We study worker behavior in an efficiency-wage environment where co-workers’ wages can influence a worker’s effort. Theoretically, we show that an increase in workers’ responsiveness to co-workers’ wages should lead profit-maximizing firms to compress wages. Our laboratory experiments, on the other hand, show that --while workers’ effort choices are highly sensitive to their own wages-effort is...

Unemployment Insurance (UI) wage records allow a detailed look at the functioning of the labor market.1 Researchers used this database to examine statistical and economic relationships between job and worker flows. For example, using UI wage records for the State of Maryland, S. Burgess and others found that new hires are not limited to expanding firms; separations are not limited to shrinking ...

The aging of the U.S. population, combined with an increasing probability that any given older individual will work, means that the importance of older workers to the labor force is rising. One possible solution to the solvency problems facing the Social Security System is increasing the labor supply of older workers. Understanding how policy levers can affect the labor supply of the elderly th...

Paying More to Hire the Best? Foreign Firms, Wages and Worker Mobility In the context of the debate on the labour-market consequences of globalisation, we examine worker mobility in order to identify the wage differences between foreign and domestic firms. Using matched employer-employee panel data for Portugal, we consider virtually all spells of interfirm mobility over a period of ten years. ...

ABSTRACT The analysis of the links between trade policy and labor market outcomes has developed in recent decades, prompt up by the concerns about the effects of the increasing globalization process in which trade plays a major role. In this work we analyze the impact of the increase in trade liberalization, as a consequence of Mercosur's creation on employment, income and wage dispersion at th...

This paper provides a systematic empirical analysis of the effect of union membership on job satisfaction and wages, and shows how the interaction between these effects leads to empirically observable relations between unionization and individual quit probabilities. Using the National Longitudinal Survey of Mature Men, several empirical results were obtained. First, union members, on average, r...

In a laboratory experiment we show that minimum wages have significant and lasting effects on subjects' reservation wages. The temporary introduction of a minimum wage leads to a rise in subjects' reservation wages which persists even after the minimum wage has been removed. Firms are therefore forced to pay higher wages after the removal of the minimum wage than before its introduction. As a c...

Previous research has reached mixed conclusions about whether higher levels of immigration reduce the wages of natives. This paper reexamines this question using data from the Current Population Survey and the Immigration and Naturalization Service and focuses on differential effects by skill level. Using occupation as a proxy for skill, we find that an increase in the fraction of workers in an...

This paper examines the relationship between firms’ wage offers and workers’ supply of effort using a three-period experiment. In equilibrium, firms will offer deferred compensation: first period productivity is positive and wages are zero, while third period productivity is zero and wages are positive. The experiment produces strong evidence that deferred compensation increases worker effort; ...