wages and productivity growth in a dynamic monopoly abstract this paper studies the intertemporal problem of a monopolistic firm that engages in productivity enhancing innovations to reduce labor costs the optimal innovation policy is not monotone and the rate of productivity growth is the highest when the firm s size is in some intermediate range as long as its initial productivity is not too low the firm eventually reaches a steady state where the rate of productivity growth is identical to the rate of wage growth productivity dependent wage differentials do not affect productivity growth in the steady state they increase however the firm s long run equilibrium cost level

income dispersion and counter cyclical markups recent advances in measuring cyclical changes in the income distribution raise new questions how might these distributional changes affect the business cycle itself we show how counter cyclical income dispersion can generate counter cyclical markups in the goods market without any preference shocks or price setting frictions in recessions idiosyncratic labor productivity shocks raise income dispersion lower the price elasticity of demand and increase imperfectly competitive firms optimal markups the calibrated model explains not only many cyclical features of markups but also cyclical and long run patterns of standard business cycle aggregates

the low skill trap recently it has become popular to argue that certain workers have fallen into a trap in which they have poor skills few job opportunities and a low return on training while others have not this paper demonstrates how such a trap can occur within a simple matching model with rent sharing rent sharing diminishes the worker s incentive to acquire skills however since firms also benefit from training rent sharing likewise induces job creation the subsequent improved matching prospects may offset the initial disincentive to invest however for this mechanism to be effective firms and workers must coordinate their actions if they do not the trap occurs

bidding for army career specialties improving the rotc branching mechanism motivated by the low retention rates of us military academy and reserve officer training corps graduates the army recently introduced incentives programs in which cadets could bid 3 years of additional service obligation to obtain higher priority for their desired branches the full potential of this incentives program is not utilized because of the rotc s deficient matching mechanism i propose a design that eliminates these shortcomings and mitigates several policy problems the army has identified in contrast to the rotc mechanism my design utilizes market principles more extensively and it is a hybrid between a market mechanism and a priority based allocation mechanism

optimal truncation in matching markets abstract although no stable matching mechanism can induce truth telling as a dominant strategy for all participants roth 1982 recent studies have presented conditions under which truthful reporting by all agents is close to optimal immorlica and mahdian 2005 kojima and pathak 2009 lee 2011 our results demonstrate that in large uniform markets using the men proposing deferred acceptance algorithm each woman s best response to truthful behavior by all other agents is to truncate her list substantially in fact the optimal degree of truncation for such a woman goes to 100 of her list as the market size grows large in general one to one markets we provide comparative statics for optimal truncation strategies reduction in risk aversion and reduced correlation across preferences each lead agents to truncate more so while several recent papers focused on the limits of strategic manipulation our results serve as a reminder that without pre conditions ensuring truthful reporting there exists a potential for significant manipulation even in settings where agents have little information

unionisation structures and innovation incentives this paper examines how dierent unionisation structures aect rms innovation incen tives and industry employment we distinguish three modes of unionisation with increasing degree of centralisation 1 decentralisation where wages are determined independently at the rm level 2 coordination where one industry union sets individual wages for all rms and 3 centralisation where an industry union sets a uniform wage rate for all rms while rms investment incentives are largest under centralisation investment in centives are non monotone in the degree of centralisation decentralisation carries higher investment incentives than coordination labour market policy can spur innovation by decentralising unionisation structures or through non discrimination rules

testing rent sharing using individualized measures of rent evidence from domestic helpers wing suen the market for resident domestic helpers offers a rare opportunity where the surplus from employment relationship can be quantitatively measured for each individual employee using the difference between employer s cost of time and employee s wage as a measure of rent it is found that wages for domestic helpers are positively related to rent however the apparent sharing of rent is better explained by matching than by efficiency wage models rent sharing is observed even in households where monitoring or turnover costs are low rent sharing is not observed among newly arrived foreign domestic helpers whose ability remains to be revealed jel j41 i introduction this article studies the pattern of wages for resident domestic helpers in hong kong no one would lure economists into paying attention to this arcane labor market were it not for one feature of the market for housework a measure of employment rent can be plausibly assigned to each individual employee having an individualized measure of rent at the worker level instead of a general measure at the firm level will shed considerable light on the large and growing literature of rent sharing in wage determination since 1975 the hong kong government has allowed the importation of foreign domestic helpers into the territory because of large wage differences between hong kong and some of its asian neighbors the program is highly popular the census and statistics department 1995 estimates that 92 700 households or 5 6 of all domestic households in hong kong employed domestic helpers in 1993 the figure is even more dramatic for high income households 44 of households with monthly income of over hk 50 000 had one or more domestic helpers 1 one consequence of the availability of market procured housework is that women who employ helpers have more time for market work in suen 1994 i estimate that the probability of labor force participation among married women who had domestic helpers is 22 percentage points higher than that for women without domestic help other things equal if hiring a helper enables a married woman to engage in market work then a plausible measure for the rent or surplus from this employment relationship is the difference between the woman s wage and her helper s wage if a woman with a domestic helper decides to stay home nonetheless the size of the surplus can be measured by the difference between the shadow value of leisure and the helper s wage wage information is readily available from census data and shadow wages can be estimated using standard techniques this article utilizes this rare opportunity to impute a measure of rent for each employer employee pair studying how the wages of domestic helpers vary wi th the magnitude of rent will provide direct evidence for rent sharing in the labor market there is a large literature which documents the fact that the characteristics of the employer such as industry affiliation and firm size are significantly correlated with the employees wages krueger and summers 19881 brown and medoff 1989 groshen 1991 helwege 1992 and many others offer convincing evidence that inter industry wage differentials and employer wage effects exist rent sharing is often invoked to account for such wage patterns however few studies in the literature offer a plausible account for the existence of or a measure for the size of the rent that is supposedly shared 2 at the industry level dickens and katz 1987 use variables such as concentration ratio capital labor ratio research and development expenditures and average rate of return on capital as covariates in wage equations these variables provide at best an indirect and error prone measure of employment rent campbell 1993 makes use of firm level characteristics instead of industry characteristics but t here is no information on profits in his firm level data

firm wage premia industrial relations and rent sharing in germany the authors use three distinct methods to investigate the influence of industrial relations on firm wage premia in germany first ordinary least squares ols regressions for the firm effects from

the creation and capture of rents wages and innovation in a panel of u k companies this paper examines the impact of technological innovation on wages using a panel of british firms a head count measure of major innovations between 1945 and 1983 is combined with share price and accounting information innovating firms are found to have higher average wages but rival innovation tends to depress own wages this appears consistent with a model where wages are partly determined by a sharing in the rents generated by innovation in other words innovation may be a good instrument for proxies for rents such as profitability quasi rents or tobin s average q instrumental variable estimates of the elasticity between wages and quasi rents are about 0 29

wage compression within the firm evidence from an indexation scheme we revisit the role of labour market institutions by showing how they affect the sharing of firm specific rents between employers and employees we look at an italian wage indexation mechanism scala mobile that compressed the distribution of wages imposing real wage increases at the bottom of the distribution after developing a simplified version of a search model with intra firm bargaining and on the job search we document that skilled workers received lower wage adjustments when employed at firms with many unskilled workers and they tended to move towards more skill intensive firms moreover the system drove the least skill intensive firms out of the market

rent sharing and workers bargaining power an empirical cross country cross industry panel analysis this paper studies how rents are shared between capital and labour using industry level panel data for 19 oecd countries over the 1988 2007 period the first step is an explanation of the rent creation process we provide evidence of a significant impact of regulation on value added prices at the industry level relative to the value added price for the overall economy rent in the second step we dissect the value added sharing process running ols and iv estimations our results confirm the blanchard giavazzi 2003 prediction the impact of rents on the capital share depends on workers bargaining power this article is protected by copyright all rights reserved

rent sharing holdup and wages evidence from matched panel data rent sharing by workers can reduce the incentives for investment if some of the returns to sunk capital are captured in higher wages we propose a simple measure of this holdup effect based on the size of the wage offset for firm specific capital accumulation using social security earnings records for workers in the veneto region of italy linked to detailed financial data for their employers we find strong evidence of rent sharing with an elasticity of wages with respect to potential rents per worker of around 4 arising mainly at larger firms with higher price cost margins on the other hand we find little evidence that bargaining lowers the return on investment instead firm level bargaining appears to split the rents after deducting the full cost of capital

wages and productivity growth in a competitive industry abstract we describe the evolution of productivity growth in a competitive industry with free entry and exit the exogenous wage rate determines the firms engagement in labor productivity enhancing process innovation there is a unique steady state of the industry dynamics which is globally asymptotically stable in the steady state the number of active firms their unit labor cost and supply depend on the growth rate but not on the level of the wage rate in addition to providing comparative statics of the steady state the paper characterizes the industry s adjustment path

in search of advice for participants in matching markets which use the deferred acceptance algorithm many centralized entry level labor markets use the firm proposing deferred acceptance da algorithm to compute the matching that is implemented among workers and firms we propose a definition of the strategic options a worker faces in the da algorithm then we develop a theory to advise workers who distinguish between the firms from which they believe not to receive a proposal the firms from which they might receive a proposal and the firms from which they certainly receive a proposal if a worker is not able to deduce which new proposals she receives after having rejected others then it is not profitable for her to submit a list that reverses the true ranking of any two acceptable firms furthermore it is not beneficial for her to include a firm in her submitted list that is unacceptable to her

trade unions v statistical discrimination theory and application to post apartheid south africa a simple model of statistical discrimination is analyzed which captures some stylized facts of the south african labor market it shows that this type of discrimination disappears when the wage rates are determined by efficient bargaining between a representative firm and a union with endogenous membership this may explain why the wage gap between black and white workers in post apartheid south africa is smaller among unionized workers than among non unionized ones

the impact of tfp growth on steady state unemployment theoretical predictions of the impact of total factor productivity tfp growth on unemployment are ambiguous and depend on the extent to which new technology is embodied in new jobs we evaluate a model with embodied and disembodied technology capitalization and creative destruction effects in econometric estimates with a panel of industrial countries we find a large negative impact of tfp growth on unemployment which implies that embodied technology and creative destruction play no role in the steady state dynamics of unemployment capitalization effects explain some of the estimated impact but a part remains unexplained

the direct incidence of corporate income tax on wages a stylised model is provided to show how the direct effect of corporate income tax on wages can be identified in a bargaining framework using cross company variation in tax liabilities conditional on value added per employee using data on 55 082 companies located in nine european countries over the period 1996 2003 we estimate the long run elasticity of the wage bill with respect to taxation to be 0 093 evaluated at the mean this implies that an exogenous rise of 1 in tax would reduce the wage bill by 49 cents only a weak evidence of a difference for multinational companies is found

do r d tax incentives lead to higher wages for r d workers evidence from the netherlands this paper examines the impact of the dutch r d tax incentive scheme on the wages of r d workers we construct firm specific r d tax credit rates that vary over time following variations in the dutch r d tax incentive program using instrumental variables we estimate a wage sharing model with an unbalanced firm level panel data covering the period 1997 2004 the elasticity of the r d wage with respect to the fraction of the wage supported by the fiscal incentives scheme is estimated at 0 2 in the short run and 0 24 in the long run

the political economy of technological innovation and employment building on the varieties of capitalism thesis of comparative advantages in technological innovation the authors theorize the effect of sociopolitical coordination from a dynamic perspective and then apply the dynamic theories to the political economy of employment in comparison to the existing employment literature situated in a constant technology context based on cross sectional survey as well as pooled time series aggregate data the authors argue that new technologies not only increase productivity through process innovation but also generate rents through product innovation by preventing opportunistic behavior between firms sociopolitical coordination intensifies reciprocal sharing of innovation which increases productivity returns but dilutes rents leading to comparative advantage in process over product innovation because process innovation is labor saving but product innovation is employment friendly interfirm coordination further leads to comparative disadvantage in job creation from in

bargaining sorting and the gender wage gap quantifying the impact of firms on the relative pay of women there is growing evidence that rm specic pay premiums are an important source of wage inequality these premiums will contribute to the gender wage gap if women are less likely to work at high paying rms or if women negotiate worse wage bargains with their employers than men using longitudinal data on the hourly wages of portuguese workers matched with balance sheet information for rms we show that the wages of both men and women contain rm specic premiums that are strongly correlated with employer productivity we then show how the impact of these rm specic pay dierentials on the gender wage gap can be decomposed into a combination of bargaining and sorting eects consistent with the bargaining literature we nd that women receive only 90 of the rm specic pay premiums earned by men notably we obtain very similar estimates of the relative bargaining power ratio from our analysis of between rm wage premiums and from analyzing changes in

a multisectorial matching model of unions abstract we develop an equilibrium matching model where unions have an important institutional presence monopolistic competition characterizes the goods market where only some sectors are unionized thus the model can vary the coverage of collective bargaining it can vary the degree of coordination between unions and alternatively consider national and sectorial unions calibration to the union premium implies a workers rent extraction parameter much lower than assumed in the matching literature we introduce unemployment insurance to study the interactions of policies with unions and find that unions only push for more generous benefits if this does not entail higher payroll taxes

open shop unions and product market competition in this paper we analyse the impact of changes in product market competition on wage outcomes in the presence of an open shop union with less than full union membership product market competition is shown to aect not only a unionised rm s pro ts but also its payoin the event of a dispute in contrast to the pre diction of the standard model increases in product market competition may now increase wage levels the model is therefore able to accommodate the mixed empir ical ndings regarding the impact of product market competition on union wages

price and quality components of imports of food products into the uk this paper analyses the principal factors responsible for the growth in the value of imports of the uk food sector during the period 1985 90 on the basis of estimates of translog multilateral price indices it assesses the relative contribution of changes in the quality of imported products and factors other than quality to growth in import values of food products the main conclusion is that growth in quality appears to be the principal reason for the growth in unit values of imports and the trade deficit incurred by the food manufacturing sector