Beginning in the 1970s and continuing to the present, economists have examined the pay of public sector employees. Usually, an attempt is made to compare the compensation of public employees at various levels of government to workers in the private sector who are believed to be comparable. Of the many studies done, there is substantial variation in the operational meaning of comparable. Nonetheless, the general finding is that public employees on average receive rents or, stated otherwise, are overcompensated when compared to employees in private employment. The estimated levels of rent seem to be highest at the federal and lowest at the local level of government. Despite the general finding, there are substantial differences in the quantitative estimates. The major focus of this paper is on a critical evaluation of the various empirical methodologies that have been employed. An attempt will be made to reconcile the differences observed and to suggest improvements in the method of estimation.

In treatments of Monopolistic Competition, Edward Chamberlin and Joan Robinson are usually credited with simultaneously and independently developing the theory of monopolistic or imperfect competition. While their contributions were indeed simultaneously developed, it is inappropriate to treat them as having duplicated each other’s efforts. Yet it has become customary in many treatments to regard them as having done just that, and modern textbook treatments tend to mention the two as if they were interchangeable. In no respect were they less so than in their views of the welfare implications of monopolistic competition. But the passage of time seems to have resulted in a blurring of the distinction between them, and it has become a common practice to ascribe to monopolistic competition an incompatibility with Pareto optimality. An important point of focus of this paper is Chamberlin’s response to the tendency to treat his analysis as indicating a market failure.

This paper’s purpose is to examine the importance of controlling for the comparability of the units in a sample when examining wage differentials of various types. We use U.S. CPS data for the period 1992-2000 to compare estimated wage differentials between public and private sector workers obtained using two different methodologies: Lee’s two-step method that controls for the selection bias resulting from the non-randomness of the sample, and the propensity score matching method that controls also for the comparability of the workers. Lee’s method suggests that federal workers are paid a premium, while state and local workers are underpaid compared to private sector workers. However the matching method indicates that this data is too heterogeneous to be used to compare wages across sectors. We conclude that, when the outcome under study is not only affected by some sort of selection but also requires comparable groups, the traditional methodology may not be enough.

The concept of a European Social Model, though commonly employed, masks the considerable degree of variation across the nations of Western Europe in the provision of welfare, worker protective legislation, and associated rigidities in labor markets. Although the European Union’s emphasis on “flexicurity” would promote a greater degree of uniformity in the labor market institutions of Europe, the contention of this paper is that substantial differences remain, and that the construct of a European Social Model is inaccurate and potentially misleading. Differences across nations are examined by employing World Bank data on impediments to doing business around the world.

Using data from. the Health and Retirement Study, we apply propensity score matching methods to examine evidence on the rent paid to public sector workers in the United States. Traditionally, wage differentials are computed assuming that workers from both public and private sectors are comparable, without actually controlling for the comparability, of the units. Using this method, we are able to control for selection bias and, at the same time, select a subsample of comparable workers in terms of their conditional probability of choosing to work in the public sector on which to estimate separate wage equations.

This thoroughly updated and revised edition of a popular and authoritative reference work introduces the reader to the major concepts and leading contributors in the field of law and economics. The Companion features accessible, informative and provocative entries on all the significant issues, and breaks new ground by bringing together widely dispersed yet theoretically congruent ideas.

Academy of Management ReviewVol. 30, No. 2 Book ReviewsWage Dispersion: Why Are Similar Workers Paid Differently?Don BellanteDon Bellante University of South Florida, TampaPublished Online:1 Apr 2005https://doi.org/10.5465/amr.2005.16387904AboutSectionsView articleView Full TextPDF/EPUB ToolsDownload CitationsAdd to favoritesTrack Citations ShareShare onFacebookTwitterLinkedInRedditEmail View articleAbstractThe article reviews the book “Wage Dispersion: Why Are Similar Workers Paid Differently?,” by Dale T. Mortensen.REFERENCESBurdett K. , Mortensen D. T. 1998. Wage differentials, employer size, and unemployment. International Economic Review, 39: 257–273. Google ScholarGordon R. J. 1990. What is new-Keynesian economics? Journal of Economic Literature, 28: 1115–1171. Google ScholarFiguresReferencesRelatedDetails Vol. 30, No. 2 Permissions Metrics in the past 12 months History Published online 1 April 2005 Published in print 1 April 2005 Information© Academy of Management ReviewKeywordsBOOKS -- ReviewsWAGESNONFICTIONDownload PDF

This paper examines portfolio allocation behavior of the elderly, investigating whether their behavior conforms to Arrow's postulate of increasing relative risk aversion. Additionally, the effects on risk aversion of age, race, gender, education, health status, and the number of children are examined. The source of data is the AHEAD data set that is comprised of households with at least one member aged 70 or over. In the preferred specification, evidence supports a finding of modestly decreasing relative risk aversion and statistical significance for the personal characteristics examined. Implications are drawn for the likely security markets effects of an aging population.

Data from the 1990 Census One Percent Public Use Microdata Sample are examined in order to determine the extent of regional differences in the earnings of immigrants relative to nonimmigrants of the same ethnic origin and relative to nonimmigrants of Western European origin. Earnings equations are separately estimated for eight regions as well as for the U.S. as a whole. Also, relative earnings ratios are separately estimated for each of six ethnic groups within each region. The regional earnings functions are found to be statistically significantly different from a function estimated for the U.S. as a whole.

Conclusion We have argued that the difference-in-differences method of examining the effects of the New Jersey minimum wage, especially when the differences in differences are measured shortly after the change, is questionable. That being the case, if we nonetheless take this method seriously, and if following Card and Krueger we look at the data shortly before and after the New Jersey minimum was imposed, then the only statistically significant evidence we can find supports the conclusion that the New Jersey minimum reduced employment of young workers.

Previous researchers have attempted to explain the growth in the size of government over time. Some have observed a “ratchet” effect and have attributed these observed jumps in the relative size of government to ideological shifts in response to severe crises. We explain these observed ratchets as the consequence of asymmetries in the response of government employment to the business cycle. A public-choice oriented model of the employment response to the cycle is developed and applied to state and local government employment data. The data confirm the presence of ratchet effects that correspond to the business cycle. Moreover, virtually all of the growth in the ratio of state and local government employment to private employment has occurred during recessions .

This study examines the effect of English language ability and time spent in the USA on the earnings of immigrants. Earnings are examined for immigrants of eight broad ancestry areas. Earnings are compared to native‐born Americans of the same ancestry. The study is limited to males between the ages of 25 and 64, using the 1990 US Census 1 percent Public Use Microdata Sample. Substantial differences are found across ancestry groups. Relative earnings slightly but significantly improve with each year spent in the USA. Relative earnings are positively and significantly affected by English language mastery, but the affects of language mastery and years spent in the USA do not appear to significantly reinforce each other.

Studies of the relative earnings of Blacks in the U.S. have found that the ratio of Black to White male earnings is lower in the South than in the rest of the U.S. In this paper, it is argued that the usual methods of estimating earnings ratios are distorted by the omission of variables that generate equalizing wage differences which are place-specific. The results support this contention. It is concluded that the Black-White earnings ratio is only about 2.5 percent lower in the South than outside the South. It is not significantly different for those with less than 16 years of work experience.

ainstream macroeconomics is in disarray. Perusal of commonly used textbooks in macroeconomics will confirm that impression without much difficulty. Unfortunately, the same statement could have been made, and often was made, fifteen years ago. While in this sense little has changed in recent years, the disarray is now more fundamental and severe than a t any time since the 1930s. Amidst this disarray a variant of Keynesianism identified as Neoor New Keynesianism emerged in which the workings of labor markets are analyzed to a degree that is uncharacteristic of the orthodox Keynesian tradition. The key element in the New Keynesian analysis of the labor market is the concept of "efficiency wages." In what follows, the concept will be criticized, though criticisms that have been offered by mainstream economists will largely be ignored. Instead, this essay will focus on the criticism that follows from an Austrian perspective on entrepreneurship and the business cycle. I t will be argued that the concept of efficiency wages provides an poor answer to the question of why wages are not sufficiently flexible so as to elminate fluctuations in unemployment, and that from an Austrian perspective the question is not all that relevant.

Collective bargaining requires that an agent represent workers. This paper examines the implications for the trade union movement of the resulting agency costs. Without transferable rights in the union, union members lack the means and incentive to bring forth the innovative agent controls common to the modern corporation. Considerations of the bargaining strengths of employers and employees, each represented by an agent, provide an explanation of the simultaneous decline of private sector union membership (corporate share holders have been more successful at lowering agency costs) and growth of public sector union representation (where the union official, a “double agent,” serves the interest of both employee and bureaucratic employer).

The effect of the relative supply of Hispanics on the relative earnings of Blacks in US labour markets is examined. The data source for the empirical estimates is the March 1988 Current Population Survey. The results support one of the key features of the Becker model of discrimination, namely, that the extent of discrimination is affected by relative supply. Results also indicated that an increase in the number of Hispanics in a local labour market will reduce the income of otherwise comparable Blacks. However, if the Black labour supply in a local labour market is sufficiently large, a given percentage increase in the relative supply of Blacks will have a more negative impact on average Black earnings than would the same percentage increase in the number of Hispanics.