Wages, Profits and Rent-Sharing
30 Pages Posted: 3 Jan 2002 Last revised: 17 Jul 2022
Date Written: December 1992
Abstract
The paper uses CPS data from 1964 to 1985 to test for the existence of rent-sharing in US tabor markets, Using an unbalanced panel from the manufacturing sector, and random-effects and fixed-effects specifications, the paper finds that changes in wages are explained by movements in lagged levels of profitability and unemployment. The results appear to be consistent with rent-sharing theory (or a labor contract framework with risk-averse firms) and to be inconsistent with the competitive labor market model. The paper estimates the unemployment elasticity of pay at approximately -0.03, and the profit elasticity of pay at between 0.02 and 0.05.
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Fairness and Retaliation: The Economics of Reciprocity
By Ernst Fehr and Simon Gächter
-
Fairness and Retaliation: The Economics of Reciprocity
By Ernst Fehr and Simon Gächter
-
Cooperation and Punishment in Public Goods Experiments
By Ernst Fehr and Simon Gächter
-
Social Norms and Welfare State Dynamics
By Assar Lindbeck, Sten Nyberg, ...
-
The Evolution of Strong Reciprocity: Cooperation in Heterogeneous Populations
By Samuel Bowles and Herbert Gintis
-
Does Unmeasured Ability Explain Inter-Industry Wage Differentials?
-
More Order with Less Law: On Contract Enforcement, Trust and Crowding
By Iris Bohnet, Bruno S. Frey, ...
-
The Behavioral Impact of Emotions in a Power-to-Take Game: An Experimental Study