Labor Market Institutions and the Industry Wage Distribution: Evidence from Austria, Norway, and the U.S
The paper compares the industry wage structures of Austria, Norway, the union sector of the U.S. as well as the non-union sector of the U.S. We make comparable regressions for each country, and are thus able to compare the sectoral earnings patterns controlling for the usual individual characteristics. Our results confirm the hypothesis that the patterns of the inter-industry pay structure is largely independent of labor market institutions: High paying industries in a non-union environment tend to pay high wages also in regimes where bargaining is very centralized and coordinated. This, however, does not mean that collective bargaining does not matter. The influence is mainly on the amount of wage dispersion: We find considerably lower industry pay gaps in centralized Austria and Norway than in decentralized US. Within the US, pay differentials within the union sector slightly exceed those of the non-union sector. The results give support to non-competitive explanations of the labor market. If efficiency wage mechanisms were the reason for wage differentials we would expect central bargainers to internalize these effects. Competitive explanations, on the other hand, would predict no difference between the non-union outcome and a central agreement with the aim of achieving full employment.
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Web page: http://www.escholarship.org/repec/iir_iirwps/
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- 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.
- 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.
- William T. Dickens, 1986. "Wages, Employment and the Threat of Collective Action by Workers," NBER Working Papers 1856, National Bureau of Economic Research, Inc.
- Winter-Ebmer, Rudolf, 1994.
"Endogenous Growth, Human Capital, and Industry Wages,"
Bulletin of Economic Research,
Wiley Blackwell, vol. 46(4), pages 289-314, October.
- Winter-Ebmer, Rudolf, 1992. "Endogenous Growth, Human Capital, and Industry Wages," CEPR Discussion Papers 714, C.E.P.R. Discussion Papers.
- George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, Oxford University Press, vol. 97(4), pages 543-569.
- Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-1059, October.
- Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
- Wagner, Joachim, 1990. "An international comparison of sector wage differentials," Economics Letters, Elsevier, vol. 34(1), pages 93-97, September. Full references (including those not matched with items on IDEAS)
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