High-wage Industries Research Articles

Investment in Good Jobs

Relaxing the standard assumption of one price in labor markets, we evaluate the impact of labor subsidies, namely, the effects of an industrial policy designed to reallocate workers from low-wage to high-wage industries through subsidization of training costs. We found that the welfare gains can be substantial, and, in contrast to well-established results, the wage gap between low-paid workers and high-paid workers is actually reduced.

What Determines Firm Size?

Motivated by theories of the firm, which we classify as technological or organizational, we analyze the determinants of firm size across industries and across countries in a sample of 15 European countries. We find that, on average, firms facing larger markets are larger. At the industry level, we find firms in the utility sector are large, perhaps because they enjoy a natural, or officially sanctioned, monopoly. Capital intensive industries, high wage industries, and industries that do a lot of R&D have larger firms, as do industries that require little external financing. At the country level, the most salient findings are that countries with efficient judicial systems have larger firms, and, correcting for institutional development, there is little evidence that richer countries have larger firms. Interestingly, institutional development, such as greater judicial efficiency, seems to be correlated with lower dispersion in firm size within an industry. The effects of interactions (between an industry's characteristics and a country's environment) on size are perhaps the most novel results in the paper, and are best able to discriminate between theories. As the judicial system improves, the difference in size between firms in capital intensive industries and firms in industries that use little physical capital diminishes, a finding consistent with Critical Resource theories of the firm. Finally, the average size of firms in industries dependent on external finance is larger in countries with better financial markets, suggesting that financial constraints limit average firm size.

Design of Work-Based Learning for Students in the United States

Work-based learning (WBL) of the “learn-and-stay” variety prepares for specific occupations or industries, whereas “learn-and-go” WBL develops more broadly transferable knowledge and skills. Census data from California show that from the ages of 16 to 34, many workers move from industries with lower earning prospects to industries with higher ones. This natural flow might be facilitated by more learn-and-go WBL in low-wage industries and more learn-and-stay in high-wage industries. School-sponsored enterprises could play an important role in delivering additional WBL.

The Political Economy of Workers' Compensation Benefit Levels, 1910–1930

Most members of the key economic interest groups with a stake in workers' compensation anticipated gains. Despite their general agreement on the superiority of a no-fault system of accident compensation, the various interest groups fought over the level of accident benefits the new law would provide. These legislated benefit levels were important because they determined each group's share of the rents that workers' compensation created. The disputes were ultimately settled by state legislators who responded to pressures from both employer and worker groups. An empirical analysis of the workers' compensation benefit parameters that emerged from the political process shows that employers in high-accident risk industries succeeded in securing relatively lower benefits, while those in high-wage industries succeeded in keeping benefit levels in check. Employers' successes in lobbying for their optimal benefits were tempered in states where organized labor was strong, where political reform movements led to political shifts in the state legislature, and where bureaucratic agencies administered the workers' compensation system.

The Distributional Effects of Local Labor Demand and Industrial Mix: Estimates Using Individual Panel Data

This paper finds that increases in local labor demand have significant progressive effects on the income distribution, and significantly reduce poverty. The anti-poverty effects of stronger demand havenotlessened in recent years. Local labor demand's benefits are particularly great for younger, less-educated men. Labor demand's benefits are similar for blacks and whites, and men and women. The paper also finds that shifts in the local industrial mix toward manufacturing or other high-wage industries do not have progressive effects and do not reduce poverty.

Declining High-Wage Industries, Efficient Labour Contracts, and Optimal Adjustment Assistance

Wages frequently remain high in industries thrown into permanent decline. Previous analyses based on arbitrary wage rigidities have concluded that some degree of subsidization of the declining industry is warranted on efficiency grounds. The present paper proposes as an alternative an efficient bargaining model that generates wage stickiness and inefficiently low levels of intersectoral labor transfer. Expanding rather than declining sectors should be assisted under these circumstances.

Are institutions or economic rents responsible for interindustry wage differentials?

Much research on wage gaps in less-developed countries (LDCs) has used the segmented labor market paradigm, but the causes of segmentation often are not clearly identified. This paper uses an alternative approach — that of interindustry wage differentials — to guage whether interindustry wage gaps are caused by the existence of rents in certain industries or by key institutions such as minimum wage laws and social security legislation. Evidence from Ecuador suggests that institutions are more important than rents in explaning the existence of high wage industries.

Supervision and Wages Across Industries

This paper uses supervision data from a supplement to the 1977 wave of the Panel Survey of Income Dynamics to examine differences in supervision and wages across industries and to evaluate relationships between supervision practices and interindustry wage differentials. The results demonstrate that workers in high-wage industries are supervised with equal or greater stringency than secondary sector workers. Further, the results offer no evidence that interindustry differences in monitoring contribute to interindustry wage differentials. Such findings appear to contradict explanations for industry wage premiums that are motivated by efficiency wage models of shirking. Copyright 1993 by MIT Press.

Industrial Characteristics and Job Mobility Rates

Allfirms operate in at least two markets. the product market and the labor market. I investigate the relationship between characteristics of these two markets by examining the effects of product market (industrial) characteristics on job mobility in labor markets. Informed by a theoretical model in which employer personnel strategies mediate the relationship between industrial characteristics and job mobility rates, hypotheses are formulated concerning the effects of six industrial characteristics concentration levels, conglomerate domination, labor intensity, growth rates, wage levels, and average establishment size on four types of job mobility involuntary exits, quits, intra-firm moves, and upward authority moves. Among the findings are: (1) quit rates, intra-firm mobility rates, and upward authority mobility rates are low in high wage industries; (2) labor intensive industries have high involuntary exit rates and low interand intra-firm mobility rates; and (3) the effects of industry growth on job mobility vary depending on whether growth occurs through the emergence of new firms or the increasing size of existing firms.

Job Queues and Wages

This paper uses job applications data to investigate the relationship between job queues and wage differentials. The main finding is that openings for jobs that pay the minimum wage attract more job applicants than jobs that pay either slightly more or slightly less than the minimum wage. This spike in the job application rate distribution suggests that ex ante rents generated for employees by an above market-level minimum wage are not completely dissipated by reductions in nonwage benefits. In addition, we find that highly unionized firms, large firms, and firms in high-wage industries tend to receive relatively many job applicants for openings.

Causes of changes in wage variation among states

Borts and Stein [1] point to a shift from low wage agriculture to more diversified economies as a major reason for income convergence among states from 1880 through 1950. We find continued convergence through 1980 with some divergence from 1980 to 1985. Generalizing from a bifurcated model to a model with 50 industries, we find that shifts in the mix among low- and high-wage industries causes a change in average wage rate both directly through the weighting effect and indirectly by influencing wage rates as measured by a fixed weight index.

More evidence on the puzzle of interindustry wage differentials: The case of West Germany

Mehr Evidenz zur interindustriellen Lohnstruktur in der Bundesrepublik Deutschland. — Die Verfasser zeigen, das in der Bundesrepublik Deutschland fur Arbeitskrafte mit ahnlichen Qualifikationsmerkmalen branchenspezifische Lohnunterschiede existieren und das die interindustrielle Lohnstruktur in der Bundesrepublik der interindustriellen Lohnstruktur in den Vereinigten Staaten gleicht. So sind der Strasenfahrzeugbau und die Mineralolverarbeitung in beiden Landern typische Hochlohnbranchen, das Bekleidungsgewerbe und das Ledergewerbe dagegen typische Niedriglohnbranchen. Diese ahnlichkeit der interindustriellen Lohnstrukturen mus uberraschen, da sich die institutionellen Rahmenbedingungen des Arbeitsmarktes in beiden Landern sehr stark unterscheiden. Daruber hinaus zeigt sich, das im Branchenquerschnitt die Verdienste von Beschaftigten mit unterschiedlicher Qualifikation eng miteinander korreliert sind. Diese Ergebnisse sind nicht ohne weiteres mit den herkommlichen neoklassischen Arbeitsmarktmodellen zu vereinbaren.

Efficiency Wages and the Inter-Industry Wage Structure

This paper empirically tests and rejects classical competitive theories of wage determination by examining differences in wages for equally skilled workers across industries. Human capital earnings functions are estimated using cross-sectional and longitudinal data from the CPS and QES. The major finding is that the dispersion in wages across industries as measured by the standard deviation in industry wage differentials is substantial. Furthermore, F tests of the joint significance of industry dummy variables are decisively rejected. These differences are very difficult to link to unobserved differences in ability or to compensating differentials for working conditions. Fixed effects models are estimated using two longitudinal data sets to control for constant, unmeasured worker characteristics that might bias cross-sectional estimates. Because measurement error is a serious problem in looking at workers who report changing industries, we use estimates of industry classification error rates to adjust the longitudinal results. In the fixed effects analysis, the industry wage differentials are sizable and are very similar to the cross-sectional estimates. In addition, the fixed effects estimates are robust under a variety of assumptions about classification errors and are similar using both data sets. These findings cast doubt on explanations of industry wage differentials based on unmeasured ability. Additional analysis finds that the industry wage structure is highly correlated for workers in small and large firms, in different regions of the U.S., and with varying job tenures. Finally, evidence is presented demonstrating that turnover has a negative relationship with industry wage differentials. These findings suggest that workers in high wage industries receive noncompetitive rents.

Dialectics of Black Capitalism Part II

T e economy of the black community (and the white as well), can be divided into four sectors: i high wage industries; low wage industries; irregular e n t e r p r i s e ; and wel fare . High wage i n d u s t r i e s a re characteristically capital intensive, with high labor productivity and wages. They tend to be dominated by a few large firms, and to be strongly unionized. In many, such as automobiles, there is considerable verticle integration. For the black community, such industries are attractive because they offer high paying jobs, utilize advanced technology and bring a high rate of return. But they are difficult because they require large capital investment, skilled managers and workers, tend to face strong competition from established white firms, and provide relatively few jobs for a dollar's worth of invested capital. The first three difficulties can be met in interesting ways, relying on subsidies and co-operation from large white enterprises. A capital intensive white firm can establish a capital intensive,

Why Wages Are Lower in Retailing

Wage scales are lower in trade, agriculture and the service industries, in general, than they are in manufacturing, construction and transportation. Similarly, within a major industrial group such as manufacturing, wages are higher in the automotive, aircraft and petroleum refining industries than in textiles, apparel and leather products.1 Differentials in wage scales have existed for many decades. Today, as in the past, buyers and sellers still make bargains in the labor market at various rates, rather than at a single rate, even for the same labor grade. Various economic factors have been singled out to explain why wage scales can be and are higher in some industries than in others. Professor Lester offers the following array: Some industries have much higher wage scales (both for unskilled and skilled labor) than do other industries. In terms of both entrance rates for common labor and of average hourly earnings for all production workers, the following are high-wage industries not only in this country but also in Canada and Great Britain; petroleum refining, automobiles, railway equipment, chemicals, rubber tires and tubes, and aircraft. By the same token, wage scales are relatively low in such industries as tobacco, cotton textiles, leather and leather products, food preparation and canning, lumber, fertilizer and furniture.