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Worker Motivation, Wages, and Bilateral Market Power in Nonunion Labor Markets


  • William D. Ferguson

    () (Economics Department, Grinnell College)


This paper investigates bilateral market power in labor markets by merging an effort or labor discipline model with a turnover cost model. The effort model indicates unilateral employer power over workers; adding costly turnover allows for bilateral power in employment relationships. Systematic differences in exogenous determinates of the cost of job loss to workers and replacement costs to firms can help explain observed patterns of wage differentiation, including distinctions between segments of dual labor markets, interindustry wage differentials, the response of skill-based differentials to technological change and international competition, race- and gender-based differentials, and regional and national changes in unemployment.

Suggested Citation

  • William D. Ferguson, 2004. "Worker Motivation, Wages, and Bilateral Market Power in Nonunion Labor Markets," Eastern Economic Journal, Eastern Economic Association, vol. 30(4), pages 527-547, Fall.
  • Handle: RePEc:eej:eeconj:v:30:y:2004:i:4:p:527-547

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    Labor Markets; Wage;

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets


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