Wages, Profits, and Rent-Sharing

The paper suggests a new test for rent-sharing in the U. S. labor market. Using an unbalanced panel from the manufacturing sector, it shows that a rise in a sector's profitability leads after some years to an increase in the long-run level of wages in that sector. The paper controls for workers...

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Bibliographic Details
Published in:The Quarterly journal of economics 1996-02, Vol.111 (1), p.227-251
Main Authors: Blanchflower, David G., Oswald, Andrew J., Sanfey, Peter
Format: Article
Language:English
Subjects:
Correlation analysis
Econometrics
Economic models
Economic rent
Economic theory
Economics
Employment
Evaluation
Labor market
Labor markets
Long run profit maximization
Manufacturing
Net income
Paper profit
Profit
Profitability
Rents (Property)
Risk aversion
Studies
Unemployment
Wage rates
Wages
Wages & salaries
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Summary:The paper suggests a new test for rent-sharing in the U. S. labor market. Using an unbalanced panel from the manufacturing sector, it shows that a rise in a sector's profitability leads after some years to an increase in the long-run level of wages in that sector. The paper controls for workers' characteristics, for industry fixed effects, and for unionism. Lester's range of wages is estimated, for rent-sharing reasons alone, at approximately 24 percent of the mean wage.
ISSN:0033-5533
1531-4650
DOI:10.2307/2946663