Wages, Profits and Rent-Sharing
The paper uses CPS data from 1964 to 1985 to test for the existence of rent-sharing in US tabor markets, Using an unbalanced panel from the manufacturing sector, and random-effects and fixed-effects specifications, the paper finds that changes in wages are explained by movements in lagged levels of profitability and unemployment. The results appear to be consistent with rent-sharing theory (or a labor contract framework with risk-averse firms) and to be inconsistent with the competitive labor market model. The paper estimates the unemployment elasticity of pay at approximately -0.03, and the profit elasticity of pay at between 0.02 and 0.05.
|Date of creation:||Dec 1992|
|Date of revision:|
|Publication status:||published as Quarterly Journal of Economics, February, 1996, vol.CXI(1), pp. 227-252.|
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References listed on IDEAS
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- Gordon R. Sparks & David A.Wilton, 1970.
"Determinants of Negotiated Wage Increases: An Empirical Analysis,"
19, Queen's University, Department of Economics.
- Sparks, Gordon R & Wilton, David A, 1971. "Determinants of Negotiated Wage Increases: An Empirical Analysis," Econometrica, Econometric Society, vol. 39(5), pages 739-50, September.
- Blanchflower, D. & Oswald, A., 1989.
"The Wage Curve,"
340, London School of Economics - Centre for Labour Economics.
- David Blanchflower & A Oswald, 1993.
"International Wage Curve,"
CEP Discussion Papers
dp0116, Centre for Economic Performance, LSE.
- Blanchflower, D. & Oswald, A. & Garrett, M., 1988.
"Insider Power In Wage Determination,"
319, London School of Economics - Centre for Labour Economics.
- 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.
- repec:cup:cbooks:9780521818551 is not listed on IDEAS
- Max H. Bazerman, 1985. "Norms of distributive justice in interest arbitration," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 38(4), pages 558-570, July.
- Baily, Martin Neil, 1974. "Wages and Employment under Uncertain Demand," Review of Economic Studies, Wiley Blackwell, vol. 41(1), pages 37-50, January.
- Nickell, S. & Wadhwani, S., 1989.
"Insider Forces And Wage Determination,"
Economics Series Working Papers
9972, University of Oxford, Department of Economics.
- 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 365-77, June.
- Alan B. Krueger & Lawrence H. Summers, 1986. "Reflections on the Inter-Industry Wage Structure," NBER Working Papers 1968, National Bureau of Economic Research, Inc.
- Azariadis, Costas, 1975. "Implicit Contracts and Underemployment Equilibria," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1183-1202, December.
- Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
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