Efficiency wage
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The Effect of Minimum Wages on Low-Wage Jobs* Open
We estimate the effect of minimum wages on low-wage jobs using 138 prominent state-level minimum wage changes between 1979 and 2016 in the United States using a difference-in-differences approach. We first estimate the effect of the minimu…
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Firms and Labor Market Inequality: Evidence and Some Theory Open
We synthesize two related literatures on firm-level drivers of wage inequality. Studies of rent sharing that use matched worker-firm data find elasticities of wages with respect to value added per worker in the range of 0.05–0.15. Studies …
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Tasks, Automation, and the Rise in U.S. Wage Inequality Open
We document that between 50% and 70% of changes in the U.S. wage structure over the last four decades are accounted for by relative wage declines of worker groups specialized in routine tasks in industries experiencing rapid automation. We…
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Unemployment and Business Cycles Open
We develop and estimate a general equilibrium search and matching model that accounts for key business cycle properties of macroeconomic aggregates, including labor market variables. In sharp contrast to leading New Keynesian models, we do…
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Who Pays for the Minimum Wage? Open
This paper provides a comprehensive assessment of the margins along which firms responded to a large and persistent minimum wage increase in Hungary. We show that employment elasticities are negative but small even four years after the ref…
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Labor Share Decline and Intellectual Property Products Capital Open
We study the behavior of the U.S. labor share over the past 90 years. We find that the observed decline of the labor share is entirely explained by the capitalization of intellectual property products in the national income and product acc…
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Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior Open
We analyze how separations responded to arbitrary differences in own and peer wages at a large US retailer. Regression-discontinuity estimates imply large causal effects of own-wages on separations, and on quits in particular. However, thi…
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Wage-led versus profit-led demand regimes: the long and the short of it Open
Empirical studies have found mixed results regarding whether various countries have wage-led or profit-led demand regimes. Most of the previous literature has paid little attention to the time dimension of this distinction, but most of the…
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Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle Open
This paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to as much as $11 in 2015 and to as much as $13 in 2016.Using a v…
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Wage-led growth in the EU15 member-states: the effects of income distribution on growth, investment, trade balance and inflation Open
This paper estimates a multi-country demand-led growth model for EU15 countries. A decrease in the share of wages in national income in isolation leads to lower growth in Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Po…
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Long Work Hours, Part-Time Work, and Trends in the Gender Gap in Pay, the Motherhood Wage Penalty, and the Fatherhood Wage Premium Open
We assess how changes in the social organization and compensation of work hours over the last three decades are associated with changes in wage differentials among mothers, fathers, childless women, and childless men. We find that large di…
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Firm Wage Differentials and Labor Market Sorting: Reconciling Theory and Evidence Open
Why do firms pay different wages? Empirical evidence suggests the presence of substantial differences in firm pay controlling for worker skill. Moreover, these differences are uncorrelated with skills, indicating the absence of sorting. I …
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From Population Growth to Firm Demographics: Implications for Concentration, Entrepreneurship and the Labor Share Open
The US economy has undergone a number of puzzling changes in recent decades.Large firms now account for a greater share of economic activity, new firms are being created at a slower rate, and workers are getting paid a smaller share of GDP…
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The Declining Labor Market Prospects of Less-Educated Men Open
Over the last half century, US wage growth stagnated, wage inequality rose, and the labor-force participation rate of prime-age men steadily declined. In this article, we examine these worrying labor market trends, focusing on outcomes for…
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Job Ladders and Earnings of Displaced Workers Open
Workers who suffer job displacement experience surprisingly large and persistent earnings losses. This paper proposes an explanation for this robust empirical puzzle in a model of search with a significant job ladder and increased separati…
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Growing Apart: The Changing Firm-Size Wage Premium and Its Inequality Consequences Open
Wage inequality in the United States has risen dramatically over the past few decades, prompting scholars to develop a number of theoretical accounts for the upward trend. This study argues that large firms have been a prominent labor-mark…
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Minimum Wage and Individual Worker Productivity: Evidence from a Large US Retailer Open
We study workers who are employed by a large US retailer, work in many store locations, and are paid based on performance. By means of a border-discontinuity analysis, we document that workers become more productive and are terminated less…
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Wages and the Value of Nonemployment* Open
Nonemployment is often posited as a worker’s outside option in wage-setting models such as bargaining and wage posting. The value of nonemployment is therefore a key determinant of wages. We measure the wage effect of changes in the value …
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Wage Inequality in Germany after the Minimum Wage Introduction Open
While monthly wage inequality in Germany continued to increase strongly until 2010, it recently returned to the level of the year 2000. We assess the role of the national minimum wage introduced in 2015. Unconditional quantile regressions …
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Facts and Fantasies about Wage Setting and Collective Bargaining Open
In this article, we document and discuss salient features of collective bargaining systems in the OECD countries, with the goal of debunking some misconceptions and myths and revitalizing the general interest in wage setting and collective…
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Minimum Wages and Firm Value Open
How does firm value change in response to a minimum wage hike? This paper exploits the announcement of a big change in the UK minimum wage that was both totally unanticipated and free of uncertainty. The stock market response to this is ex…
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Collective Bargaining and the Evolution of Wage Inequality in Italy Open
Italian male wage inequality has increased at a relatively fast pace from the mid‐1980s until the early 2000s, while it has been persistently flat since then. We analyse this trend, focusing on the period of most rapid growth in pay disper…
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When 3 + 1 > 4: Gift Structure and Reciprocity in the Field Open
Do higher wages elicit reciprocity and lead to increased productivity? In a field experiment with 266 employees, we find that paying higher wages, per se, does not have a discernible effect on productivity in a context with no future emplo…
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Wage Flexibility under Sectoral Bargaining Open
Sectoral contracts in many European countries set wage floors for different occupation groups. In addition, employers often pay a wage premium (or wage cushion) to individual workers. We use administrative data from Portugal, linked to col…
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Who Killed the Phillips Curve? A Murder Mystery Open
Is the Phillips curve dead? If so, who killed it? Conventional wisdom has it that the sound monetary policy since the 1980s not only conquered the Great Inflation, but also buried the Phillips curve itself. This paper provides an alternati…
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Public Sector Wage Policy and Labor Market Equilibrium: A Structural Model Open
We develop and estimate a structural model that incorporates a sizeable public sector in a labor market with search frictions. The wage distribution and the employment rate in the public sector are taken as exogenous policy parameters. Ove…
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Workplace Variation in Fatherhood Wage Premiums: Do Formalization and Performance Pay Matter? Open
Parenthood contributes substantially to broader gender wage inequality. The intensification of gendered divisions of paid and unpaid work after the birth of a child create unequal constraints and expectations such that, all else equal, mot…
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Career concerns with exponential learning Open
This paper examines the interplay between career concerns and market structure. Ability and effort are complements: effort increases the probability that a skilled agent achieves a one-time breakthrough. Wages are based on assessed ability…
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High Wage Workers Work for High Wage Firms Open
We develop a new approach to measuring the correlation between the types of matched workers and firms.Our approach accurately measures the correlation in data sets with many workers and firms, but a small number of independent observations…
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The Relative Power of Employment-to-Employment Reallocation and Unemployment Exits in Predicting Wage Growth Open
We study the cyclical comovement nominal wage growth (either monthly earnings or hourly wage rate) and labor market flows. We use microdata from the Survey of Income and Program Participation over 1996-2013 to purge composition effects in …