IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Institutional changes, firm size and wages in the telecommunications sector

  • Majumdar, Sumit K.
Registered author(s):

    This article evaluates the impact of institutional changes and firm size on wage determination in the local exchange sector of the United States telecommunications industry. The firms examined are all the principal local exchange carriers in the United States telecommunications industry in a regulated segment where firms operate as local monopolies. Hence, these results are salient since the sector is ubiquitous in peoples' lives and accounts for a large number of employees, though employment levels are declining. Wage determination is examined over a 14Â year period, between 1988 and 2001, when several important institutional changes took place. The presence of rate of return regulation for prices, the impact of the Telecommunications Act 1996, the application of unbundled network elements-platform (UNE-P) and total element long-run incremental costs (TELRIC) rules and inter-modal competitive threats have pressurized wages downwards, while after mergers smaller firms experience higher wage levels. Absent institutional changes, the relationship between firm size and wages is negative and significant; however, the far-reaching institutional changes in the sector wash out the impact of size on wage levels.

    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://www.sciencedirect.com/science/article/B6V8J-4XSVR37-1/2/67614bda25f4aa7424912f9ef8eaf065
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Elsevier in its journal Information Economics and Policy.

    Volume (Year): 22 (2010)
    Issue (Month): 3 (July)
    Pages: 201-217

    as
    in new window

    Handle: RePEc:eee:iepoli:v:22:y:2010:i:3:p:201-217
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505549

    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 Sibley, 1989. "Asymmetric Information, Incentives and Price-Cap Regulation," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 392-404, Autumn.
    2. Radner, Roy, 1986. "The Internal Economy of Large Firms," Economic Journal, Royal Economic Society, vol. 96(380a), pages 1-22, Supplemen.
    3. John W. Budd & Matthew J.Slaughter, 2000. "Are Profits Shared Across Borders? Evidence on International Rent Sharing," NBER Working Papers 8014, National Bureau of Economic Research, Inc.
    4. Luojia Hu, 2003. "The Hiring Decisions and Compensation Structures of Large Firms," ILR Review, Cornell University, ILR School, vol. 56(4), pages 663-681, July.
    5. Stephen G. Bronars & Melissa Famulari, 2001. "Shareholder Wealth and Wages: Evidence for White-Collar Workers," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 328-354, April.
    6. Oecd, 1995. "Restructuring in Public Telecommunications Operator Employment," OECD Digital Economy Papers 16, OECD Publishing.
    7. Van Reenen, John, 1996. "The Creation and Capture of Rents: Wages and Innovation in a Panel of U.K. Companies," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 195-226, February.
    8. Olivier Blanchard & Francesco Giavazzi, . "Macroeconomic effects of regulation and deregulation in goods and labor markets," Working Papers 187, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    9. 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.
    10. Brennan, Timothy J, 1989. "Regulating by Capping Prices," Journal of Regulatory Economics, Springer, vol. 1(2), pages 133-47, June.
    11. Farrell, Joseph & Shapiro, Carl, 1988. "Horizontal Mergers: An Equilibrium Analysis," Department of Economics, Working Paper Series qt0tp305nx, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    12. Arellano, Manuel, 2003. "Panel Data Econometrics," OUP Catalogue, Oxford University Press, number 9780199245291, March.
    13. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    14. Oi, Walter Y, 1983. "Heterogeneous Firms and the Organization of Production," Economic Inquiry, Western Economic Association International, vol. 21(2), pages 147-71, April.
    15. Hilderth, A.K. & Oswald, A.J., 1993. "Rent-Sharing and Wages: Evidence form Company and Establishment Panels," Economics Series Working Papers 99154, University of Oxford, Department of Economics.
    16. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
    17. Weisman, Dennis L, 1993. "Superior Regulatory Regimes in Theory and Practice," Journal of Regulatory Economics, Springer, vol. 5(4), pages 355-66, December.
    18. Bradley, Ian & Price, Catherine, 1988. "The Economic Regulation of Private Industries by Price Constraints," Journal of Industrial Economics, Wiley Blackwell, vol. 37(1), pages 99-106, September.
    19. Barron, John M & Black, Dan A & Loewenstein, Mark A, 1987. "Employer Size: The Implications for Search, Training, Capital Investment, Starting Wages, and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 5(1), pages 76-89, January.
    20. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
    21. Kridel, Donald J & Sappington, David E M & Weisman, Dennis L, 1996. "The Effects of Incentive Regulation in the Telecommunications Industry: A Survey," Journal of Regulatory Economics, Springer, vol. 9(3), pages 269-306, May.
    22. Ronald R. Braeutigam & John C. Panzar, 1989. "Diversification Incentives under "Price-Based" and "Cost-Based" Regulation," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 373-391, Autumn.
    23. Garen, John E, 1985. "Worker Heterogeneity, Job Screening, and Firm Size," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 715-39, August.
    24. Velenchik, A.D., 1995. "Government Intervention, Efficiency Wages, and the Employer-Size Wage Effects in Zimbabwe," Papers 95-09, Wellesley College - Department of Economics.
    25. Sam Peltzman, 1976. "Toward a More General Theory of Regulation," NBER Working Papers 0133, National Bureau of Economic Research, Inc.
    26. Cornett, Marcia Millon & Tehranian, Hassan, 1992. "Changes in corporate performance associated with bank acquisitions," Journal of Financial Economics, Elsevier, vol. 31(2), pages 211-234, April.
    27. Giuseppe Bertola & Pietro Garibaldi, 2001. "Wages and the Size of Firms in Dynamic Matching Models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 335-368, April.
    28. Måns Söderbom & Francis Teal, 2002. "Size and efficiency in African manufacturing firms: Evidence from firm-level panel data," CSAE Working Paper Series 2002-07, Centre for the Study of African Economies, University of Oxford.
    29. Mellow, Wesley, 1982. "Employer Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 495-501, August.
    30. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
    31. David G. Blanchflower & Andrew J. Oswald & Peter Sanfey, 1992. "Wages, Profits and Rent-Sharing," NBER Working Papers 4222, National Bureau of Economic Research, Inc.
    32. Kevin T. Reilly, 1995. "Human Capital and Information: The Employer Size-Wage Effect," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 1-18.
    33. Baker, George P, 1992. "Incentive Contracts and Performance Measurement," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 598-614, June.
    34. James M. MacDonald & Linda Cavalluzzo, 1996. "Railroad deregulation: Pricing reforms, shipper responses, and the effects on labor," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 50(1), pages 80-91, October.
    35. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
    36. Albaek, Karsten & Arai, Mahmood & Asplund, Rita & Barth, Erling & Strojer Madsen, Erik, 1998. "Measuring wage effects of plant size," Labour Economics, Elsevier, vol. 5(4), pages 425-448, December.
    37. Horst Feldmann, 2008. "Business regulation and labor market performance around the world," Journal of Regulatory Economics, Springer, vol. 33(2), pages 201-235, April.
    38. Rebick Marcus E., 1993. "The Persistence of Firm-Size Earnings Differentials and Labor Market Segmentation in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 7(2), pages 132-156, June.
    39. Schmidt, Christoph M & Zimmermann, Klaus F, 1991. "Work Characteristics, Firm Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 705-10, November.
    40. Charles Brown & James L. Medoff, 1987. "The Impact of Firm Acquisitions on Labor," NBER Working Papers 2273, National Bureau of Economic Research, Inc.
    41. Knut Gerlach & OLAF HÜBLER, 1998. "Firm Size and Wages in Germany – Trends and Impacts of Mobility," Empirica, Springer, vol. 25(3), pages 245-261, January.
    42. Gibbons, Robert & Katz, Lawrence F, 1992. "Does Unmeasured Ability Explain Inter-industry Wage Differentials?," Review of Economic Studies, Wiley Blackwell, vol. 59(3), pages 515-35, July.
    43. Joskow, Paul L, 1974. "Inflation and Environmental Concern: Structural Change in the Process of Public Utility Price Regulation," Journal of Law and Economics, University of Chicago Press, vol. 17(2), pages 291-327, October.
    44. Budd, John W & Konings, Jozef & Slaughter, Matthew, 2002. "International Rent Sharing in Multinational Firms," CEPR Discussion Papers 3326, C.E.P.R. Discussion Papers.
    45. Baron, David P., 1989. "Design of regulatory mechanisms and institutions," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 24, pages 1347-1447 Elsevier.
    46. Idson, Todd L, 1989. "Establishment Size Differentials in Internal Mobility," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 721-24, November.
    47. Dunn, L F, 1986. "Work Disutility and Compensating Differentials: Estimation of Factors in the Link between Wages and Firm Size," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 67-73, February.
    48. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
    49. Liston, Catherine, 1993. "Price-Cap versus Rate-of-Return Regulation," Journal of Regulatory Economics, Springer, vol. 5(1), pages 25-48, March.
    50. R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
    51. Sandra E. Black & Philip E. Strahan, 2001. "The Division of Spoils: Rent-Sharing and Discrimination in a Regulated Industry," American Economic Review, American Economic Association, vol. 91(4), pages 814-831, September.
    52. Marcello Estevao & Stacey Tevlin, 2003. "Do Firms Share their Success with Workers? The Response of Wages to Product Market Conditions," Economica, London School of Economics and Political Science, vol. 70(280), pages 597-617, November.
    53. Zoltan Acs & David Audretsch, 1990. "Innovation and Small Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011131, June.
    54. Julia I. Lane & John C. Haltiwanger & James Spletzer, 1999. "Productivity Differences across Employers: The Roles of Employer Size, Age, and Human Capital," American Economic Review, American Economic Association, vol. 89(2), pages 94-98, May.
    55. Bruno Amable & Donatella Gatti, 2004. "Product market competition, job security, and aggregate employment," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 667-686, October.
    56. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March.
    57. Kenneth R Troske, 1994. "Evidence on the Employer Size-Wage Premium From Worker-Establishment Matched Data," Working Papers 94-10, Center for Economic Studies, U.S. Census Bureau.
    58. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
    59. Brennan, Timothy J & Palmer, Karen, 1994. "Comparing the Costs and Benefits of Diversification by Regulated Firms," Journal of Regulatory Economics, Springer, vol. 6(2), pages 115-36, May.
    60. Walter Y. Oi & Todd L. Idson, 1999. "Workers Are More Productive in Large Firms," American Economic Review, American Economic Association, vol. 89(2), pages 104-108, May.
    61. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
    62. Weiss, Andrew & Landau, Henry J, 1984. "Wages, Hiring Standards, and Firm Size," Journal of Labor Economics, University of Chicago Press, vol. 2(4), pages 477-99, October.
    63. Rene Morissette, 1993. "Canadian Jobs and Firm Size: Do Smaller Firms Pay Less?," Canadian Journal of Economics, Canadian Economics Association, vol. 26(1), pages 159-74, February.
    64. Main, Brian G M & Reilly, Barry, 1993. "The Employer Size-Wage Gap: Evidence for Britain," Economica, London School of Economics and Political Science, vol. 60(238), pages 125-42, May.
    65. Majumdar, Sumit K, 1997. "Incentive Regulation and Productive Efficiency in the U.S. Telecommunications Industry," The Journal of Business, University of Chicago Press, vol. 70(4), pages 547-76, October.
    Full references (including those not matched with items on IDEAS)

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

    When requesting a correction, please mention this item's handle: RePEc:eee:iepoli:v:22:y:2010:i:3:p:201-217. 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: (Zhang, Lei)

    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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.