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Effort and Wages: A New Look at the Interindustry Wage Differentials

In: The Impact of International Trade on Wages

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  • Edward E. Leamer
  • Christopher F. Thornberg

Abstract

We provide evidence that US workers face a wage-effort offer curve with the high-wage high-effort jobs occurring in the capital intensive sectors. We find that real wage offers rose at every level of effort during the 1960's, a shift which is consistent with a decline in the rental cost of capital. During the 1970's, when relative prices of labor-intensive goods declined, the wage-effort offer curve twisted, offering lower pay for the low-paid jobs in the labor-intensive sectors but higher pay for the high-paid jobs in the capital-intensive sectors. In the 1980's, workers at every wage level began to work more hours for the same weekly wage. This we loosely attribute either to the increasing cost of non-wage benefits, especially health care, or to the introduction of new equipment. In studying the wage-effort offer curve rate of unionization, education, and rent sharing.
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Suggested Citation

  • Edward E. Leamer & Christopher F. Thornberg, 2000. "Effort and Wages: A New Look at the Interindustry Wage Differentials," NBER Chapters, in: The Impact of International Trade on Wages, pages 37-84, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:6190
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    References listed on IDEAS

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    Cited by:

    1. Laura Policardo & Lionello F. Punzo & Edgar J. Sanchez Carrera, 2019. "On the wage–productivity causal relationship," Empirical Economics, Springer, vol. 57(1), pages 329-343, July.
    2. Avraham Ebenstein & Ann Harrison & Margaret McMillan & Shannon Phillips, 2022. "Estimating The Impact Of Trade And Offshoring On American Workers Using The Current Population Surveys," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 12, pages 275-289, World Scientific Publishing Co. Pte. Ltd..
    3. Edward E. Leamer, 2010. "What Have Changes to the Global Markets for Goods and Services Done to the Viability of the Swedish Welfare State?," NBER Chapters, in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 285-325, National Bureau of Economic Research, Inc.
    4. Edinaldo Tebaldi & Jongsung Kim, 2010. "Two Tales on the Returns to Education: The Impact of Trade on Wages," Review of Development Economics, Wiley Blackwell, vol. 14(4), pages 768-782, November.
    5. Yih-Chyi Chuang & Pi-Fum Hsu, 2004. "FDI, trade, and spillover efficiency: evidence from China's manufacturing sector," Applied Economics, Taylor & Francis Journals, vol. 36(10), pages 1103-1115.
    6. Thomas Moutos & William Scarth, 2002. "Technical Change and Unemployment: Policy Responses and Distributional Considerations," CESifo Working Paper Series 710, CESifo.
    7. Robbins, Donald J., 2003. "The impact of trade liberalization upon inequality in developing countries : a review of theory and evidence," ILO Working Papers 993650553402676, International Labour Organization.
    8. Lutz Altenburg & Anke Brenken, 2008. "Effort, trade, and unemployment," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(3), pages 864-893, August.
    9. repec:ilo:ilowps:365055 is not listed on IDEAS
    10. Wang, Yongjin & Zhao, Laixun, 2015. "Saving good jobs from global competition by rewarding quality and efforts," Journal of International Economics, Elsevier, vol. 96(2), pages 426-434.

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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