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Specific training, unions, and the relationship between employer size and wages

  • James E. Pearce
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    In this paper I demonstrate that the explanatory power of employer size variables in nonunion wage regressions is diminished by allowing the coefficient of tenure (years on current job) to vary with employer size. Among nonunion workers, average tenure and the coefficient of tenure increase with both firm size and plant size. This pattern is consistent with the hypothesis that investment in specific human capita1 accounts for much of the previously unexplained relationship between employer size and nonunion wages . The relationships between compensation tenure, and employer size are different for union workers. Employer size is less important generally, and the importance of plant size is especially low. Also, the data are more consistent with the specific human capital model when union compensation is measured by annual income rather than the hourly wage.

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    File URL: http://dallasfed.org/assets/documents/research/papers/1985/wp8504.pdf
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    Paper provided by Federal Reserve Bank of Dallas in its series Working Papers with number 8504.

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    Date of creation: 1985
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    Handle: RePEc:fip:feddwp:85-04
    Contact details of provider: Web page: http://www.dallasfed.org/
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    1. Garen, John E, 1985. "Worker Heterogeneity, Job Screening, and Firm Size," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 715-39, August.
    2. Parsons, Donald O, 1972. "Specific Human Capital: An Application to Quit Rates and Layoff Rates," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1120-43, Nov.-Dec..
    3. Masters, Stanley H, 1969. "An Interindustry Analysis of Wages and Plant Size," The Review of Economics and Statistics, MIT Press, vol. 51(3), pages 341-45, August.
    4. Pearce, James E, 1983. "Unionism and the Cyclical Behavior of the Labor Market in U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 450-58, August.
    5. Richard B. Freeman & James L. Medoff, 1979. "New estimates of private sector unionism in the United States," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 32(2), pages 143-174, January.
    6. Lorne Carmichael, 1981. "Firm-Specific Human Capital and Promotion Ladders," Working Papers 452, Queen's University, Department of Economics.
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