Market Responses to Interindustry Wage Differentials / George J. Borjas, Valerie A. Ramey.

Format:

Book

Author/Creator:

Borjas, George J.

Contributor:

National Bureau of Economic Research.

Ramey, Valerie A.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7799.

NBER working paper series no. w7799

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2000.

Summary:

This paper examines the link between interindustry wage differentials and subsequent growth of industry variables such as employment, GDP and labor productivity. We find that industries that paid higher than average wages in 1959 experienced significantly lower employment growth and GDP growth in the subsequent 30 to 40 years, while at the same time experiencing higher-than-average growth in the capital-labor ratio and in labor productivity. We argue that the evidence is best explained by a non-competitive model of the interindustry wage structure, as both firms and the market respond to the wage rigidity implied by the long-run persistence of the interindustry wage structure.

Notes:

Print version record

July 2000.