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Prevailing Wage Laws and Construction Labor Markets

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  • Daniel P. Kessler
  • Lawrence Katz

Abstract

Prevailing wage laws, which require that construction workers employed by private contractors on public projects be paid at least the wages and benefits that are "prevailing" for similar work in or near the locality in which the project is located, have been the focus of an extensive policy debate. We find that the relative wages of construction workers decline slightly after the repeal of a state prevailing wage law. However, the small overall impact of law repeal masks substantial differences in outcomes for different groups of construction employees. Repeal is associated with a sizeable reduction in the union wage premium and a significant narrowing of the black/nonblack wage differential for construction workers.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7454.

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Date of creation: Dec 1999
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Publication status: published as Industrial and Labor Relations Review, Vol. 54, no. 2 (January 2001): 259-274
Handle: RePEc:nbr:nberwo:7454

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  1. Allen, Steven G, 1987. "Can Union Labor Ever Cost Less?," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 347-73, May.
  2. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
  3. Allen, Steven G, 1983. "Much Ado about Davis-Bacon: A Critical Review and New Evidence," Journal of Law and Economics, University of Chicago Press, vol. 26(3), pages 707-36, October.
  4. Ashenfelter, Orley, 1972. "Racial Discrimination and Trade Unionism," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 435-64, May-June.
  5. Robert S. Goldfarb & John S. Morrall III, 1981. "The Davis-Bacon Act: An appraisal of recent studies," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 34(2), pages 191-206, January.
  6. D. N. Gujarati, 1967. "The Economics of the Davis-Bacon Act," The Journal of Business, University of Chicago Press, vol. 40, pages 303.
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Cited by:
  1. Blanchflower, David G., 2007. "Entrepreneurship in the United States," IZA Discussion Papers 3130, Institute for the Study of Labor (IZA).
  2. David G. Blanchflower, 2008. "Minority Self-Employment in the United States and the Impact of Affirmative Action Programs," NBER Working Papers 13972, National Bureau of Economic Research, Inc.
  3. Clifford Winston, 2013. "On the Performance of the U.S. Transportation System: Caution Ahead," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 773-824, September.
  4. Giuseppe Bertola & Francine D. Blau & Lawrence M. Kahn, 2002. "Labor Market Institutions and Demographic Employment Patterns," NBER Working Papers 9043, National Bureau of Economic Research, Inc.
  5. David G. Blanchflower & Jon Wainwright, 2005. "An Analysis of the Impact of Affirmative Action Programs on Self-Employment in the Construction Industry," NBER Working Papers 11793, National Bureau of Economic Research, Inc.
  6. David Neumark, 2001. "Living Wages: Protection For or Protection From Low-Wage Workers?," NBER Working Papers 8393, National Bureau of Economic Research, Inc.
  7. Addison, John T., 2006. "Politico-Economic Causes of Labor Regulation in the United States: Rent Seeking, Alliances, Raising Rivals' Costs (Even Lowering One's Own?), and Interjurisdictional Competition," IZA Discussion Papers 2381, Institute for the Study of Labor (IZA).
  8. Dunn, Sarah & Quigley, John M. & Rosenthal, Larry A., 2005. "The Effects of Prevaling Wage Requirements on the Cost of Low-Income Housing," Berkeley Program on Housing and Urban Policy, Working Paper Series qt9621c051, Berkeley Program on Housing and Urban Policy.

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