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Specific training, unions, and the relationship between employer size and wages

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  • James E. Pearce

Abstract

In this paper I demonstrate that the explanatory power of employer size variables in nonunion wage regressions is diminished by allowing the coefficient of tenure (years on current job) to vary with employer size. Among nonunion workers, average tenure and the coefficient of tenure increase with both firm size and plant size. This pattern is consistent with the hypothesis that investment in specific human capita1 accounts for much of the previously unexplained relationship between employer size and nonunion wages . The relationships between compensation tenure, and employer size are different for union workers. Employer size is less important generally, and the importance of plant size is especially low. Also, the data are more consistent with the specific human capital model when union compensation is measured by annual income rather than the hourly wage.

Suggested Citation

  • James E. Pearce, 1985. "Specific training, unions, and the relationship between employer size and wages," Working Papers 8504, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddwp:85-04
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    References listed on IDEAS

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    1. Pearce, James E, 1983. "Unionism and the Cyclical Behavior of the Labor Market in U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 450-458, August.
    2. Parsons, Donald O, 1972. "Specific Human Capital: An Application to Quit Rates and Layoff Rates," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1120-1143, Nov.-Dec..
    3. Garen, John E, 1985. "Worker Heterogeneity, Job Screening, and Firm Size," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 715-739, August.
    4. Masters, Stanley H, 1969. "An Interindustry Analysis of Wages and Plant Size," The Review of Economics and Statistics, MIT Press, vol. 51(3), pages 341-345, August.
    5. Rosen, Sherwin, 2007. "Studies in Labor Markets," National Bureau of Economic Research Books, University of Chicago Press, number 9780226726304, December.
    6. repec:ucp:bknber:9780226726281 is not listed on IDEAS
    7. Jacob Mincer & Boyan Jovanovic, 1981. "Labor Mobility and Wages," NBER Chapters, in: Studies in Labor Markets, pages 21-64, National Bureau of Economic Research, Inc.
    8. Lorne Carmichael, 1983. "Firm-Specific Human Capital and Promotion Ladders," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 251-258, Spring.
    9. Richard B. Freeman & James L. Medoff, 1979. "New Estimates of Private Sector Unionism in the United States," ILR Review, Cornell University, ILR School, vol. 32(2), pages 143-174, January.
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    Cited by:

    1. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-1059, October.
    2. Walter Y. Oi, 1988. "Are Workers Overpaid By Big Firms?," Australian Journal of Management, Australian School of Business, vol. 13(2), pages 203-221, December.

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