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Market Imperfections, Labor Management, and Earnings Differentials in a Developing Country: Theory and Evidence from Yugoslavia

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  • Saul Estrin
  • Robert E. Moore
  • Jan Svejnar

Abstract

In this paper we evaluate empirically the relative importance of two explanations of Yugoslav interindustry income differentials. One explanation, proposed initially by Vanek and Jovicic [1975], stresses capital market imperfections which permit capital rents to be appropriated as workers' incomes. The second explanation points to labor allocation problems under self-management. We first present a critique of the Vanek-Jovicic original formulation and then respecify the problem to permit simultaneous evaluation of the two schools of thought. Results based on two data sets suggest that labor allocation factors and monopoly power rather than capital rents are the main source of Yugoslav earnings dispersion.

Suggested Citation

  • Saul Estrin & Robert E. Moore & Jan Svejnar, 1988. "Market Imperfections, Labor Management, and Earnings Differentials in a Developing Country: Theory and Evidence from Yugoslavia," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(3), pages 465-478.
    • Handle: RePEc:oup:qjecon:v:103:y:1988:i:3:p:465-478.
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    Cited by:

    1. Janez Prasnikar & Jan Svejnar, 1998. "Investment Wages and Ownership During the Transition to a Market Economy: Evidence from Slovenian Firms," William Davidson Institute Working Papers Series 144, William Davidson Institute at the University of Michigan.
    2. Vedran Recher, 2022. "History Matters: Life Satisfaction in Transition Countries," Journal of Happiness Studies, Springer, vol. 23(1), pages 171-193, January.
    3. Lee, Young, 1999. "Wages and Employment in China's SOEs, 1980-1994: Corporatization, Market Development, and Insider Forces," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 702-729, December.
    4. Massimo Cingolani, 2023. "Prospective analysis of the SME sector of the Western Balkans," PSL Quarterly Review, Economia civile, vol. 76(305), pages 121-154.

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