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Labor mobility and Inter-industry Wage Variation

  • Montserrat Vilalta-Bufi

This paper offers a new explanation for the empirically observed inter-industry wage variation. We represent an industry by a small open economy with inter-firm labor mobility. Each industry is characterized by a degree of learning-by-doing, learning-by-hiring, inter-firm mobility costs and technological level. In this economy we analyze how these features affect the wage level of the industry. The variety of knowledge within an industry and its capital intensity is also analyzed. Results show that industries with high learning-by-hiring and low mobility costs generally pay higher wages. More learning-by- doing and higher technological level in an industry is also giving higher wages. Results provide new hypotheses to be tested and are consistent with the finding that more capital intensive industries pay higher wages.

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File URL: http://degit.sam.sdu.dk/papers/degit_12/C012_024.pdf
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Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c012_024.

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Length: 23 pages
Date of creation: Jun 2007
Date of revision:
Handle: RePEc:deg:conpap:c012_024
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  1. Zabojnik, Jan & Bernhardt, Dan, 2001. "Corporate Tournaments, Human Capital Acquisition, and the Firm Size-Wage Relation," Review of Economic Studies, Wiley Blackwell, vol. 68(3), pages 693-716, July.
  2. Giovanni Peri, 2005. "Determinants of Knowledge Flows and Their Effect on Innovation," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 308-322, May.
  3. Combes, Pierre-Philippe & Duranton, Gilles, 2006. "Labour pooling, labour poaching, and spatial clustering," Regional Science and Urban Economics, Elsevier, vol. 36(1), pages 1-28, January.
  4. 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.
  5. Alan B. Krueger & Lawrence H. Summers, 1986. "Reflections on the Inter-Industry Wage Structure," NBER Working Papers 1968, National Bureau of Economic Research, Inc.
  6. 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.
  7. Alan Hyde, 1998. "Silicon Valley'S High-Velocity Labor Market," Journal of Applied Corporate Finance, Morgan Stanley, vol. 11(2), pages 28-37.
  8. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  9. Dickens, William T & Lang, Kevin, 1988. "The Reemergence of Segmented Labor Market Theory," American Economic Review, American Economic Association, vol. 78(2), pages 129-34, May.
  10. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 551-75, August.
  11. John E. Ettlie, 1980. "Manpower Flows and the Innovation Process," Management Science, INFORMS, vol. 26(11), pages 1086-1095, November.
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