Interindustry wage differentials: Patterns and possible sources

Monthly Labor Review

Volumn 123, Issue 2, 2000, Pages 34-46

  Osburn, Jane ^a  

^a NONE

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EID: 0011738793     PISSN: 00981818     EISSN: None     Source Type: Journal    
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References (55)

1. See for example, David H. Autor, Lawrence F. Katz, and Alan B. Krueger, "Computing Inequality: Have Computers Changed the Labor Market?" Quarterly Journal of Economics, vol. 113, no. 4, 1998, pp. 1169-1213. Also see Eli Berman, John Bound, and Zvi Griliches, "Changes in the Demand for Skilled Labor Within U.S. Manufacturing Industries: Evidence From the Annual Survey of Manufacturers," Quarterly Journal of Economics, vol. 109, no. 2, 1994, pp. 367-97; and Mark Doms, Timothy Dunne, and Kenneth R. Troske, "Workers, Wages, and Technology," Quarterly Journal of Economics, vol. 112, no. 1, 1997, pp. 253-90.
2. See for example, David H. Autor, Lawrence F. Katz, and Alan B. Krueger, "Computing Inequality: Have Computers Changed the Labor Market?" Quarterly Journal of Economics, vol. 113, no. 4, 1998, pp. 1169-1213. Also see Eli Berman, John Bound, and Zvi Griliches, "Changes in the Demand for Skilled Labor Within U.S. Manufacturing Industries: Evidence From the Annual Survey of Manufacturers," Quarterly Journal of Economics, vol. 109, no. 2, 1994, pp. 367-97; and Mark Doms, Timothy Dunne, and Kenneth R. Troske, "Workers, Wages, and Technology," Quarterly Journal of Economics, vol. 112, no. 1, 1997, pp. 253-90.
3. See for example, David H. Autor, Lawrence F. Katz, and Alan B. Krueger, "Computing Inequality: Have Computers Changed the Labor Market?" Quarterly Journal of Economics, vol. 113, no. 4, 1998, pp. 1169-1213. Also see Eli Berman, John Bound, and Zvi Griliches, "Changes in the Demand for Skilled Labor Within U.S. Manufacturing Industries: Evidence From the Annual Survey of Manufacturers," Quarterly Journal of Economics, vol. 109, no. 2, 1994, pp. 367-97; and Mark Doms, Timothy Dunne, and Kenneth R. Troske, "Workers, Wages, and Technology," Quarterly Journal of Economics, vol. 112, no. 1, 1997, pp. 253-90.
4. See Standard Industrial Classification Manual, 1987, Office of Management and Budget.
5. The full Occupational Employment Statistics sample includes, with certainty, all Federal and State government employees and all establishments employing more than 250 workers, together making up approximately one-third of total U.S. employment. The remaining two-thirds of all workers are surveyed with probability equal to the reciprocal of the probability of selection of the establishment in which they are employed. The average number of workers included in the sample for any given three-digit SIC industry/occupation cell is roughly 1,500 individuals.
6. Data for these 3 years were combined by first adjusting the 1996 and 1997 wage rates to reflect wage change over the 1996-98 period, using wage change indices obtained from the Employment Cost Index program. The Occupational Employment Statistics (OES) survey is a cooperative Federal/State effort that provides occupational employment and wage data for more than 760 occupations in detailed industrial sectors. The Department of Labor provides the funding and technical support for the program, and the States collect the data as well as provide the results in published form. OES was initiated in 1971, with 15 participating States, and has expanded throughout the years to include all 50 States and U.S. territories. As a result of a redesign effort in 19%, the OES survey now also provides occupational wage data by detailed industry. The 19% redesign effort also expanded the scope of the OES sur-vey to include all industries every year. For more information on the technical aspects of the OES survey, contact the Office of Employment and Unemployment Statistics, room 4840, 2 Massachusetts Avenue, NE, Washington DC 20212; telephone (202) 691-6569; or e-mail at: oesinfo@bls.gov.
7. For a survey of studies, including data references, see William T. Dickens and Lawrence F. Katz. "Inter-industry Wage Differences and Industry Characteristics," in Kevin Lang and Jonathan S. Leonard, eds., Unemployment and the Structure of Labor Markets (New York, Basil Blackwell, 1987), ch. 3, pp. 41-54.
8. For examples of studies using establishment data, see Alejandra Mizala and Pilar Romaguera, "Wage Differentials and Occupational Wage Premia: Firm-Level Evidence for Brazil and Chile," Review of Income and Wealth, vol. 44, no. 2, 1998, 239-57; and Andrew K.G. Hildreth and Andrew J. Oswald, "Rent Sharing and Wages: Evidence from Company and Establishment Panels," Journal of Labor Economics, vol. 15, no. 2, 1997, pp. 318-37.
9. For examples of studies using establishment data, see Alejandra Mizala and Pilar Romaguera, "Wage Differentials and Occupational Wage Premia: Firm-Level Evidence for Brazil and Chile," Review of Income and Wealth, vol. 44, no. 2, 1998, 239-57; and Andrew K.G. Hildreth and Andrew J. Oswald, "Rent Sharing and Wages: Evidence from Company and Establishment Panels," Journal of Labor Economics, vol. 15, no. 2, 1997, pp. 318-37.
10. See David I. Levine, "Can Wage Increases Pay for Themselves? Tests With a Production Function," Economic Journal, vol. 102, no. 414, 1992, pp. 1102-15. Also see Erica L. Groshen, "Sources of Intra-Industry Wage Dispersion: How Much do Employers Matter?" Quarterly Journal of Economics, vol. 106, no. 3, 1991, pp. 869-84; and Jonathan S. Leonard, "Executive Pay and Firm Performance," Industrial and Labor Relations Review, vol. 43, no. 3, 1990, pp. S13-29.
11. See David I. Levine, "Can Wage Increases Pay for Themselves? Tests With a Production Function," Economic Journal, vol. 102, no. 414, 1992, pp. 1102-15. Also see Erica L. Groshen, "Sources of Intra-Industry Wage Dispersion: How Much do Employers Matter?" Quarterly Journal of Economics, vol. 106, no. 3, 1991, pp. 869-84; and Jonathan S. Leonard, "Executive Pay and Firm Performance," Industrial and Labor Relations Review, vol. 43, no. 3, 1990, pp. S13-29.
12. See David I. Levine, "Can Wage Increases Pay for Themselves? Tests With a Production Function," Economic Journal, vol. 102, no. 414, 1992, pp. 1102-15. Also see Erica L. Groshen, "Sources of Intra-Industry Wage Dispersion: How Much do Employers Matter?" Quarterly Journal of Economics, vol. 106, no. 3, 1991, pp. 869-84; and Jonathan S. Leonard, "Executive Pay and Firm Performance," Industrial and Labor Relations Review, vol. 43, no. 3, 1990, pp. S13-29.
13. A more detailed discussion of theories of interindustry wage differentials appears later in the article.
14. The Bureau of Labor Statistics has another data set - the National Compensation Survey - that does address some of the issues of scope and responsibility, albeit for a smaller number of occupations. See Brooks Pierce, "Using the National Compensation Survey to Predict Wage Rates," Compensation and Working Conditions, Winter 1999, pp. 8-16.
15. See Erica L. Groshen, "Five Reasons Why Wages Vary Among Employers," Industrial Relations, vol. 30, no. 3, 1991, pp. 350-81. Goshen used Current Population Survey data to show that about 50 percent of the variation in wages among industries is accounted for by worker education, age, sex, race, union affiliation, industry (two-digit SIC), and occupation. Also see Alan Krueger and L. Summers, "Efficiency Wages and the Inter-Industry Wage Structure," Econometrica, vol. 56 no. 2, 1988, pp. 259-93; and K. M. Murphy, and R. H. Topel, "Efficiency Wages Reconsidered: Theory and Evidence," in Y. Weiss, and G. Fishelson, eds., Advances in the Theory and Measurement of Unemployment (London, Macmillan, 1990), pp. 204-42. For early research on interindustry wage differentials, see Sumner H. Slichter, "Notes on the Structure of Wages," Review of Economics and Statistics, vol. 32, 1950, pp. 80-91.
16. See Erica L. Groshen, "Five Reasons Why Wages Vary Among Employers," Industrial Relations, vol. 30, no. 3, 1991, pp. 350-81. Goshen used Current Population Survey data to show that about 50 percent of the variation in wages among industries is accounted for by worker education, age, sex, race, union affiliation, industry (two-digit SIC), and occupation. Also see Alan Krueger and L. Summers, "Efficiency Wages and the Inter-Industry Wage Structure," Econometrica, vol. 56 no. 2, 1988, pp. 259-93; and K. M. Murphy, and R. H. Topel, "Efficiency Wages Reconsidered: Theory and Evidence," in Y. Weiss, and G. Fishelson, eds., Advances in the Theory and Measurement of Unemployment (London, Macmillan, 1990), pp. 204-42. For early research on interindustry wage differentials, see Sumner H. Slichter, "Notes on the Structure of Wages," Review of Economics and Statistics, vol. 32, 1950, pp. 80-91.
17. See Erica L. Groshen, "Five Reasons Why Wages Vary Among Employers," Industrial Relations, vol. 30, no. 3, 1991, pp. 350-81. Goshen used Current Population Survey data to show that about 50 percent of the variation in wages among industries is accounted for by worker education, age, sex, race, union affiliation, industry (two-digit SIC), and occupation. Also see Alan Krueger and L. Summers, "Efficiency Wages and the Inter-Industry Wage Structure," Econometrica, vol. 56 no. 2, 1988, pp. 259-93; and K. M. Murphy, and R. H. Topel, "Efficiency Wages Reconsidered: Theory and Evidence," in Y. Weiss, and G. Fishelson, eds., Advances in the Theory and Measurement of Unemployment (London, Macmillan, 1990), pp. 204-42. For early research on interindustry wage differentials, see Sumner H. Slichter, "Notes on the Structure of Wages," Review of Economics and Statistics, vol. 32, 1950, pp. 80-91.
18. See Erica L. Groshen, "Five Reasons Why Wages Vary Among Employers," Industrial Relations, vol. 30, no. 3, 1991, pp. 350-81. Goshen used Current Population Survey data to show that about 50 percent of the variation in wages among industries is accounted for by worker education, age, sex, race, union affiliation, industry (two-digit SIC), and occupation. Also see Alan Krueger and L. Summers, "Efficiency Wages and the Inter-Industry Wage Structure," Econometrica, vol. 56 no. 2, 1988, pp. 259-93; and K. M. Murphy, and R. H. Topel, "Efficiency Wages Reconsidered: Theory and Evidence," in Y. Weiss, and G. Fishelson, eds., Advances in the Theory and Measurement of Unemployment (London, Macmillan, 1990), pp. 204-42. For early research on interindustry wage differentials, see Sumner H. Slichter, "Notes on the Structure of Wages," Review of Economics and Statistics, vol. 32, 1950, pp. 80-91.
19. This ratio provides a measure of the share of industry sales accounted for by the largest four firms.
20. For an exhaustive investigation of the characteristics of interindustry wage differentials, see Dickens and Katz, "Inter-industry Wage Differences and Industry Characteristics." This article also contains a review of the empirical research on interindustry wage differentials, including data sources.
21. Ibid.
22. For a discussion of changes in the nature of product markets that have altered the imperatives of competition for firms in most industries over the last two decades, see Ray Marshall, "Job and Skill Demands in the New Economy," in Lewis C. Solmon and Alec R. Levenson, eds., Labor Markets, Employment Policy, and Job Creation (Oxford, The Westview Press, 1994). Also see Michael Piore, and Charles F. Sabel, The Second Industrial Divide: Possibilities for Prosperity (New York, Basic Books, 1984); and Thierry J. Noyelle, Beyond Industrial Dualism; Market and Job Segmentation in the New Economy (Oxford, The Westview Press, 1987). For a discussion of case studies examining the implementation of new technologies in pulp mills, see Shoshona Zuboff, In the Age of the Smart Machine: The Future of Work and Power (New York, Basic Books, 1988).
23. For a discussion of changes in the nature of product markets that have altered the imperatives of competition for firms in most industries over the last two decades, see Ray Marshall, "Job and Skill Demands in the New Economy," in Lewis C. Solmon and Alec R. Levenson, eds., Labor Markets, Employment Policy, and Job Creation (Oxford, The Westview Press, 1994). Also see Michael Piore, and Charles F. Sabel, The Second Industrial Divide: Possibilities for Prosperity (New York, Basic Books, 1984); and Thierry J. Noyelle, Beyond Industrial Dualism; Market and Job Segmentation in the New Economy (Oxford, The Westview Press, 1987). For a discussion of case studies examining the implementation of new technologies in pulp mills, see Shoshona Zuboff, In the Age of the Smart Machine: The Future of Work and Power (New York, Basic Books, 1988).
24. For a discussion of changes in the nature of product markets that have altered the imperatives of competition for firms in most industries over the last two decades, see Ray Marshall, "Job and Skill Demands in the New Economy," in Lewis C. Solmon and Alec R. Levenson, eds., Labor Markets, Employment Policy, and Job Creation (Oxford, The Westview Press, 1994). Also see Michael Piore, and Charles F. Sabel, The Second Industrial Divide: Possibilities for Prosperity (New York, Basic Books, 1984); and Thierry J. Noyelle, Beyond Industrial Dualism; Market and Job Segmentation in the New Economy (Oxford, The Westview Press, 1987). For a discussion of case studies examining the implementation of new technologies in pulp mills, see Shoshona Zuboff, In the Age of the Smart Machine: The Future of Work and Power (New York, Basic Books, 1988).
25. For a discussion of changes in the nature of product markets that have altered the imperatives of competition for firms in most industries over the last two decades, see Ray Marshall, "Job and Skill Demands in the New Economy," in Lewis C. Solmon and Alec R. Levenson, eds., Labor Markets, Employment Policy, and Job Creation (Oxford, The Westview Press, 1994). Also see Michael Piore, and Charles F. Sabel, The Second Industrial Divide: Possibilities for Prosperity (New York, Basic Books, 1984); and Thierry J. Noyelle, Beyond Industrial Dualism; Market and Job Segmentation in the New Economy (Oxford, The Westview Press, 1987). For a discussion of case studies examining the implementation of new technologies in pulp mills, see Shoshona Zuboff, In the Age of the Smart Machine: The Future of Work and Power (New York, Basic Books, 1988).
26. The department store industry also is used as the base for the calculation of the all-occupation industry wage differential.
27. For information about the average level of vocational preparation of photographers employed in different industries, see The Dictionary of Occupational Titles (U.S. Department of Labor, Employment and Training Administration, 1991), vols. 1-2.
28. For a description of explanations of both inter-industry wage variation and inter-establishment wage variation, see Groshen, "Five Reasons Why Wages Vary Among Employers," Industrial Relations.
29. See Michael Keane, "Individual Heterogeneity and Inter-industry Wage Differentials," Journal of Human Resources, vol. 28, no. 1, 1993. Also see McKinley Blackburn, and David Newmark, "Unobserved Ability, Efficiency Wages, and Inter-industry Wage Differentials," Quarterly Journal of Economics, vol. 107, no.4, 1992, pp. 1421-36. Keane and Blackburn and Newmark have recently estimated the proportion of industry wage differentials that is due to unobserved worker characteristics. Keane found that 50 percent of industry wage variation is explained by variation in unobserved worker skills, and Blackburn and Newmark found that 20 to 30 percent of the variation is explained by unobserved worker characteristics. Also see K. M. Murphy and R. H. Topel, "Unemployment, Risk, and Earnings: Testing for Equalizing Differences in the Labor Market" in Kevin Lang and Jonathan S. Leonard, eds., Unemployment and the Structure of Labor Markets (Oxford, Basil Blackwell, 1987). Unmeasured skills also play a role in other theories of industry wage differentials. Hae-shin Hwang and others, for example, argue that failure to adequately account for unmeasured skills has led to the underestimation of the importance of compensating differentials in explaining wage differentials among industries. See Hae-shin Hwang, Robert W. Reed, and Carlton Hubbard, "Compensating Wage Differentials and Unobserved Productivity," Journal of Political Economy, vol.100, no. 4., 1992.
30. See Michael Keane, "Individual Heterogeneity and Inter-industry Wage Differentials," Journal of Human Resources, vol. 28, no. 1, 1993. Also see McKinley Blackburn, and David Newmark, "Unobserved Ability, Efficiency Wages, and Inter-industry Wage Differentials," Quarterly Journal of Economics, vol. 107, no.4, 1992, pp. 1421-36. Keane and Blackburn and Newmark have recently estimated the proportion of industry wage differentials that is due to unobserved worker characteristics. Keane found that 50 percent of industry wage variation is explained by variation in unobserved worker skills, and Blackburn and Newmark found that 20 to 30 percent of the variation is explained by unobserved worker characteristics. Also see K. M. Murphy and R. H. Topel, "Unemployment, Risk, and Earnings: Testing for Equalizing Differences in the Labor Market" in Kevin Lang and Jonathan S. Leonard, eds., Unemployment and the Structure of Labor Markets (Oxford, Basil Blackwell, 1987). Unmeasured skills also play a role in other theories of industry wage differentials. Hae-shin Hwang and others, for example, argue that failure to adequately account for unmeasured skills has led to the underestimation of the importance of compensating differentials in explaining wage differentials among industries. See Hae-shin Hwang, Robert W. Reed, and Carlton Hubbard, "Compensating Wage Differentials and Unobserved Productivity," Journal of Political Economy, vol.100, no. 4., 1992.
31. See Michael Keane, "Individual Heterogeneity and Inter-industry Wage Differentials," Journal of Human Resources, vol. 28, no. 1, 1993. Also see McKinley Blackburn, and David Newmark, "Unobserved Ability, Efficiency Wages, and Inter-industry Wage Differentials," Quarterly Journal of Economics, vol. 107, no.4, 1992, pp. 1421-36. Keane and Blackburn and Newmark have recently estimated the proportion of industry wage differentials that is due to unobserved worker characteristics. Keane found that 50 percent of industry wage variation is explained by variation in unobserved worker skills, and Blackburn and Newmark found that 20 to 30 percent of the variation is explained by unobserved worker characteristics. Also see K. M. Murphy and R. H. Topel, "Unemployment, Risk, and Earnings: Testing for Equalizing Differences in the Labor Market" in Kevin Lang and Jonathan S. Leonard, eds., Unemployment and the Structure of Labor Markets (Oxford, Basil Blackwell, 1987). Unmeasured skills also play a role in other theories of industry wage differentials. Hae-shin Hwang and others, for example, argue that failure to adequately account for unmeasured skills has led to the underestimation of the importance of compensating differentials in explaining wage differentials among industries. See Hae-shin Hwang, Robert W. Reed, and Carlton Hubbard, "Compensating Wage Differentials and Unobserved Productivity," Journal of Political Economy, vol.100, no. 4., 1992.
32. See Michael Keane, "Individual Heterogeneity and Inter-industry Wage Differentials," Journal of Human Resources, vol. 28, no. 1, 1993. Also see McKinley Blackburn, and David Newmark, "Unobserved Ability, Efficiency Wages, and Inter-industry Wage Differentials," Quarterly Journal of Economics, vol. 107, no.4, 1992, pp. 1421-36. Keane and Blackburn and Newmark have recently estimated the proportion of industry wage differentials that is due to unobserved worker characteristics. Keane found that 50 percent of industry wage variation is explained by variation in unobserved worker skills, and Blackburn and Newmark found that 20 to 30 percent of the variation is explained by unobserved worker characteristics. Also see K. M. Murphy and R. H. Topel, "Unemployment, Risk, and Earnings: Testing for Equalizing Differences in the Labor Market" in Kevin Lang and Jonathan S. Leonard, eds., Unemployment and the Structure of Labor Markets (Oxford, Basil Blackwell, 1987). Unmeasured skills also play a role in other theories of industry wage differentials. Hae-shin Hwang and others, for example, argue that failure to adequately account for unmeasured skills has led to the underestimation of the importance of compensating differentials in explaining wage differentials among industries. See Hae-shin Hwang, Robert W. Reed, and Carlton Hubbard, "Compensating Wage Differentials and Unobserved Productivity," Journal of Political Economy, vol.100, no. 4., 1992.
33. For a general discussion of compensating wage differentials, see S. Rosen, "The Theory of Equalizing Differences," in O. Ashenfelter, and R. Layard, eds., Handbook of Labor Economics (New York, Elsevier Science Publishers, 1986). For a discussion of compensating differentials in the case of occupational hazard, see Jean Michel Cousineau, Robert Lacroix and Anne-Marie Girard, "Occupational Hazard and Wage Compensating Differentials," The Review of Economics and Statistics, vol. 74, no. 1, 1992.
34. For a general discussion of compensating wage differentials, see S. Rosen, "The Theory of Equalizing Differences," in O. Ashenfelter, and R. Layard, eds., Handbook of Labor Economics (New York, Elsevier Science Publishers, 1986). For a discussion of compensating differentials in the case of occupational hazard, see Jean Michel Cousineau, Robert Lacroix and Anne-Marie Girard, "Occupational Hazard and Wage Compensating Differentials," The Review of Economics and Statistics, vol. 74, no. 1, 1992.
35. The miscellaneous plastics industry also is used as a base for the calculation of the all-occupation wage differential for each industry.
36. See Alan B. Krueger, and Lawrence H. Summers, "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, vol. 56, no. 2, 1988, pp. 259-93.
37. Peter B. Doeringer, and Michael J. Piore, Internal Labor Markets and Manpower Analysis (Lexington, MA, D.C. Heath and Co., 1971).
38. The rent sharing explanation of industry wage differentials is discussed in A. Krueger and L. Summers, "Reflections on the Inter-Industry Wage Structure," in Kevin Lang and Jonathan S. Leonard, eds., Unemployment and the Structure of Labor Markets (Oxford, Basil Blackwell, 1987), pp. 17-47. Also see S. Nickell, and S. Wadhwani, "Insider Forces and Wage Determination," Economic Journal, vol. 100, no. 401, 1990, pp. 496-509; David G. Blanchflower, Andrew J. Oswald, and Mario D. Garrett, "Insider Power in Wage Determination," Economica, vol. 57, no. 226, 1990; and Andrew K.G. Hildreth, and Andrew J. Oswald, "Rent-Sharing and Wages: Evidence from Company and Establishment Panels," Journal of Labor Economics, vol. 15, no. 2, 1997.
39. The rent sharing explanation of industry wage differentials is discussed in A. Krueger and L. Summers, "Reflections on the Inter-Industry Wage Structure," in Kevin Lang and Jonathan S. Leonard, eds., Unemployment and the Structure of Labor Markets (Oxford, Basil Blackwell, 1987), pp. 17-47. Also see S. Nickell, and S. Wadhwani, "Insider Forces and Wage Determination," Economic Journal, vol. 100, no. 401, 1990, pp. 496-509; David G. Blanchflower, Andrew J. Oswald, and Mario D. Garrett, "Insider Power in Wage Determination," Economica, vol. 57, no. 226, 1990; and Andrew K.G. Hildreth, and Andrew J. Oswald, "Rent-Sharing and Wages: Evidence from Company and Establishment Panels," Journal of Labor Economics, vol. 15, no. 2, 1997.
40. The rent sharing explanation of industry wage differentials is discussed in A. Krueger and L. Summers, "Reflections on the Inter-Industry Wage Structure," in Kevin Lang and Jonathan S. Leonard, eds., Unemployment and the Structure of Labor Markets (Oxford, Basil Blackwell, 1987), pp. 17-47. Also see S. Nickell, and S. Wadhwani, "Insider Forces and Wage Determination," Economic Journal, vol. 100, no. 401, 1990, pp. 496-509; David G. Blanchflower, Andrew J. Oswald, and Mario D. Garrett, "Insider Power in Wage Determination," Economica, vol. 57, no. 226, 1990; and Andrew K.G. Hildreth, and Andrew J. Oswald, "Rent-Sharing and Wages: Evidence from Company and Establishment Panels," Journal of Labor Economics, vol. 15, no. 2, 1997.
41. The rent sharing explanation of industry wage differentials is discussed in A. Krueger and L. Summers, "Reflections on the Inter-Industry Wage Structure," in Kevin Lang and Jonathan S. Leonard, eds., Unemployment and the Structure of Labor Markets (Oxford, Basil Blackwell, 1987), pp. 17-47. Also see S. Nickell, and S. Wadhwani, "Insider Forces and Wage Determination," Economic Journal, vol. 100, no. 401, 1990, pp. 496-509; David G. Blanchflower, Andrew J. Oswald, and Mario D. Garrett, "Insider Power in Wage Determination," Economica, vol. 57, no. 226, 1990; and Andrew K.G. Hildreth, and Andrew J. Oswald, "Rent-Sharing and Wages: Evidence from Company and Establishment Panels," Journal of Labor Economics, vol. 15, no. 2, 1997.
42. See G. Akerlof, "Gift Exchange and Efficiency Wage Theory: Four Views," American Economic Review, Papers and Proceedings, vol. 74, no. 2, 1984, pp. 79-83.
43. Erica L. Groshen, 1991, "Five Reasons Why Wages Vary Among Employers," Industrial Relations.
44. See Lawrence R. Klein, "Components of Competitiveness," Science, vol. 241, 1988, pp. 308-15. In this article, Klein explains the competitiveness problem by decomposing output prices into unit cost, the reciprocal of labor productivity, the profit margin, and the foreign exchange value of the currency. The decomposition shows that firms have two choices for competition: the basis of competition is either cutting costs or improving productivity.
45. See Eileen Appelbaum and Rosemary Batt, The New American Workplace: Transforming Work Systems in the United States, (Ithaca, ILR Press, 1994).
46. See Dae Il Kim, "Reinterpreting Industry Premiums: Match-Specific Productivity," Journal of Labor Economics, vol. 16, no. 3, 1998, pp. 479-504. Also see Stephen G. Bronars, and Melissa Famulari, "Wage, Tenure, and Wage Growth Variation Within and Across Establishments," Journal of Labor Economics, vol. 15, no. 2, 1997, pp. 285-317; and Robert Gibbons and Lawrence F. Katz "Does Unmeasured Ability Explain Inter-Industry Wage Differentials?" Review of Economic Studies, vol. 59, no. 3, 1992, pp. 515-35.
47. See Dae Il Kim, "Reinterpreting Industry Premiums: Match-Specific Productivity," Journal of Labor Economics, vol. 16, no. 3, 1998, pp. 479-504. Also see Stephen G. Bronars, and Melissa Famulari, "Wage, Tenure, and Wage Growth Variation Within and Across Establishments," Journal of Labor Economics, vol. 15, no. 2, 1997, pp. 285-317; and Robert Gibbons and Lawrence F. Katz "Does Unmeasured Ability Explain Inter-Industry Wage Differentials?" Review of Economic Studies, vol. 59, no. 3, 1992, pp. 515-35.
48. See Dae Il Kim, "Reinterpreting Industry Premiums: Match-Specific Productivity," Journal of Labor Economics, vol. 16, no. 3, 1998, pp. 479-504. Also see Stephen G. Bronars, and Melissa Famulari, "Wage, Tenure, and Wage Growth Variation Within and Across Establishments," Journal of Labor Economics, vol. 15, no. 2, 1997, pp. 285-317; and Robert Gibbons and Lawrence F. Katz "Does Unmeasured Ability Explain Inter-Industry Wage Differentials?" Review of Economic Studies, vol. 59, no. 3, 1992, pp. 515-35.
49. See Zuboff, In the Age of the Smart Machine.
50. See Timothy F. Bresnahan, Erik Brynjolfsson, and Lorin M. Hitt, "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," NBER Working Paper no. 7136 (National Bureau of Economic Research, Cambridge, Massachusetts, 1999).
51. The capital stock data used in this analysis were obtained from the National Bureau of Economic Research, Manufacturing Productivity Database, which covers the years 1958-94. These data were extrapolated to include the years 1995 and 1996, using Annual Survey of Manufacturer's data on nominal investment by 4-digit SIC industry for the years 1995 and 1996, and extrapolated rates of capital depreciation by three-digit SIC industry. The capital stock figures by four-digit SIC industry were then aggregated to the three-digit SIC level. Data on capital depreciation rates and on investment expenditures for the years 1995 and 1996 were obtained from Randy Becker, U.S. Bureau of the Census.
52. i = industry wage differential for occupation Y in industry i Ȳ = mean industry wage differential for occupation Y
53. All calculations in table 3 use the miscellaneous plastics industry, SIC 308, as the base.
54. All calculations in table 4 use the miscellaneous plastics industry, SIC 308, as the base for comparison.
55. The calculations for the manufacturing sectors use the miscellaneous plastics manufacturing industry, SIC 308, as the base for comparison. The calculations for the services sector use the wholesale trade of motor vehicles industry, SIC 501, as the base for comparison. More information is available from the author at (202) 691-6504 or by e-mail at Osburn_J@bls.gov.