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The Impact of Market Structure on Wages, Fringe Benefits, and Turnover

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  • James E. Long
  • Albert N. Link

Abstract

This paper examines the relationship between labor compensation and the structure of the product market, which is measured by the industry concentration ratio and by dummy variables for the existence and type of government regulation. Unlike previous studies that have estimated the impact of concentration and regulation on wages or earnings, this study extends the analysis to include the effect of market structure on employer-provided pensions and insurance and on voluntary labor turnover. The hypothesis that product market power raises labor compensation is supported by empirical results indicating that concentration increases wages and fringes but lowers voluntary labor turnover. Regulations that set minimum prices and restrict entry raise labor compensation, since wage premiums due to regulation are not offset by lower pensions and insurance or higher turnover. Other forms of regulation, such as profit regulation in public utilities, are found to reduce labor compensation, as evidenced by higher turnover or lower wages and fringes, or both.

Suggested Citation

  • James E. Long & Albert N. Link, 1983. "The Impact of Market Structure on Wages, Fringe Benefits, and Turnover," ILR Review, Cornell University, ILR School, vol. 36(2), pages 239-250, January.
  • Handle: RePEc:sae:ilrrev:v:36:y:1983:i:2:p:239-250
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    Cited by:

    1. Lloyd Ulman, 1992. "Why Should Human Resource Managers Pay High Wages?," British Journal of Industrial Relations, London School of Economics, vol. 30(2), pages 177-212, June.
    2. William T. Dickens & Lawrence F. Katz, 1987. "Inter-Industry Wage Differences and Theories of Wage Determination," NBER Working Papers 2271, National Bureau of Economic Research, Inc.
    3. Hans K. Hvide & Eirik Gaard Kristiansen, 2012. "Management of Knowledge Workers," Journal of Law and Economics, University of Chicago Press, vol. 55(4), pages 815-838.
    4. David H. Good & M. Ishaq Nadiri & Robin C. Sickles, 1996. "Index Number and Factor Demand Approaches to the Estimation of Productivity," NBER Working Papers 5790, National Bureau of Economic Research, Inc.
    5. William T. Dickens & Lawrence F. Katz, 1986. "Interindustry Wage Differences and Industry Characteristics," NBER Working Papers 2014, National Bureau of Economic Research, Inc.
    6. Aparna Mitra, 1999. "Structural characteristics of firms and industries and black and white wage inequality in the U.S. economy: 1988," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 27(2), pages 179-192, June.
    7. Ulman, Lloyd, 1992. "Why Should Human Resource Managers Pay High Wages?," Institute for Research on Labor and Employment, Working Paper Series qt8378t1rz, Institute of Industrial Relations, UC Berkeley.

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