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Prevailing Wage Laws and Construction Labor Markets

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  • Daniel P. Kessler
  • Lawrence Katz

Abstract

Prevailing wage laws, which require that construction workers employed by private contractors on public projects be paid at least the wages and benefits that are "prevailing" for similar work in or near the locality in which the project is located, have been the focus of an extensive policy debate. We find that the relative wages of construction workers decline slightly after the repeal of a state prevailing wage law. However, the small overall impact of law repeal masks substantial differences in outcomes for different groups of construction employees. Repeal is associated with a sizeable reduction in the union wage premium and a significant narrowing of the black/nonblack wage differential for construction workers.

Suggested Citation

  • Daniel P. Kessler & Lawrence Katz, 1999. "Prevailing Wage Laws and Construction Labor Markets," NBER Working Papers 7454, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:7454
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    1. Ashenfelter, Orley, 1972. "Racial Discrimination and Trade Unionism," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 435-464, May-June.
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    3. D. N. Gujarati, 1967. "The Economics of the Davis-Bacon Act," The Journal of Business, University of Chicago Press, vol. 40, pages 303-303.
    4. Allen, Steven G, 1983. "Much Ado about Davis-Bacon: A Critical Review and New Evidence," Journal of Law and Economics, University of Chicago Press, vol. 26(3), pages 707-736, October.
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    6. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-338, May.
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    Cited by:

    1. Giuseppe Bertola & Francine Blau & Lawrence Kahn, 2007. "Labor market institutions and demographic employment patterns," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(4), pages 833-867, October.
    2. David Neumark, 2004. "Living Wages: Protection for or Protection from Low-Wage Workers?," ILR Review, Cornell University, ILR School, vol. 58(1), pages 27-51, October.
    3. Blanchflower, David G. & Wainwright, Jon, 2005. "An Analysis of the Impact of Affirmative Action Programs on Self-Employment in the Construction Industry," IZA Discussion Papers 1856, Institute for the Study of Labor (IZA).
    4. Blanchflower, David G., 2007. "Entrepreneurship in the United States," IZA Discussion Papers 3130, Institute for the Study of Labor (IZA).
    5. Addison, John T., 2006. "Politico-Economic Causes of Labor Regulation in the United States: Rent Seeking, Alliances, Raising Rivals' Costs (Even Lowering One's Own?), and Interjurisdictional Competition," IZA Discussion Papers 2381, Institute for the Study of Labor (IZA).
    6. David Blanchflower, 2009. "Minority self-employment in the United States and the impact of affirmative action programs," Annals of Finance, Springer, vol. 5(3), pages 361-396, June.

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