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What happens if an employer cuts wages by one cent? Much of labor economics is built on the assumption that all the workers will quit immediately. Here, Alan Manning mounts a systematic challenge to the standard model of perfect competition.Monopsony in Motionstands apart by analyzing labor markets from the real-world perspective that employers have significant market (or monopsony) power over their workers. Arguing that this power derives from frictions in the labor market that make it time-consuming and costly for workers to change jobs, Manning re-examines much of labor economics based on this alternative and equally plausible assumption. The book addresses the theoretical implications of monopsony and presents a wealth of empirical evidence. Our understanding of the distribution of wages, unemployment, and human capital can all be improved by recognizing that employers have some monopsony power over their workers. Also considered are policy issues including the minimum wage, equal pay legislation, and caps on working hours. In a monopsonistic labor market, concludes Manning, the \"free\" market can no longer be sustained as an ideal and labor economists need to be more open-minded in their evaluation of labor market policies.Monopsony in Motionwill represent for some a new fundamental text in the advanced study of labor economics, and for others, an invaluable alternative perspective that henceforth must be taken into account in any serious consideration of the subject.

In an analysis of data on employment in the 48 contiguous United States from 1978 to 2008, we examine the connection between organizational demography and rising income inequality at the state level. Drawing on research on social comparisons and firm boundaries, we argue that large firms are susceptible to their employees making social comparisons about wages and that firms undertake strategies, such as wage compression, to help ameliorate their damaging effects. We argue that wage compression affects the distribution of wages throughout the broader labor market and that, consequently, state levels of income inequality will increase as fewer individuals in a state are employed by large firms. We hypothesize that the negative relationship between large-firm employment and income inequality will weaken when large employers are more racially diverse and their workers are dispersed across a greater number of establishments. Our results show that as the number of workers in a state employed by large firms declines, income inequality in that state increases. When these firms are more racially diverse, however, the negative relationship between large-firm employment and income inequality weakens. These results point to the importance of considering how corporate demography influences the dispersion of wages in a labor market.

Swedish census data and tax records reveal an astonishing decline in the aggregate skill premium of 30 percent between 1970 and 1990, with only a modest recovery in the next couple of decades. In contrast, the US skill premium rose by around 24 percent over those four decades. A theory that equalizes wages with marginal products can rationalize these disparate outcomes when we replace commonly used measures of total labor supplies by private sector employment. The dramatic decline in the skill premium in Sweden is the result of an expanding public sector that has disproportionately hired unskilled labor.

OECD countries have experienced a large increase in top wage inequality. Atkinson ( 2008 ) attributes this phenomena to the superstar theory leading to a Pareto tail in the wage distribution with a low Pareto coefficient. Do we observe a similar phenomena for academic wages? We examine wage formation in a public US university using for each academic rank a hybrid mixture formed by a lognormal distribution for regular wages and a Pareto distribution for top wages, using a Bayesian approach. The presence of superstars wages would imply a higher dispersion in the Pareto tail than in the lognormal body. We concluded that academic wages are formed in a different way than other top wages. There is an effort to propose competitive wages to some young Assistant Professors. But when climbing up the wage ladder, we found a phenomenon of wage compression which is just the contrary of a superstar phenomenon.

This article argues that federal labor policy was a factor in causing the Great Compression, the dramatic compression of skill-based wage differentials that occurred in the 1940s, and in bringing it to an end. By giving the National Labor Relations Board the power to determine the appropriate collective-bargaining unit, New Dealers gave industrial unions the means with which to build a more egalitarian wage structure. Unskilled and semiskilled workers seized the opportunity and voted themselves big pay raises. Skilled craftsmen responded by petitioning the NLRB for permission to form their own craft bargaining units, a process known as “craft severance.” As conservatives gained influence in Washington in the 1940s, the board adopted a bargaining-unit policy more favorable to craft unions. By the early 1950s, skilled craftsmen had regained control of their wage demands and thereby helped bring the Great Compression to a halt.

The author uses German linked employer-employee data to estimate the impact of intra-firm wage dispersion on the probability that establishments pay for further training. About half of all establishments in the estimation sample cover all direct and indirect training costs, which contradicts the standard human capital approach with perfect labor markets. The main finding of cross-section, panel, and instrumental variable probit estimations is that establishments with larger intra-firm wage compression are more likely to cover all direct and indirect training costs, which is consistent with theoretical considerations of the \"new training literature\" about imperfect labor markets.

In May and June of 1968 a dramatic wave of strikes paralyzed France, making industrial relations reform a key item on the government agenda. French trade unions seemed due for a golden age of growth and importance. Today, however, trade unions are weaker in France than in any other advanced capitalist country. How did such exceptional militancy give way to equally remarkable quiescence? To answer this question, Chris Howell examines the reform projects of successive French governments toward trade unions and industrial relations during the postwar era, focusing in particular on the efforts of post-1968 conservative and socialist governments. Howell explains the genesis and fate of these reform efforts by analyzing constraints imposed on the French state by changing economic circumstances and by the organizational weakness of labor. His approach, which links economic, political, and institutional analysis, is broadly that of Regulation Theory. His explicitly comparative goal is to develop a framework for understanding the challenges facing labor movements throughout the advanced capitalist world in light of the exhaustion of the postwar pattern of economic growth, the weakening of the nation-state as an economic actor, and accelerating economic integration, particularly in Europe.

\"We develop a dynamic partial-equilibrium model to analyse how labour market institutions (wage compression, minimum wages, unemployment benefits, mobility costs and fixed-costs of self-employment) and learning affect who and when people become self-employed. We find that certain ability groups of workers become self-employed for both 'carrot' and 'stick' reasons: Some prefer self-employment to the low institutionalised wage, while others are not productive enough to qualify for a job at the institutionalised wage. Furthermore, wage compression and learning may give rise to a class of switchers who start in wage employment and later switch to self-employment. Several predictions of the model are consistent with observed empirical regularities, such as the existence of a group of low-skilled self-employed workers, the increasing propensity for self-employment over age groups and the larger spread in earnings among self-employed.\" Forschungsmethode: Theorieanwendung; deskriptive Studie. (author's abstract, IAB-Doku).

With growing concern about the conditions facing low wage workers and new challenges to traditional forms of labor market protection, this book offers a timely analysis of the purpose and effectiveness of minimum wages in different European countries. Building on original industry case studies, the analysis goes beyond general debates about the relative merits of labor market regulation to reveal important national differences in the functioning of minimum wage systems and their integration within national models of industrial relations. There is no universal position on minimum wage policy followed by governments and social partners. Nor is it true that trade unions consistently support minimum wages and employers oppose them. The evidence in this book shows that interests and objectives change over time and differ across industries and countries.  Investigating the pay bargaining strategies of unions and employers in cleaning, security, retail, and construction, this book's industry case studies show how minimum wage policy interacts with collective bargaining to produce different types of pay equity effects. The analysis provides new findings of 'ripple effects' shaped by trade union strategies and identifies key components of an 'egalitarian pay bargaining approach' in social dialogue. The lessons for policy are to embrace an inter-disciplinary approach to minimum wage analysis, to be mindful of the interconnections with the changing national systems of industrial relations, and to interrogate the pay equity effects.

Using the 1968, 1981, and 2000 Swedish Level of Living Surveys, the authors examine the evolution of the wage distribution in Sweden over the periods 1968-1981 and 1981-2000. The first period was the heyday of the Swedish solidarity wage policy with strong equalization clauses in the central wage agreements. During the second period, there was more flexibility for firms to adjust wages to reflect conditions such as labor shortages in particular fields. The authors find a remarkable narrowing of the wage distribution in the first period, but in the second period, wages grew more equally across the distribution. The authors decompose these changes in wages across the distribution into two components—those due to changes in the distribution of characteristics such as education and experience and those due to changes in the distribution of returns to those characteristics. They find that the wage compression between 1968 and 1981 was driven by changes in the distribution of returns, but between 1981 and 2000, the change in the distribution of returns had less of an effect on wage compression.