Reorganization of Firms and Labour Market Inequality

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Reorganization of Firms and Labour Market Inequality

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Lindbeck, Assar
Snower, Dennis J.

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Abstract

This paper explores the implications of the ongoing reorganization of firms for inequality in the labour market. We show how recent technological advances in physical and human capital can lead to the breakdown of occupational barriers, creating demands for new combinations of skills, and thereby leading to new patterns of wage inequality. Specifically, our analysis indicates how the changes can segment the labour market into an expanding sector of restructured firms where wages are rising, a contracting sector of traditional firms where wages are relatively stagnant, and an expanding pool of the unemployed. The analysis helps explain various significant labour market phenomena, such as: the increased versatility of work; the widening dispersion of wages within occupational, educational, and job tenure groups in the United Kingdom and the United States, accompanied by a narrowing of the male-female wage differentials; the reorganization of firms from task-oriented departments to customer-oriented teams; and the breakdown of occupational barriers.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1375.

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Date of creation: Mar 1996
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Handle: RePEc:cpr:ceprdp:1375

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Article
- Lindbeck, Assar & Snower, Dennis J, 1996. "Reorganization of Firms and Labor-Market Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 315-21, May.
Paper
- Lindbeck, A. & Snower, D.J., 1995. "Reorganization of Firms and Labor Market Inequality," Papers 448, Industrial Institute for Economic and Social Research.
- Lindbeck, A. & Snower, D.J., 1996. "Reorganization of Firms and Labor Market Inequality," Papers 605, Stockholm - International Economic Studies.
- Lindbeck, Assar & Snower, Dennis J., 1997. "Reorganization of Firms and Labor Market Inequality," Seminar Papers 605, Stockholm University, Institute for International Economic Studies. [Downloadable!]

Find related papers by JEL classification:
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executive Compensation
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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.:

Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
Lindbeck,A. & Snower,D.J., 1995. "Restructuring Production and Work," Papers 602, Stockholm - International Economic Studies.
Other versions:
- Lindbeck, Assar & Snower, Dennis J., 1995. "Restructuring Production and Work," CEPR Discussion Papers 1323, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Lindbeck, Assar & Snower, Dennis J., 1997. "Restructuring Production and Work," Seminar Papers 602, Stockholm University, Institute for International Economic Studies. [Downloadable!]
Milgrom, Paul & Roberts, John, 1995. "The Economics of Modern Manufacturing: Reply," American Economic Review, American Economic Association, vol. 85(4), pages 997-99, September. [Downloadable!] (restricted)

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