A Multisector Model of Efficiency Wages

Walsh, Frank

doi:10.1086/209924

Cited by 44 publications

(57 citation statements)

References 23 publications

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“…Moreover, while studies on industry wage differentials offer some evidence against the perfectly competitive model, they hardly allow one to discriminate between alternative models supporting the existence of an effect of employer characteristics on wages (Krueger and Summers 1988;Thaler 1989;Lindbeck and Snower 1990;Walsh 1999;Benito 2000). Prima facie, wage disparities observed between sectors support the efficiency wage theory.…”

Section: Inter-industry Wage Differentials: What Do We Know?mentioning

confidence: 93%

Wage structure effects of international trade in a small open economy: the case of Belgium

2012

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This paper investigates the impact of international trade on wage dispersion in a small open economy, Belgium. It is one of the few to: (i) use detailed, matched employer-employee data to compute industry wage premia and disaggregated industry-level panel data to examine the impact of changes in international trade on changes in wage differentials, (ii) simultaneously analyse both imports and exports, and (iii) examine the impact of imports according to the country of origin. Looking at the export side, we find (on the basis of the system generalized method of moments estimator) a positive effect of exports on industry wage premia. The results also show that import penetration has a significant and negative impact on industry wage differentials. However, the detrimental effect of imports on wages is found to be significantly greater when imports originate from low-and middleincome countries than from high-income countries.

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Section: Inter-industry Wage Differentials: What Do We Know?mentioning

confidence: 93%

Wage structure effects of international trade in a small open economy: the case of Belgium

2012

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“…All in all, there is no consensus regarding to exact scale of the industry wage premia. Moreover, while studies on industry wage premia offer some evidence against the perfectly competitive model, they hardly allow to discriminate among alternative models supporting the existence of an effect of the employer's characteristics on wages (Benito, 2000;Krueger and Summers, 1988;Lindbeck and Snower, 1990;Thaler, 1989;Walsh, 1999).…”

Section: Theoretical and Empirical Backgroundmentioning

confidence: 99%

“…Yet, the role of unmeasured abilities in explaining the inter-industry wage differentials is still unsettled (Abowd et al, 1999;Benito, 2000;Bjorklund et al, 2004;Carruth et al, 2004, Gibbons andKatz, 1992;Goux andMaurin, 1999, Martins, 2004). Moreover, while studies on industry wage premia offer some evidence against the perfectly competitive model, they hardly allow to discriminate among alternative models supporting the existence of an effect of the employer's characteristics on wages (Benito, 2000;Krueger and Summers, 1988;Lindbeck and Snower, 1990;Thaler, 1989;Walsh, 1999). In particular, little is known on the contribution of rent-sharing to the observed industry wage differentials.…”

Section: Introductionmentioning

confidence: 99%

Industry Wage Differentials, Unobserved Ability, and Rent-Sharing: Evidence from Matched Worker-Firm Data, 1995-2002

2006

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. (2004) methodology. However, the contribution of this explanation to the observed industry wage differentials appears to be limited. Further results show that ceteris paribus, workers earn significantly higher wages when employed in more profitable firms. Our instrumented wage-profit elasticity stands at 0.063 and Lester's range of pay is about 41 per cent of the mean wage. This rent-sharing phenomenon accounts for a large fraction of the industry wage differentials. We find indeed that the magnitude, dispersion and significance of industry wage differentials decreases sharply when controlling for profits.JEL Classification: D31, J31, J41

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“…Moreover, while studies on industry wage differentials offer some evidence against the perfectly competitive model, they hardly allow one to discriminate between alternative models supporting the existence of an effect of employer characteristics on wages (Krueger and Summers, 1988;Lindbeck and Snower, 1990;Thaler, 1989;Walsh, 1999;Benito, 2000). Prima facie, wage disparities observed between sectors support the efficiency wage theory.…”

Section: Inter-industry Wage Differentials: What Do We Know?mentioning

confidence: 93%

Wage Structure Effects of International Trade: Evidence from a Small Open Economy

2011

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In the last decades, international trade has increased between industrialised countries and between high-and low-wage countries. This important change has raised questions on how international trade affects the labour market. In this spirit, this paper aims to investigate the impact of international trade on wage dispersion in a small open economy. It is one of the few to: i) use detailed matched employer-employee data to compute industry wage premia and disaggregated industry level panel data to examine the impact of changes in international trade on changes in wage differentials, ii) simultaneously analyse both imports and exports, and iii) examine the impact of imports according to the country of origin. Looking at the export side, we find (on the basis of the system GMM estimator) a positive effect of exports on industry wage premia. The results also show that import penetration has a significant and negative impact on industry wage differentials whatever the country of origin. However, the country of origin appears to matter quite a lot. Indeed, the detrimental effect of imports on wages is found to be significantly bigger when the latter come from low-income countries than from high-income countries. AbstractIn the last decades, international trade has increased between industrialised countries and between high-and low-wage countries. This important change has raised questions on how international trade affects the labour market. In this spirit, this paper aims to investigate the impact of international trade on wage dispersion in a small open economy. It is one of the few to: i) use detailed matched employeremployee data to compute industry wage premia and disaggregated industry level panel data to examine the impact of changes in international trade on changes in wage differentials, ii) simultaneously analyse both imports and exports, and iii) examine the impact of imports according to the country of origin. Looking at the export side, we find (on the basis of the system GMM estimator) a positive effect of exports on industry wage premia. The results also show that import penetration has a significant and negative impact on industry wage differentials whatever the country of origin. However, the country of origin appears to matter quite a lot. Indeed, the detrimental effect of imports on wages is found to be significantly bigger when the latter come from low-income countries than from high-income countries.

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A Multisector Model of Efficiency Wages

Cited by 44 publications

References 23 publications

Wage structure effects of international trade in a small open economy: the case of Belgium

Wage structure effects of international trade in a small open economy: the case of Belgium

Industry Wage Differentials, Unobserved Ability, and Rent-Sharing: Evidence from Matched Worker-Firm Data, 1995-2002

Wage Structure Effects of International Trade: Evidence from a Small Open Economy

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