In this paper we derive a model for the joint endogeneity of centrally contracted wages and wage drift in which central union attempts to reduce wage dispersion plays a pivotal role. Empirical results demonstrate that union efforts to level wage differentials exerted large positive effects on both centrally negotiated wage changes and wage drift. We also show that wage drift was accurately pred...

This paper develops a model of wage distribution and wage dynamics based on assignment and Pareto learning. The model matches a large number of key facts about wage distribution and wage dynamics. The tractability of Pareto learning allows us to derive joint implications on the wage distribution and wage dynamics as assignment becomes more important. Our model also provides a natural framework ...

Revisiting Inter-Industry Wage Differentials and the Gender Wage Gap: An Identification Problem We propose a measure of the industrial gender wage gap which is free from an identification problem by using inter-industry wage differentials, or industrial wage premia. We draw on a recent literature showing that a normalized regression equation can be used to resolve the identification problem in ...

What Do Labor Market Institutions Do? The past couple of decades have seen a huge increase in research on various labor market institutions. This paper offers a brief overview and discussion of research on the labor market impacts of minimum wages (MW), unemployment insurance (UI), and employment protection legislation (EPL). It is argued that research on UI is largely a success story, involvin...

Centralized wage-setting institutions are considered to be more effective at reducing wage inequality. In this paper, I offer an expansive cross-national analysis of the effects of recent liberalization in wage-setting institutions on wage inequality in the OECD, taking into special consideration the effects of EU and EMU membership. A qualitative comparison of liberalization occurring within E...

Over the past decade, economists have developed efficiency wage models to explain the presence of wage rigidity and thus of involuntary unemployment. In these models, workers' productivity depends positively on the wage or firms' costs depend negatively on the wage, giving firms an incentive to pay wages above the market-clearing level. One type of efficiency wage model is the turnover cost mod...

Union Wages and the Minimum Wage Henry S. Farber Massachusetts Institute of Technology It is argued that a change in the minimum wage may affect the outcomes of collective bargaining through its effect on a hypothetical "reference wage" which the union rank-and-file use as a basis of comparison in formulating their wage demand. It is further argued that the importance of the minimum wage in the...

Are Wage and Employment Effects Robust to Alternative Minimum Wage Variables? A national minimum wage cannot explain variation in wages or employment across regions. Identification of the effect of the minimum wage separately from the effect of other variables on wages or employment requires regional variation. Many minimum wage variables with regional variation have been suggested in the liter...