The collective agreements specified a set of minimum wages and wage progressions for the occupational categories covered by the negotiations sometimes called a wage grid. When this occurs, it is the national minimum wage, and not the collectively bargained wage, that binds.
In the United States, the bargaining environment is very different from that prevailing in France. For this description as well as for the recent changes that affected this country, we rely on the work of Farber and Western While NLRA guaranteed the rights of employees as distinct from workers or citizens, in general to organize and bargain, it also established the procedure for a union to become the exclusive bargaining agent of a group of workers.
The campaign takes place between the time of the petition and the election. Employers and unions both participate in the campaign. Once a union is certified and an initial contract negotiated, the jobs included in the bargaining unit become union jobs.
Successor employers are normally bound to negotiate with the duly certified union unless there has been a decertification election.
Figure Four of Farber and Western shows the huge decrease in certification elections that took place during the eighties. Not surprisingly, these facts, along with the decline in manufacturing employment generally, contributed to a sharp decline in the overall unionization rate among private employers.
To further assess potential differences in wage setting, Abowd et al. Returns to one additional year of education were 6. Finally, the gender wage gap in the initial year is roughly equal in both countries, although it decreases over the sample period in the U.
Apart from labor market institutions, the intensity of competition prevailing on the product market should affect wages according to the theory developed above because wages are the sum of an opportunity wage and a rent component. Regulations that affect product markets are more dispersed than labor market regulations. For instance, the American airline or banking industries were heavily regulated in the seventies. But these regulations were discarded during the s and s.
The effects on labor market outcomes of such deregulation have been shown to be quite large To paraphrase the conclusion of Peoples , the effect of deregulation was heavily tied to reductions in the labor costs that followed. In all the industries where labor earnings fell sharply, trucking or airline, employment increased dramatically. In industries where labor earnings fell slightly, such as telecommunications, employment was steady.
Finally, in industries where earnings did not change, such as the railroad industry, employment sharply declined. Hence, our sample period for the United States is one of intense product market competition. This is far from the case in France.
Even though France, pushed by European institutions, started in the s to deregulate some industries, the process is far from completion. During our sample period, near monopolies operated in many industries. Entry into these industries was, and still is, heavily regulated.
Surprisingly, it is also the case in many other apparently competitive industries, such as the retail trade, that entry regulations loomed and are still very important see Bertrand and Kramarz for the detrimental effect of the Loi Royer on employment in the retail trade.
Djankov et al. This startup process takes 66 days and 16 different legal and administrative steps in France and only 7 days and 4 steps in the United States. We estimated all of the identifiable person and firm effects from equation 5 and calculated the decomposition shown in equation 8. Summary results for the U.
An instructive way to summarize the results is to consider the industries with the largest positive and negative raw wage differentials. For the U. Notice that the industry with the largest raw differential is SIC 62 security brokers, dealers and exchanges. This raw differential of 0. Similarly, NAP 72 air transport and NAP 42 tobacco products and NAP 07 distribution of gas all derive the bulk of their raw differential from the industry average firm effect. We show in Table 3 that both the raw differential and its components are strongly correlated between the U.
The international correlation of the effects does not depend upon which country we select to supply the base weights although it is slightly stronger when weighted by French industry shares than when we use the U. The smallest correlations in the table are between the industry average person effect and the industry average firm effect within or between countries.
This correlation is positive but it is not very large, suggesting that the forces that sort person effects are not strongly correlated with the forces that sort firm effects.
Our definition differs in two important respects from the one used by Abowd and Lemieux. The exact construction of all these variables is precisely described in the data Appendix Additional file 1. Table 5 shows the results with no controls other than the variables listed The first six columns present estimates for the United States.
The last six columns present equivalent results for France. For each country, we estimate three specifications of the explanatory variables. These average person and firm effects are estimated using the methods described in section 5. This difference is more marked in the French regressions than in the American regressions.
Indeed, union strength is highly correlated to the firm effect and not the person effect in both countries. The two regressions contained in the second set of columns have different specifications because union presence takes different forms in the two countries. In the US, we use employment in a job covered by a collective bargaining agreement as the measure of unionization. We also use measures of union presence in the firms under its various legal guises, existence of union representatives, and existence of a health and security commission CHSCT as unionization measures.
Indeed, because large rents may induce unions to enter industries to capture these rents, our regressions must be seen as descriptive and not causal. Hence, our wording of the above results is particularly cautious in not hinting at causality. Table 6 presents our second specification in which we control for the age and education structure or occupations structure in the industry.
We first present the results for the United States. In this country, even though unions were quite weak during our sample period, relatively strong unions still existed in some industries. Results in Table 5 show that stronger unions are associated with larger firm effects in the industry. However, this union effect disappears in Table 6 , a potential reflection of educational or occupational capital, specific to the unionized industry.
More generally, the introduction of the education and age structures changes the results quite markedly for the United States. Skip to main content. This service is more advanced with JavaScript available. Advertisement Hide. Authors Authors and affiliations Toshiaki Tachibanaki. This process is experimental and the keywords may be updated as the learning algorithm improves.
This is a preview of subscription content, log in to check access. Abowd, J. Freeman and L. Google Scholar. Abraham, K. Altonji, J. CrossRef Google Scholar. Arrow, K. Atkinson, A. Becker, G. Blanchflower, D. Blau, F. Blinder, A. Bowles, S. Brown, H. Go to wages and employment under monopsony. Read more on the gender pay gap. Stagflation is a combination of high inflation, high unemployment, and stagnant economic growth. Because inflation isn't supposed to occur in a weak economy, stagflation is an unnatural situation.
Slow growth prevents inflation in a normal The laissez-faire economic theory centers on the restriction of government intervention in the economy. According to laissez-faire economics, the economy is at its strongest when the government protects individuals' rights but otherwise doesn't intervene.
What Is Adverse Selection? Adverse selection is a term that describes the presence of unequal information between buyers and sellers, distorting the market and creating conditions that can lead to an economic collapse.
It develops Explaining The K-Shaped Economic Recovery from Covid A K-shaped recovery exists post-recession where various segments of the economy recover at their own rates or levels, as opposed to a uniform recovery where each industry takes the same Both on paper and in real life, there is a solid relationship between economics, public choice, and politics.
The economy is one of the major political arenas after all. Many have filed for bankruptcy, with an Wage differentials Labour markets Wage differentials. Wage differentials If labour markets are very competitive, with identical workers and perfect mobility of labour, wages will move towards the same equilibrium level. However, a player like Harry Kane is more scarce than Harry Winks. Winks is a young academy prospect who has yet to reach his potential. There are a great number of those sorts of footballers in the industry.
If Winks gets injured, it will easy for Tottenham to replace him. Kane, on the other hand, is a world-class player who is coveted by all the top teams in the world.
If Kane gets injured, there are relatively few players in the world who could stand in for him. Wages for footballers though are a source of great controversy.
Therefore, Harry Kane might have a miserable season and not score any goals, or he might get injured for the season; he still picks up his wage despite contributing very little. Alexis Sanchez. Harry Winks, on the other hand, may end up as the player of the season and become a valuable marketing tool for the club much like Dele Alli a few seasons back. His wage will eventually rise to reflect this but there will be a time lag.
The female players earn nothing like the male players, despite arguably being more successful.
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