Inter-industry Wage Structure Research Articles

Evolution of the Interindustry Wage Structure in China Since the 1980s

AbstractIndustry mean wages in China have exhibited sharply increased dispersion since the early1990s. Researchers have attributed this rising inequality within the industrial wage structure to: (i) increasingly competitive labour markets leading to better matches between worker pay, worker skills and employer demands; or (ii) residual government control in some industrial sectors that has generated high wages through monopoly rent sharing. We argue that the rise in China's industrial wage dispersion is primarily attributable to increasingly competitive labour markets, which have led to greater returns to schooling and to efficient redistribution of workers across major industry groups. We cannot reject the null hypothesis that the level or changes in government monopoly power has had negligible impact on China's rising industrial wage dispersion.

Understanding inter-industry wage structures in the euro area

This article focuses on the euro area wage structure and its potential determinants from a sectoral viewpoint. Merging information from the Organization for Economic Co-operation and Development (OECD) Structural Analysis database with data from the EU Labour Force Survey, we construct a cross-country panel of 22 industries in eight euro area countries for 1991–2002. Data inspection confirms the existence of a fairly stable inter-industry wage structure that is similar across countries. We then apply panel data techniques to identify factors explaining inter-industry wage differentials in the euro area. Both workforce characteristics (e.g. human capital variables) and firm-related characteristics (e.g. capital intensity, productivity) contribute significantly. However, considerable wage heterogeneity across sectors remains. Idiosyncratic sector and country specifics, reflecting different socio-cultural and institutional backgrounds, appear to bear a major role. While our empirical analysis only uses direct evidence from workforce and firm-related characteristics, we also relate the remaining heterogeneity to institutional characteristics, based on related literature.

THE WAGE–WAGE‐ . . . ‐WAGE–PROFIT RELATION IN A MULTISECTOR BARGAINING ECONOMY

ABSTRACTThe equalization of profit rates across industries subject to firm‐level bargaining over wages generates an interindustry wage structure with higher wages in capital‐intensive sectors. The familiar inverse wage–profit relation gives way to a wage–wage‐ . . . ‐wage–profit surface on which the profit rate can vary directly with the wage paid in an individual industry. Institutional changes that decrease workers' bargaining power and increase the incomes of the unemployed tend to compress the wage distribution; these changes draw political support from cross‐class coalitions of low‐wage workers and capital‐intensive firms. Some capital‐using, labor‐saving technical changes that raise capitalists' profits in current prices lower the equilibrium profit rate.

Understanding Inter-Industry Wage Structures in the Euro Area

This paper focuses on the euro area wage structure and its potential determinants from a sectoral viewpoint. Merging information from the OECD Structural Analysis database with data from the EU Labour Force Survey, we construct a cross-country panel of 22 industries in 8 euro area countries for 1991-2002. Data inspection confirms the existence of a fairly stable inter-industry wage structure that is similar across countries. We then apply panel data techniques to identify factors explaining inter-industry wage differentials in the euro area. Both workforce characteristics (e.g., human capital variables) and firm-related characteristics (e.g., capital intensity, productivity) contribute significantly. However, considerable wage heterogeneity across sectors remains. Idiosyncratic sector and country specifics, reflecting different socio-cultural and institutional backgrounds, appear to bear a major role. While our empirical analysis only uses direct evidence from workforce and firm-related characteristics, we also try to relate the remaining heterogeneity to institutional characteristics, based on related literature.

Industry wage premia and collective bargaining revisited: evidence from Spain

This study examines the general influence of collective bargaining on inter-industry wage differentials drawing on an unique data set on industry minimum wages for Spain. Our novel evidence confirms the untested hypothesis that inter-industry wage premia are driven by industry minimum wages in corporatist countries with centralized collective bargaining systems, but suggests that a compressed inter-industry wage structure needs not to be a feature of such systems.

A comparative analysis of inter-industry wage differentials: before and after the Korean financial crisis

Korean economy has changed rapidly since the 1997 Korean financial crisis. This article investigates whether the inter-industry wage differentials in the Korean manufacturing industry are consistent over time and how the inter-industry wage structure has changed after the financial crisis. We used the 1995 and 1999 survey report on the wage structure–Korea. Our empirical results provide evidences for a wider inter-industry wage differentials and changes of the wage structure. After the crisis, company size, region (live in capital), sex, tenure, education are more critical to determine wages. According to factor analysis, the job quality factor is most closely related to wages before the crisis, while the industry attributes factor does in 1999.

Assessing the stability of the inter-industry wage structure in the face of radical economic reforms

We assess the stability of the wage structure in an economy experiencing substantial economic changes. We find that the structure of inter-industry wage differentials remained remarkably stable in Brazil in the face of major shocks.

The Wage-Wage- . . . -Wage-Profit Relation in A Multisector Bargaining Economy

The equalization of profit rates across industries subject to firm-level bargaining over wages generates an interindustry wage structure with higher wages in capital-intensive sectors. The familiar inverse wage-profit relation gives way to a wage-wage- . . . -wage-profit surface on which the profit rate can vary directly with the wage paid in an individual industry. Institutional changes that decrease workers' bargaining power and increase the incomes of the unemployed tend to compress the wage distribution; these changes draw political support from cross-class coalitions of low-wage workers and capital-intensive firms. Some capital-using, labor-saving technical changes that raise capitalists' profits in current prices lower the equilibrium profit rate.

Riding the Transition Roller-Coaster: Flexibility and The Inter-Industry Wage Structure in Russia

This paper examines the changes in the inter-industry wage structure experienced by Russia since 1993, as part of its transition from a plan-based economy to a more \market oriented structure. Using two Russian household panel data sets, the RLMS and the RUSSET, we nd that since the transformation process began, the dispersion of inter-industry wage structure has increased. Moreover, Russia exhibits large movements in wage premia, as industries respond to massively changing demand conditions. The issue of wage arrears (unpaid wages or outstanding pay), which aects half of all employees, plays an important role in the determination of wages. Studies, which do not account for wage arrears, overestimate the overall inter-industry wage dispersion. Despite movements towards a privatized market economy, we still nd government ownership and Soviet network eects play an important role in determining the wage structure.

Assessing the Stability of the Inter-Industry Wage Structure in the Face of Radical Economic Reforms

We assess the stability of the wage structure in an economy experiencing substantial economic changes. We find that the structure of inter-industry wage differentials remained remarkably stable in Brazil in the face of major shocks.

A comparative analysis of inter-industry wage differentials: industrialized versus developing countries

This study aims to compare the available evidence on inter-industry wage structure for industrialized and developing countries and to find whether the industry wage differentials are consistent and stable independent of time and space. Moreover, it tries to clarify some of the determinants of industry wage differentials. International evidence supports the wage differential regularity across countries, and the factors underlying inter-industry wage differentials are found to be more or less the same for both industrialized and developing countries.

Returns to Human Capital Under The Communist Wage Grid and During the Transition to a Market Economy

We estimate returns to human capital during communism and the transition using data on 2,284 men in the Czech Republic. We show: (a) extremely low and constant rates of return to education under the communist wage grid and dramatic increases in transition, which do not differ by firm ownership, (b) radical changes in returns to several fields of study and “sheepskin effects” in both regimes, (c) identical wage experience profile in both regimes, (d) similar 1996 returns to human capital obtained in communism and in transition, and (e) changes in the interindustry wage structure. A decomposition of the variance of wages finds individuals' unobservable effects from communism to persist into transition, but most of the variance is due to unobservable effects introduced in the transition.

Industry Wage Differentials Revisited: A Longitudinal Comparison of Germany and USA

In this paper, the inter-industry wage structure in West Germany and USA is compared using the German Socio-Economic Panel (GSOEP), the German Mikrozensus (MZ), the American Panel Study of Income Dynamics (PSID) and the American Current Population Survey (CPS) from 1984 to 1996. Using a sample of prime age full-time employed males from the respective datasets, it is shown that the structure of wages has remained remarkably stable over this time period, and that the German structure resembles the American structure strongly. Cross-sectional and panel results are provided for both countries. Controlling for unobserved heterogeneity in the random effects panel estimations reduces the industry wage dispersion by about half. Thus, although the MZ and the CPS provide very large sample sizes, panel data sets (although typically smaller in sample size) are still very important in getting at the essence of the industry wage structure and the absolute level of industry wage dispersion. In calculating inter-industry wage differentials as deviations from a hypothetical employment-share weighted mean, we use the methodology as described in Haisken-DeNew and Schmidt (1997) of calculating exact differentials and their respective standard errors.

Collective Bargaining and the Interindustry Wage Structure: International Evidence

This paper studies collective bargaining and industry wage levels using microdata and quantile regression techniques for the United States, Britain, West Germany, Austria, Sweden and Norway for the 1980s. The United States has higher industry wage differentials and union wage effects than other countries, with particularly large impacts at the bottom of the distribution. European wage structures are more compressed at the bottom for both nonunion and union workers relative to the United States, with larger differences for nonunion workers. These findings suggest more coordination, contract extension and spillover to nonunion workers, and more binding industry wage floors outside the United States.

Interindustry wage differentials in dummy variable models

Abstract Normalized interindustry wage differentials a la Krueger and Summers [Krueger, A.B., Summers, L.H., 1988. Efficiency wages and the inter-industry wage structure. Econometrica 56, 259–293] derive from a general specification of wage equations with dummy variables which cannot be directly estimated. This note illustrates how they can be obtained from the coefficients of a more specific parameterization and how their estimated variances can be transformed accordingly.

Updated Notes on the Interindustry Wage Structure, 1890–1990

The author documents and analyzes changes in wage structure across manufacturing industries over the years 1890–1990. Interindustry differentials in wages were highly stable over that period for production workers, but much less stable for nonproduction workers. Interindustry wage patterns were very similar for production and nonproduction workers in 1990, though this similarity dates back only to 1958. Although dispersion of wages across industries followed varying trends over the period, it was higher in 1990 than at any previous time in this century. The variables that have been most strongly correlated with wage growth are productivity growth, rising union density, rising capital intensity, and profit growth.

Persistent Inequalities: Wage Disparity under Capitalist Competition.

Up to now, most radical, as well as neoclassical, economists have assumed that significant wage differentials among workers of similar skill and ability will endure only when competition in the capital and/or labor market is seriously restricted. In contrast, this work uses a classical Marxist analysis of real capitalist competition to show that substantial patterns of wage disparity can persist despite high levels of competition and significant degrees of labor mobility. Indeed, Howard Botwinick argues in this provocative book that capitalist competition often militates against the equalization of wage rates. An analytical strength of this new approach is that critical institutionalist insights concerning the impact of unions and industry structure can now be rigorously incorporated within a highly competitive framework. Thus, this book provides unorthodox economists with a robust alternative to efficiency wage theories, which are once again suggesting that unions have little long-term effect on the inter-industry wage structure. In addition to providing the basis for a new explanation for the persistence of race and gender inequality, the work has important implications for effective trade union strategies in an increasingly competitive environment. Contrary to corporate calls for team production systems and other forms of labor-management cooperation, Botwinick argues that labor's most effective strategy is to build wider levels of militant union organization that can once again take wages and working conditions out of capitalist competition.

Wage determination in late socialism: The case of Poland

Does economic transition necessitate a profound change in the inter-industry wage structure? This paper argues that principles of wage determination in centrally planned economies were not basically different from those prevailing in market economies. Even if the center became involved in wage setting, reward for human capital and the compensating differential had to be taken into consideration. Moreover, market power led to rent-sharing via wage bargaining and efficiency wages. Hence, this paper claims that wages in socialist economies were determined by similar factors to those in market economies. This is supported by comparison of inter-industry wage structures between socialist and capitalist countries and by results of the estimation of the wage equation for Poland. There is a noticeable degree of similarity in wage structures generated by both systems.

Concentration and the inter-industry wage structure: the Israeli manufacturing sector

The paper analysis the inter-industry wage differentials in the Israeli manufacturing sector in conjunction with differences in the degree of competition in the various industries. Unlike some other studies (carried out with US date) that did not produce conclusive results, this study shows a clear-cut positive relationship between wages and the degree of monopolization. This result is found both for unskilled and highly skilled workers.

The Impact of Incomes Policy on the Male Inter-Industry Wage Structure

With few exceptions, the wage guidelines between 1975 and March 1987 in Australia imposed uniform percentage wage adjustments. From 1975 to 1983, however, the inter- industry Average Weekly and Ordinary Time Earnings distributions exhibited increased dispersion, which reflected less stringent compliance requirements than the later period, when intra-industry wage dispersion appeared to rise. During the period 1983-87, incremental creep and job promotions for incumbent workers appear to explain part of the increased dispersion. Over the period 1966-88, both inter-industry wage distributions exhibited significant rank order correlations, except for the period 1980-81 during the breakdown of the centralized system. This suggests that there is a relatively stable ordering of inter-industry wages, irrespective of the presence or absence of incomes policy.