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DOI: 10.1177/0486613412470098 2013 45: 412Review of Radical Political Economics

Curtis Skinner Work in the Wealthy World

Low-Wage and Unveiling Inequality: A World-Historical PerspectiveBook Review:

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412 Review of Radical Political Economics 45(3)

Foster, J. B., B. Clark, and R. York. 2010. The ecological rift: Capitalisms war on the Earth. New York: Monthly Review Press.

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Hodgson, G. M. 1996. Economics and evolution: Bringing life back into eonomics. Ann Arbor: University of Michigan Press.

________. 1999. Evolution and institutions: On evolutionary economics and the evolution of economics. Cheltenham, UK: Edward Elgar.

Kropotkin, P. 1902. Mutual aid: A factor of evolution. New York: McClure Phillips and Company.Levins, R., and R. Lewontin. 1985. The dialectical biologist. Cambridge, MA: Harvard University Press.Nelson, R. R., and S. G. Winter. 1982. An evolutionary theory of economic change. Cambridge, MA:

Harvard University Press.Veblen, T. 1897. Why is economics not an evolutionary science? Quarterly Journal of Economics 12 (July).

Reprinted in The place of science in modern civilization and other essays. New York: B. W. Huebsch, 1919: 56-81.

Unveiling Inequality: A World-Historical Perspective.Roberto Patricio Korzeniewicz and Timothy Patrick Moran; Russell Sage Foundation, 2009. 192 pp., ISBN: 978-0-87154-483-4

Low-Wage Work in the Wealthy World.Jerome Gautie and John Schmitt (eds.); Russell Sage Foundation, 2010. 485 pp., ISBN: 978-0-87154-061-4

DOI: 10.1177/0486613412470098

Date accepted: June 7, 2012

These very different books, both published by the Russell Sage Foundation, complement one another in ambition, respectively examining the sources of income inequality in the world and low-wage work in high-income nations. National and global social forces and institutions figure prominently in each story.

The authors of Unveiling Inequality argue that understanding social inequality requires tak-ing a world-historical perspective that examines socioeconomic relations within and between nations over time. Korzeniewicz and Moran (hereafter KM) note that the bulk of academic research in the field examines inequality within rich nations and argue that this limited frame of reference obscures an understanding of the incidence, depth, and historical trajectory of inequal-ity both within nations and in the world as a whole. Although their thesis is hardly new, KM offer a fluidly-written and engaging essay supported by careful empirical work.

The authors take aim at contemporary varieties of the hoary modernization paradigm of national development, which posits that mutually-supporting advances in urbanization, democ-ratization, and a socioeconomic reward structure based on achievement rather than ascription work to reduce inequality over time. KM note that scholars associated with the influential new institutional economics school follow the modernization paradigm in their efforts to identify national institutional constraintssuch as weak property rights and unequal access to education and marketsto these desired development outcomes. From a world-historical perspective, however, the modernizing transition is shown to be the exception rather than the rule. Drawing on carefully-constructed data sets measuring income inequality within and between a sample

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of 96 countries, KM distribute these nations into high inequality and low inequality clusters based on their Gini coefficients in the year 2000. For a much smaller sample of nations with available longitudinal data, KM find considerable stability in within-nation inequality since 1960. The authors also synthesize some (admittedly skimpy) research in economic history and suggest that many of the regions in the world characterized by comparatively low levels and high levels of inequality in the nineteenth century reveal the same patterns today. KM conclude that many nations tend to remain in what they call high-inequality equilibria (HIE) and low-inequal-ity equilibria (LIE), either of which can be associated with efficiency and economic growth depending on the historical and institutional context. For example, high-inequality plantation economies in the Americas brought rapid wealth accumulation and economic growth for a long period of time before the nineteenth century. In the latter twentieth century, low-inequality sys-tems in East Asia achieved rapid growth.

Proceeding to analyze between-country inequality, KM highlight the enormous gaps between rich and poor on a global scale, which can make inequality within rich countries appear almost trivial (although it certainly is not: within-country inequality has political salience not yet associ-ated with global inequality). In a pair of fascinating figures, the authors distribute within-country income deciles into global deciles. In this exercise, the tenth through the fourth income deciles in the United States are all contained in the wealthiest global decile and the bottom three U.S. deciles are contained in the second-wealthiest global decile; other rich countries follow similar distribu-tions. KM argue that institutional arrangements that characterize LIE in some wealthy nations simultaneously deepened the HIE between countries (77). The authors emphasize rich nations restrictive immigration policyan ascriptive criterion based on national identity and citizen-shipas critical to supporting rich country LIE by transferring competitive pressures abroad and keeping wages for the lower-skilled in rich countries comparatively high. From a global perspec-tive, the authors assert, there are three paths to social mobility: within-country mobility, national economic growth that lifts all boats, and international migration, the single most important and effective means of global social mobility for populations in most countries of the world (107).

While it is indisputably true that immigrants from poor countries to rich countries can sub-stantially raise their incomes and often do so, the argument that restrictive immigration policy sustains rich country LIE appears most plausible when speculating about an open borders counter-factual. In fact, immigration (legal and illegal) to many rich countries has grown very rapidly in recent decades; moreover, the rapid increase in international investment and trade has almost certainly held down wages and increased income inequality in wealthy nations. KM find little increase in inequality in many European countries when they examine the trend in the Gini coefficient between 1990 and 2006, but it is curious that they do not extend the analysis to 1980. In the United States, at least, the 1980s were a period of rapidly rising income inequality, notably in wage income by level of worker education.

This reviewer would also have liked to see KM engage more deeply with the rich literature on global inequality drawing on Marxist and old institutionalist frames of analysis, among others. KM do discuss Immanuel Wallersteins work and passingly refer to other work in an endnote, but source much of their analysis in the new institutionalist literature even as they criticize it. They briefly, and not very convincingly, touch on their disengagement from Marx, again in an endnote. That said, the books succinct but interesting endnotes are comparatively broad-ranging and can guide the reader to some of the important research literature.

Unveiling Inequality is highly recommended for those interested in the topicwho among us is not?and especially for students in development economics. It is exceptionally well-written and contributes valuable new empirical analysis to the literature on inequality within and between nations.

Institutionsa dull term for culture and class struggle past and presentare also front and cen-ter to the narrative in Low-Wage Work in the Wealthy World. This edited volume is sometimes stolidly written and occasionally repetitive, but rewards close reading for the authors valuable

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synthesis of data on the characteristics of employment, jobs, and labor market institutions in the United States and five European countries. The volume also summarizes previously published, cross-national case studies sponsored by Russell Sage on the characteristics of employment in seven occupations often characterized by low-wages: call center operators, food processing opera-tors, nursing assistants and cleaners in hospitals, hotel housekeepers, cashiers, and retail store stock or sales clerks. The researchers gathered these primary data (often with difficulty) through inter-views with firm executives, store managers, frontline workers, trade unions, and worker councils.

The books principal conclusion is that national (and European Union) labor market institu-tions retain a dominant influence over the incidence of low-wage work and the quality of low-wage jobs in wealthy nations even in the contemporary context of heightened international competition. Although rising product market competition, increased capital mobility, new infor-mation and communications technologies, and rising immigration have put pressure on low-wage workers in all countries in recent years, strong trade unions, enforceable government regulations, and robust social benefits are shown to effectively constrain within-nation inequality.

The researchers define low-wage workers as those earning less than two-thirds of the given countrys median gross hourly wage. Among the six countries, the United States had highest incidence of low-income workers in 2003-2005 (about 25 percent of the total working-age popu-lation), followed by the United Kingdom and Germany. The Netherlands was mid-range at 17.6 percent, while France and Denmark had comparatively low shares of low-wage labor at 11.1 percent and and 8.5 percent respectively. Since the 1970s, the low-wage share has fallen steadily in France, remained relatively constant in Denmark and the United States, and increased in the Netherlands, the U.K., and Germany.

The authors conclude that the incidence of low-wage work is closely associated with the inclusiveness of national labor market institutions. In Denmark, high union density serves to maintain wage standards and prevent firms from adopting low road competitive strategies. Although union representation is low in France, collective bargaining agreements are extended by statute to non-union firms and a high minimum wage also reduces the incidence of low-wage employment. In the Netherlands and Germany, various exit strategies, among them outsourc-ing, temporary contracts, and lower pay for part-time workers, allow firms to use low-wage workers more extensively. The availability and generosity of social assistance benefits for non-working adults also affects the share of low-wage work.

Interestingly, inclusive institutions appear to significantly moderate the impact of immigra-tion on the national share of low-wage work. The foreign-born population grew as a share of total population in all countries during the decade from 1995 to 2005. Yet, despite very similar shares of immigrants in the national labor force in 2004ranging from four to six percentDenmark, France, the Netherlands, and the U.K. had markedly different shares of low-income work. The authors conclude that there is no simple relationship between the share of immigrants (or the share of less-educated workers) and the national share of low-wage work.

Contributors also look beyond pay to compare other aspects of job quality, working condi-tions, and living standards. Differences in the national social wagehealth, pension, child care, paid leave, and other benefits subsidized by the governmenthave a large effect on the economic security of low-wage workers in different countries. In the EU, part-time workers are treated the same as full-timers with respect to key benefits (pay scales, pension, annual leave, sick pay, access to training). With respect to worker mobility out of low-wage jobs, Geoff Mason and Wiemar Salverda (ch. 2) compare year-on-year transition rates between low-wage employ-ment, better-wage employment, and non-employment over the 1995 to 2001 period. They find that, among the six countries, low-wage workers in the United States were more likely to either move from a lower-paid to a higher-paid job or to move from a higher-paid to a lower-paid job.

On the supply side, contributors note that a weak social safety net and limited training oppor-tunities provide strong incentives to accept low-wage work in the United States. Yet a low share

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of low-wage work is associated with a high unemployment rate only in France. Denmark is characterized by high public expenditure on active labor market policies (training, job subsidies, direct job creation, and so on) accompanied by generous unemployment benefits and a low unemployment rate.

The industry/occupation case studies summarized in the final chapters of Low-Wage Work in the Wealthy World will interest labor economists and sociologists of work. This reviewer found the comparative study of nursing assistants in hospitals particularly absorbing. The six countries show remarkable diversity in the share of workers in this occupation who earn low wages, ranging from 38 percent in the United States to 21 percent in the U.K., 9 percent in Germany, and only 0 per-cent-5 percent in the Netherlands, France, and Denmark. As hospitals in all countries have con-fronted increased pressure to hold down costs (from public health systems in Europe and private and public insurers in the United States), they have responded with very different models of orga-nizing nursing work. In Germany and the Netherlands, where there is only a small wage differential between nursing assistants and nurses, hospitals hire comparatively few nursing assistants and require skilled nurses to perform many comparatively unskilled tasks. U.S. and U.K. hospitals make heavy use of poorly-paid and poorly-trained nursing assistants. In the United States, certified nursing assistants are paid far below registered nurses and can become certified with only six weeks of training. To save costs, some U.S. hospitals now require nursing assistants to perform such tasks as drawing blood and taking vital signs without necessarily increasing their training. Finally, France and Denmark make high use of well-paid and well-trained nursing assistants. Responding to a shortage of doctors and skilled nurses, hospitals in Denmark substantially upgraded the skill content of the nursing assistant occupation, which now requires 34 months of training. Hospitals in France have also made a sustained effort to upgrade nursing assistant training.

Low-Wage Work in the Wealthy World is recommended for scholars in industrial relations, labor economics, and the sociology of work. The volumes exhaustive detail will daunt many students and casual readers but reward those seeking well-organized comparative data on the characteristics and institutional context of low-wage work.

Curtis SkinnerNational Center for Children in Poverty

Columbia University215 West 125th StreetNew York, NY 10027

E-mail: curtis.skinner@gmail.com

Due Diligence: An Impertinent Enquiry into Microfinance.David Roodman; Washington DC, Center for Global Development 2012. 365 pages., Paperback $24.95

DOI: 10.1177/0486613412470100

Date accepted: April 30, 2012

It has been said that microfinance tiny loans given out to the poor to allow them to establish an income-generating activity is the one development policy that the average person in the street will have heard of and, moreover, might actually wish to individually support. Famously brought to the worlds attention in the 1980s by the U.S. trained Bangladeshi economist and 2006 Nobel Peace Prize winner, Dr. Muhammad Yunus, and then decisively driven forward by

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