Advanced Search
MyIDEAS: Login to save this paper or follow this series

Complex Production Processes and Wage Inequality

Contents:

Author Info

  • Pekkarinen, Tuomas

    ()
    (Government Institute for Economic Research, Helsinki)

Abstract

This paper studies how changes in the complexity of the firms' production technologies affect wage differences between and within tasks. In a production process where tasks are complementary, the employer may have an incentive to pay higher wages when using more complex technologies because the output of such processes is more effort-sensitive. We use linked employer-employee data from the Finnish metal industry. These data provide quantified information on the complexity of the tasks of individual workers. The average complexity of the tasks in the firm is used as a proxy for the complexity of the production process. We estimate the effect of the complexity of the production process on hourly wages at different levels of complexity of the worker's own tasks and at different parts of the conditional wage distribution within tasks. We find that the complexity of the firm's production process increases wages in all the tasks but that there are no significant differences in this effect across tasks. Finally, the effect of the complexity of the production process tends to be stronger at the high end of the conditional wage distribution within tasks.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://ftp.iza.org/dp1060.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1060.

as in new window
Length: 24 pages
Date of creation: Mar 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1060

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: technological complexity; wage inequality;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The Skill Content Of Recent Technological Change: An Empirical Exploration," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(4), pages 1279-1333, November.
  2. Timothy Dunne & Lucia Foster & John Haltiwanger & Kenneth Troske, 2000. "Wage and Productivity Dispersion in U.S. Manufacturing: The Role of Computer Investment," Working Papers, Center for Economic Studies, U.S. Census Bureau 00-01, Center for Economic Studies, U.S. Census Bureau.
  3. Kremer, M & Maskin, E, 1996. "Wage Inequality and Segregation by Skill," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 96-23, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Pekkarinen, Tuomas, 2002. "Complexity, wages, and the O-ring production function: evidence from Finnish panel data," Labour Economics, Elsevier, Elsevier, vol. 9(4), pages 531-546, September.
  5. Entorf, Horst & Gollac, Michel & Kramarz, Francis, 1999. "New Technologies, Wages, and Worker Selection," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 17(3), pages 464-91, July.
  6. John M. Abowd & Francis Kramarz & David N. Margolis, 1994. "High Wage Workers and High Wage Firms," NBER Working Papers 4917, National Bureau of Economic Research, Inc.
  7. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, American Economic Association, vol. 74(3), pages 433-44, June.
  8. Uusitalo, Roope, 2002. " Changes in the Finnish Wage Structure: Will Demand and Supply Do?," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 104(1), pages 69-85.
  9. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  10. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 40(1), pages 7-72, March.
  11. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 108(3), pages 551-75, August.
  12. DiNardo, John E & Pischke, Jorn-Steffen, 1997. "The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(1), pages 291-303, February.
  13. Doms, Mark & Dunne, Timothy & Troske, Kenneth R, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(1), pages 253-90, February.
  14. Michael Kremer & Eric Maskin, 1996. "Wage Inequality and Segregation," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1777, Harvard - Institute of Economic Research.
  15. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, American Economic Association, vol. 80(3), pages 511-28, June.
  16. Sattinger, Michael, 1979. "Differential Rents and the Distribution of Earnings," Oxford Economic Papers, Oxford University Press, vol. 31(1), pages 60-71, March.
  17. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 1999. "Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-Level Evidence," NBER Working Papers 7136, National Bureau of Economic Research, Inc.
  18. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, Econometric Society, vol. 46(1), pages 33-50, January.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp1060. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.