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

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  • Barth, Erling
  • Zweimuller, Josef

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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Bibliographic Info

Paper provided by Institute of Industrial Relations, UC Berkeley in its series Institute for Research on Labor and Employment, Working Paper Series with number qt1811h146.

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Date of creation: 01 May 1992
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Handle: RePEc:cdl:indrel:qt1811h146

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Related research

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

References

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  1. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
  2. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
  3. 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.
  4. 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.
  5. William T. Dickens, 1986. "Wages, Employment and the Threat of Collective Action by Workers," NBER Working Papers 1856, National Bureau of Economic Research, Inc.
  6. Wagner, Joachim, 1990. "An international comparison of sector wage differentials," Economics Letters, Elsevier, vol. 34(1), pages 93-97, September.
  7. 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.
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Citations

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Cited by:
  1. Barth, Erling, 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 qt7f18t2vt, Institute of Industrial Relations, UC Berkeley.
  2. Du Caju, Philip & Rycx, Francois & Tojerow, Ilan, 2011. "Wage Structure Effects of International Trade: Evidence from a Small Open Economy," IZA Discussion Papers 5597, Institute for the Study of Labor (IZA).
  3. Amir Borges Ferreira Neto & Ricardo Da Silva Fregugli, 2014. "How Much Does Talent Matter? Evidences From The Brazilian Formal Cultural Industry," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 233, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  4. Robert Plasman & François Rycx & Ilan Tojerow, 2007. "Wage differentials in Belgium: the role of worker and employer characteristics," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 50(1), pages 11-40.
  5. Philip Du Caju & François Rycx & Ilan Tojerow, 2008. "Rent-Sharing and the Cyclicality of Wage Differentials," Working Papers CEB 08-035.RS, ULB -- Universite Libre de Bruxelles.
  6. Winter-Ebmer, Rudolf, 1996. "Wage curve, unemployment duration and compensating differentials," Labour Economics, Elsevier, vol. 3(4), pages 425-434, December.
  7. Francine D. Blau & Lawrence M. Kahn, 2001. "Understanding International Differences in the Gender Pay Gap," NBER Working Papers 8200, National Bureau of Economic Research, Inc.
  8. Philip Du Caju & François Rycx & Ilan Tojerow, 2012. "Wage structure effects of international trade in a small open economy: The case of Belgium," ULB Institutional Repository 2013/138896, ULB -- Universite Libre de Bruxelles.
  9. Wolfgang Pollan, 2009. "How large are wage differentials in Austria?," Empirica, Springer, vol. 36(4), pages 389-406, November.
  10. Björklund, Anders & Bratsberg, Bernt & Eriksson, Tor & Jäntti, Markus & Raaum, Oddbjørn, 2004. "Inter-Industry Wage Differentials and Unobserved Ability: Siblings Evidence from Five Countries," IZA Discussion Papers 1080, Institute for the Study of Labor (IZA).
  11. Barth, Erling & Zweimuller, Josef, 1993. "Bargaining Regimes and Wage Dispersion," Institute for Research on Labor and Employment, Working Paper Series qt5w75g2d8, Institute of Industrial Relations, UC Berkeley.

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