Wage Inequality and Labor Rights Violations

43 Pages Posted: 30 Sep 2020

See all articles by Ioana Elena Marinescu

Ioana Elena Marinescu

University of Pennsylvania - School of Social Policy & Practice; National Bureau of Economic Research (NBER)

Yue Qiu

Temple University

Aaron Sojourner

University of Minnesota; IZA Institute of Labor Economics

Date Written: August 13, 2020

Abstract

Wage inequality does not fully capture differences in job quality. Jobs also differ along other key dimensions, including the prevalence of labor-rights violations. Yet, there is little systematic evidence on this non-wage dimension of job quality and how it contributes to overall inequality. We use a combination of systematic legal violations data from federal agencies, and local industry employment data. We construct novel measures of labor violation rates and show they are positively correlated with worker survey reports of adverse working conditions, establishing their validity. Within local industries over time, a 10% increase in the average local industry wage is associated with a 0.15% decrease in the number of violations per employee and a 4% decrease in fines per dollar of pay. Increases in worker power measured by reduced labor market concentration and increased unionization are also associated with reductions in labor violations. Overall, we conclude that labor violations are regressive: they deepen wage inequality by increasing inequality in job quality.

Keywords: wage differentials, inequality, worker power, labor rights

JEL Classification: J31, J83, J32, J33, J28, K31, K42

Suggested Citation

Marinescu, Ioana Elena and Qiu, Yue and Sojourner, Aaron J., Wage Inequality and Labor Rights Violations (August 13, 2020). Available at SSRN: https://ssrn.com/abstract=3673495 or http://dx.doi.org/10.2139/ssrn.3673495

Ioana Elena Marinescu (Contact Author)

University of Pennsylvania - School of Social Policy & Practice ( email )

3701 Locust Walk
Philadelphia, PA 19104-6214
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yue Qiu

Temple University ( email )

Philadelphia, PA 19122
United States

Aaron J. Sojourner

University of Minnesota ( email )

Carlson School of Management
321 19th Ave S, 3-300
Minneapolis, MN 55455
United States
6126249521 (Phone)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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