments to be as good as possible. ._culture_and_the_labor_market_by_austen_1_.pdf econ343_w2020_assignment1_1_.pdf ._human_capital_vs._signaling_explanations_of_wages_by_andew.pdf econ343_w2020_assignment2.pdf Unformatted Attachment Preview Culture and the Labor Market Author(s): Siobhan Austen Source: Review of Social Economy, Vol. 58, No. 4 (DECEMBER 2000), pp. 505-521 Published by: Taylor & Francis, Ltd. Stable URL: https://www.jstor.org/stable/29770084 Accessed: 02-12-2019 04:15 UTC JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at https://about.jstor.org/terms Taylor & Francis, Ltd. is collaborating with JSTOR to digitize, preserve and extend access to Review of Social Economy This content downloaded from 142.105.208.236 on Mon, 02 Dec 2019 04:15:22 UTC All use subject to https://about.jstor.org/terms REVIEW OF SOCIAL ECONOMY, VOL. LVIII, NO. 4, DECEMBER 2000 Culture and the Labor Market Siobhan Austen Curtin University of Technology aus tens @ clos. curtin. edu. au Abstract This paper explores the relationship between culture and labor market behavior. An attempt is made to clarify, from an economic perspective, the meaning of culture; to discuss the importance of cultural studies in the economic analysis of the labor market; and to outline the major theoretical issues that are associated with adopting a cultural perspective on economic behavior in the labor market. Keywords: Culture, labor market, labor economics, social norms Culture is a hermeneutic system, that is, an interpretative integration of material objects, behavior, and their meanings (Jennings and Waller 1994: 1000). Culture encompasses language, norms, customs, morals, beliefs and conventions, and it serves to establish a shared understanding among a group of people of the external world and each individuals relationship to this world. An understanding of culture should be an integral part of any economic analysis of the labor market. Culture determines, in large part, the value and significance that individuals attach to alternative labor market actions and outcomes. Particular aspects of culture, such as social norms, also help to define the boundaries to the pursuit by individuals of their culturally defined objectives in the labor market. The economic analysis of Veblen and Commons embraced a cultural per? spective on economic life (Jackson 1996). Veblen described individuals as the sometimes comic creations of their inherited cultures and, following in his foot? steps, old-instutiutionalists have continued to interpret patterns of economic behavior as being the product of cultural environments that are specific to par? ticular times and places (Mayhew 1987: 590, 596 and Woodbury 1979). Old-institutionalists have also identified aspects of culture, such as customs, conventions and norms as legitimate and distinct topics of economic analysis. Rather than interpreting these aspects of culture as the products of self-interested individual action, the old-institutionalists have sought to describe social norms, Review of Social Economy ISSN 0034-6764 print/ISSN 1470-1162 online ? 2000 The Association for Social Economics http ://w w w. tandf. co. uk/j ournal s This content downloaded from 142.105.208.236 on Mon, 02 Dec 2019 04:15:22 UTC All use subject to https://about.jstor.org/terms REVIEW OF SOCIAL ECONOMY customs, conventions and beliefs as autonomous parts of the environment in which economic action takes place (see Hillard and Mclntyre 1994: 620-621 and Gimble 1991). However, the neo-classical (and new-institutionalist) analysis of the labor market has attacked the notion of culture as a core process (Mayhew 1987). In neo-classical analysis, human action is typically defined by objectives that are treated as independent from the culture of the individual. Rather than viewing human action as the product of culture, aspects of culture (such as language, norms and morals) are interpreted as the product of an independent set of indi? vidual interests. As Julie Nelson (1993: 292) explains, Homo economicus springs up fully formed, with preferences fully developed, and is fully active and self contained. . .The [social and economic] environment has no effect on him but rather is merely the passive material, presented as constraints, over which his rationality has play. He interacts with society without being influenced by society. The dominance of neo-classical model in labor economics over recent decades has meant that, despite the richness of the old-institutionalist heritage, the important relationship between culture and labor market behavior has been a relatively neglected field. An important gap now exists in the labor economics literature. This paper aims to help fill this gap in the literature by describing and dis? cussing in broad terms the concept of culture as it relates to some important labor market issues. The paper also sets out to describe the theoretical controversies that are associated with adopting a cultural perspective on labor market issues and to highlight the potential scope of cultural studies of these issues. The structure of the paper reflects these aims. Section I utilises the classi? fication of cultural effects provided by Di Maggio (1994) to identify, in very broad terms, the nature of the relationship between culture and human action. Then, in sections II and III, two major types of cultural effects are described and discussed in greater detail, with reference to particular labor market issues. Several funda? mental theoretical questions emerge from this analysis, especially concerning the relationship between culture and instrumental reasoning, and these are discussed in section IV. Section V concludes with a general discussion of the agenda for further studies of the effects of culture in the labor market. I. CULTURE AND ECONOMIC BEHAVIOR IN THE LABOR MARKET The cultural perspective on labor market issues features an understanding that the behavior of individuals in the labor market is shaped by their culture. It features, in particular, an understanding that the language, categories, customs, norms and 506 This content downloaded from 142.105.208.236 on Mon, 02 Dec 2019 04:15:22 UTC All use subject to https://about.jstor.org/terms CULTURE AND THE LABOR MARKET other aspects of culture shape an individuals valuation of alternative means and ends, as well as his or her perception of legitimate and feasible action. Di Maggio (1994) provides a taxonomy of cultural effects that can be used to describe the general relationships between culture and economic behavior and to highlight the difference between a cultural and neo-classical perspective of the labor market. Di Maggio, first, describes the constitutive effects of culture. These effects refer to the way in which the economic behavior of individuals is shaped by the categories, understandings and differential valuations provided by culture. One clear example of these effects is the influence of culture on an individuals perceptions of their self-regarding interest, and, thus, their preferences for alternative labor market activities or outcomes. Di Maggio also identifies the regulatory effects of culture, whereby aspects of culture, such as social norms, morals, laws and conventions, impose boundaries to the pursuit by individuals of their culturally defined objectives. In the context of conventional models of economic behavior, these effects of culture can be under? stood especially in terms of their regulation of the individuals pursuit of his or her self-regarding interest. This taxonomy of cultural effects has the advantage of simplicity and, thus, it is a useful starting point for the task of describing and analyzing the relationship between culture and economic behavior. However, it must be recognised that this categorisation does not capture the richness and complexity of culture. For example, it does not reflect the important differences in the concept of class, organisational and national culture. Furthermore, the taxonomy suggests that there are distinct elements of the cultural system, whereas White and Dillingham (1973: 12-13) emphasise that Culture is a whole. Everything is related to every? thing else in a cultural system. Thus, although the notions of constitutive and regulatory effects are discussed separately in the following sections, this is purely for expository purposes. The two effects should not be construed as being separate entities. II. THE CONSTITUTIVE EFFECTS OF CULTURE According to a cultural perspective on economic behavior, individuals interests (or their preferences) are not a priori theirs. Rather, the value and significance that individuals attach to material objects and different types of behavior have their origins in the cultural environment, and these are transmitted to individuals through a process of social learning. Thus, the choices made by individuals, even those choices that have the objective of maximising their self-interest, are seen to be shaped by (and can only be properly understood in the context of) the cultural environment. 507 This content downloaded from 142.105.208.236 on Mon, 02 Dec 2019 04:15:22 UTC All use subject to https://about.jstor.org/terms REVIEW OF SOCIAL ECONOMY The labor market is replete with examples that demonstrate these points about the cultural specificity of economic behavior. An individuals evaluation of occu? pational attributes, such as income, responsibility, caring and creativity, and, in turn, his or her occupational choice clearly reflects prevailing cultural values, as passed on by schools families and peers (see Dugger 1981: 400 and Chapman 1981). The relationship between cultural values relating to work, leisure, income and household production, and the formation of individual preferences for labor market participation and hours of work also illustrate the way in which culture constitutes economic action (see Brown 1985 and Golden 1996). These constitutive effects of culture are not recognised in the neo-classical analysis of the labor market. Orthodox economic models typically incorporate an assumption that preferences are exogenous to the cultural environment of the choice-maker. For example, Stigler and Becker (1977: 76) argue that preferences are the same for all individuals and that any observed differences in behavior between individuals or groups across time or space can always be explained by an analysis of price and income factors. According to their view, if individuals from different societies do engage in different types of activities and/or create and maintain different institutions this is because they associate different costs and benefits with similar actions (for example, because they have acquired different types of skills). In contrast, a hallmark of a cultural (and old-institutionalist) perspective is an assumption that individual preferences are endogenous. For example, an important link is recognised between the culture of an organisation, its organis? ational structure and workers perceptions of their own self-interest. The insti tutionalist analysis of internal labor markets features an argument that the structure of such markets promotes the internalisation of the norms of the organisation by its employees, (see Golden 1996: 13) Piores (1979) work on migrant labor is also distinguished by an assumption that workers preferences and, thus, their willing? ness to accept job offers, are molded by the characteristics of their social and economic environment. However, despite the efforts of institutionalist scholars to advance an under? standing of these constitutive effects of culture, the dominance of the neo? classical paradigm in labor economics has meant that this important issue has been relatively neglected in recent decades. The analysis of patterns and changes in the choice of occupation, labor force participation and hours of work has suffered as a result. The blindness of orthodox economics to the constitutive effects of culture has also had implications for the type policy recommendations made for the labor market. The assumption of exogenous preferences has caused many economists to measure economic welfare in terms of the satisfaction of the supposedly constant 508 This content downloaded from 142.105.208.236 on Mon, 02 Dec 2019 04:15:22 UTC All use subject to https://about.jstor.org/terms CULTURE AND THE LABOR MARKET preferences that are revealed by the choices made by economic actors. As a result, policy recommendations have emphasised the importance of minimising any con? straints on individual choice making, and the role for government intervention has often been restricted to those cases where it is perceived that individual choice making has been constrained or has been ill-informed. In turn, these recom? mendations have typically resulted in sets of policy action that have had the effect of preserving the status quo. Jennings and Waller (1994) argue that, by ignoring the possibility that other sets of cultural arrangements may create different preferences, this approach has been blind to the possibility that cultural change may be an avenue to real welfare improvement. It has also been blind to the possibility that, viewed from another cultural perspective, current patterns of choice making may not be in any sense optimal (see also Bowles 1985: 32). The importance of these points about the cultural blindness of the neo-classical analysis of the labor market can be seen in Georges (1997) analysis of approaches to the issue of revealed working hours preferences. He notes that an assumption of exogenous preferences has led neo-classical economists to adopt an ambivalent position on the apparent change in individual preferences towards longer working hours. However, this assumption and the policy ambivalence may not be justified and there may be a role for the government in the regulation of working hours. For example, the change in preferences may have been caused by employers man? dating the working of overtime which, in turn, created high levels of permanent consumption. Thus, the longer working hours may represent a sacrifice of indi? vidual welfare even though individuals are declaring a preference for extended hours.1 The neglect of the constitutive effects of culture by mainstream economists has also had important implications for the analysis of the evolution of labor market institutions. The neo-classical view of labor market institutions emphasises that there are given conditions that characterise, for example, the natural environment. Furthermore, because individual preferences are assumed to be exogenous, the ways that individuals respond to these conditions are perceived to not vary over time or space. In contrast, a cultural perspective emphasises that the problems that labor market institutions are designed to resolve, and the characteristics of the insti? tutions themselves, will be specific to the cultural environment. Thus, the cultural perspective on labor market institutions emphasises the need to understand insti? tutions as constantly evolving and path-dependent features of particular labor 1 Gintis (1972) also discusses this issue in the context of the economic analysis of education. 509 This content downloaded from 142.105.208.236 on Mon, 02 Dec 2019 04:15:22 UTC All use subject to https://about.jstor.org/terms REVIEW OF SOCIAL ECONOMY markets, whereas the neo-classical perspective interprets all labor market insti? tutions according to the single (and constant) calculus of maximisation of indi? vidual interest. The relevance of this cultural perspective has also been highlighted by some recent work on the labor market. Grief (1994) related the differences in the cultural values of two trading societies of the late medieval period?the Genoese (who were highly individualistic) and the Maghribis (who had a collectivist culture)? to the different nature of principal agent problems that were encountered in each labor market. Using game theoretic techniques, he demonstrated how the cultural differences between the two communities influenced the propensity of traders to share information, as well as their expectations about the behavior of agents. He went on to identify how these culturally determined patterns of behavior resulted in the evolution and survival of different wage structures and patterns of wealth distribution in the two societies, despite the similarity of their material situations. In summary, culture constitutes economic behavior by providing individuals with categories of understandings and patterns of differential valuation. Neo? classical economic models, with their assumption that individual preferences are exogenously determined and constant across time and space, are not suited to the analysis of the constitutive effects of culture. The widespread use of these models has limited the economic analysis of important labor market issues, such as the participation of women in the labor market, occupational choice and working hours. It has also resulted in a failure to appreciate the dynamic and culture specific nature of labor market institutions. III. THE REGULATORY EFFECTS OF CULTURE One aspect of culture that has received attention by both neo-classical and institutional economists is what is known as the regulatory effects of culture. These effects refer to the way in which the values and beliefs embodied in a culture, and reflected in social norms, conventions and customs, enjoin the indi? vidual to regard the interests of others, even if this may involve some sacrifice of self-regarding interest. The emphasis by economists on these aspects of culture reflects the apparent potential to maintain an analytical distinction between norm-guided action and self-interested behavior. As a result, the interpretation that is often given to culture is that of an external constraint on economic action. Furthermore, the economic analysis of culture by neo-classical and institutional economists alike, often focuses on how social norms result in labor market behavior and labor market outcomes (such as patterns of wage payments and unemployment) that cannot be reconciled with the predictions of standard neo-classical models. 510 This content downloaded from 142.105.208.236 on Mon, 02 Dec 2019 04:15:22 UTC All use subject to https://about.jstor.org/terms CULTURE AND THE LABOR MARKET A variety of social norms have been linked to labor market outcomes, the most important of which appear to be the norms of distribution that relate to shared beliefs about the legitimate or fair basis for the allocation of labor market out? comes, such as wages. Norms of reciprocity and co-operation have also been ascribed an important role in the regulation of labor market behavior. The norms of distribution are wide-ranging but include four main categories that relate to the key aspects of the distribution of earnings, namely: The legiti? mate reasons for differences in individual earnings (norms of equity), the legitimate degree of difference in earnings (norms of equality); the legitimacy of protecting the earnings outcomes for individuals at the lowest end of the distri? bution (norms of need); and the legitimacy of protecting an individuals current position in the distribution of earnings (reference level norms). The norms of distribution all have potentially important consequences for the wage structure. To illustrate, the results of Kelley and Evanss (1993) study of norms of equity indicate that there is a broad consensus in a number of modern industrialised societies that individual contribution should be the primary b ... Purchase answer to see full attachment