Insider Power in Wage Determination
This paper argues that wage determination is best seen as a kind of rent-sharing in which workers' bargaining power is influenced by conditions in the external labor market. It uses British establishment data from 1984 to show that pay depends upon a blend of insider pressure (including the employer's financial performance and oligopolistic position) and outsider pressure (including external wages and unemployment). R. A. Lester's feasible "range" of wages appears typically to be between 8 and 22 percent of pay. Estimates of the unemployment elasticity of the wage lie in a narrow band around -0.1. Copyright 1990 by The London School of Economics and Political Science.
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Volume (Year): 57 (1990)
Issue (Month): 226 (May)
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