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Efforts and Wages: A New Look at the Inter-Industry Wage Differentials

  • Edward E. Leamer
  • Christopher Thornberg

We provide evidence that US workers face a wage-effort offer curve with the high-wage high-effort jobs occurring in the capital intensive sectors. We find that real wage offers rose at every level of effort during the 1960's, a shift which is consistent with a decline in the rental cost of capital. During the 1970's, when relative prices of labor-intensive goods declined, the wage-effort offer curve twisted, offering lower pay for the low-paid jobs in the labor-intensive sectors but higher pay for the high-paid jobs in the capital-intensive sectors. In the 1980's, workers at every wage level began to work more hours for the same weekly wage. This we loosely attribute either to the increasing cost of non-wage benefits, especially health care, or to the introduction of new equipment. In studying the wage-effort offer curve rate of unionization, education, and rent sharing.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6626.

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Date of creation: Jun 1998
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Publication status: published as Effort and Wages: A New Look at the Interindustry Wage Differentials , Edward E. Leamer, Christopher F. Thornberg. in The Impact of International Trade on Wages , Feenstra. 2000
Handle: RePEc:nbr:nberwo:6626
Note: LS
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  1. Ben S. Bernanke, 1985. "Employment, Hours, and Earnings in the Depression: An Analysis of EightManufacturing Industries," NBER Working Papers 1642, National Bureau of Economic Research, Inc.
  2. Lundberg, Shelly J, 1988. "Labor Supply of Husbands and Wives: A Simultaneous Equations Approach," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 224-35, May.
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  9. Biddle, Jeff E & Zarkin, Gary A, 1989. "Choice among Wage-Hours Packages: An Empirical Investigation of Male Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 7(4), pages 415-37, October.
  10. John M. Abowd & David Card, 1986. "Intertemporal Labor Supply and Long Term Employment Contracts," NBER Working Papers 1831, National Bureau of Economic Research, Inc.
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  12. William T. Dickens & Lawrence F. Katz, 1986. "Interindustry Wage Differences and Industry Characteristics," NBER Working Papers 2014, National Bureau of Economic Research, Inc.
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  15. Barry T. Hirsch & David A. Macpherson, 1993. "Union Membership and Coverage Files from the Current Population Surveys: Note," ILR Review, Cornell University, ILR School, vol. 46(3), pages 574-578, April.
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