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Labor Market Institutions and the Industry Wage Distribution: Evidence from Austria, Norway, and the U.S

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Author Info
Erling Barth (University of California, Berkeley)
Josef Zweimuller (University of California, Berkeley)

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Abstract

The paper compares the industry wage structures of Austria, Norway, the union sector of the U.S. as well as the non-union sector of the U.S. We make comparable regressions for each country, and are thus able to compare the sectoral earnings patterns controlling for the usual individual characteristics. Our results confirm the hypothesis that the patterns of the inter-industry pay structure is largely independent of labor market institutions: High paying industries in a non-union environment tend to pay high wages also in regimes where bargaining is very centralized and coordinated. This, however, does not mean that collective bargaining does not matter. The influence is mainly on the amount of wage dispersion: We find considerably lower industry pay gaps in centralized Austria and Norway than in decentralized US. Within the US, pay differentials within the union sector slightly exceed those of the non-union sector. The results give support to non-competitive explanations of the labor market. If efficiency wage mechanisms were the reason for wage differentials we would expect central bargainers to internalize these effects. Competitive explanations, on the other hand, would predict no difference between the non-union outcome and a central agreement with the aim of achieving full employment.

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Paper provided by Institute of Industrial Relations, UC Berkeley in its series Institute for Research on Labor and Employment, Working Paper Series with number 1067.

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Date of creation: 01 May 1992
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Handle: RePEc:cdl:indrel:1067

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Related research
Keywords: Barth; Zweimuller; Labor market; industry wage distribution; Austria; Norway; United States;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June. [Downloadable!] (restricted)
  2. William T. Dickens & Lawrence F. Katz, 1987. "Interindustry Wage Differences and Industry Characteristics," NBER Working Papers 2014, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Alan B. Krueger & Lawrence H. Summers, 1987. "Reflections on the Inter-Industry Wage Structure," NBER Working Papers 1968, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Erling Barth & Josef Zweimuller, 1993. "Bargaining Regimes and Wage Dispersion," Institute for Research on Labor and Employment, Working Paper Series 1082, Institute of Industrial Relations, UC Berkeley. [Downloadable!]
  5. Winter-Ebmer, Rudolf, 1992. "Endogenous Growth, Human Capital, and Industry Wages," CEPR Discussion Papers 714, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March. [Downloadable!] (restricted)
  7. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. William T. Dickens & Lawrence F. Katz, 1987. "Inter-Industry Wage Differences and Theories of Wage Determination," NBER Working Papers 2271, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. William T. Dickens, 1986. "Wages, Employment and the Threat of Collective Action by Workers," NBER Working Papers 1856, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Wagner, Joachim, 1990. "An international comparison of sector wage differentials," Economics Letters, Elsevier, vol. 34(1), pages 93-97, September. [Downloadable!] (restricted)
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Cited by:
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  1. Björklund, Anders & Bratsberg, Bernt & Eriksson, Tor & Jäntti, Markus & Raaum, Oddbjörn, 2004. "Inter-Industry Wage Differentials and Unobserved Ability: Siblings Evidence from Five Countries," IZA Discussion Papers 1080, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Erling Barth & Josef Zweimuller, 1993. "Bargaining Regimes and Wage Dispersion," Institute for Research on Labor and Employment, Working Paper Series 1082, Institute of Industrial Relations, UC Berkeley. [Downloadable!]
  3. Du Caju, Philip & Rycx, Francois & Tojerow, Ilan, 2008. "Rent-Sharing and the Cyclicality of Wage Differentials," IZA Discussion Papers 3844, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Robert Plasman & François Rycx & Ilan Tojerow, 2007. "Wage Differentials in Belgium: The Role of Worker and Employer Characteristics," Working Papers DULBEA 07-12.RS, Université libre de Bruxelles, Department of Applied Economics (DULBEA). [Downloadable!]
    Other versions:
  5. Erling Barth, 1992. "Why Do Some Firms Pay More? An Empirical Investigation of Inter-Firm Wage Differentials," Institute for Research on Labor and Employment, Working Paper Series 1070, Institute of Industrial Relations, UC Berkeley. [Downloadable!]
  6. Josef Zweimuller & Erling Barth, 1992. "Bargaining Structure, Wage Determination, and Wage Dispersion in 6 OECD-Countries," Institute for Research on Labor and Employment, Working Paper Series 1074, Institute of Industrial Relations, UC Berkeley. [Downloadable!]
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