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Wages, Profits, and Rent-Sharing

Listed author(s):
  • David G. Blanchflower
  • Andrew J. Oswald
  • Peter Sanfey

The paper suggests a new test for rent-sharing in the U. S. labor market. Using an unbalanced panel from the manufacturing sector, it shows that a rise in a sector's profitability leads after some years to an increase in the long-run level of wages in that sector. The paper controls for workers' characteristics, for industry fixed effects, and for unionism. Lester's range of wages is estimated, for rent-sharing reasons alone, at approximately 24 percent of the mean wage.

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File URL: http://hdl.handle.net/10.2307/2946663
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Article provided by Oxford University Press in its journal The Quarterly Journal of Economics.

Volume (Year): 111 (1996)
Issue (Month): 1 ()
Pages: 227-251

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Handle: RePEc:oup:qjecon:v:111:y:1996:i:1:p:227-251.
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  1. Nickell, Stephen J & Wadhwani, Sushil, 1990. "Insider Forces and Wage Determination," Economic Journal, Royal Economic Society, vol. 100(401), pages 496-509, June.
  2. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, July.
  3. Oswald, Andrew J, 1986. "Unemployment Insurance and Labor Contracts under Asymmetric Information: Theory and Facts," American Economic Review, American Economic Association, vol. 76(3), pages 365-377, June.
  4. David G. Blanchflower & Andrew Oswald, 1995. "International Wage Curves," NBER Chapters,in: Differences and Changes in Wage Structures, pages 145-174 National Bureau of Economic Research, Inc.
  5. Max H. Bazerman, 1985. "Norms of Distributive Justice in Interest Arbitration," ILR Review, Cornell University, ILR School, vol. 38(4), pages 558-570, July.
  6. Blanchflower, David G & Oswald, Andrew J & Garrett, Mario D, 1990. "Insider Power in Wage Determination," Economica, London School of Economics and Political Science, vol. 57(226), pages 143-170, May.
  7. Sparks, Gordon R & Wilton, David A, 1971. "Determinants of Negotiated Wage Increases: An Empirical Analysis," Econometrica, Econometric Society, vol. 39(5), pages 739-750, September.
  8. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
  9. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
  10. Erica L. Groshen, 1988. "Why do wages vary among employers?," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 19-38.
  11. Alan B. Krueger & Lawrence H. Summers, 1986. "Reflections on the Inter-Industry Wage Structure," NBER Working Papers 1968, National Bureau of Economic Research, Inc.
  12. Martin Neil Baily, 1974. "Wages and Employment under Uncertain Demand," Review of Economic Studies, Oxford University Press, vol. 41(1), pages 37-50.
  13. Azariadis, Costas, 1975. "Implicit Contracts and Underemployment Equilibria," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1183-1202, December.
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