Wage differential studies rare& account for interarea differences in cost of living, owing both to data limitations and theoretical ambiguity. This study develops a price index for 185 metropolitan areas comprising about 70% of the US. labor force. Current Population Survey data for 1985-95 and data on site-speci’c amenities are used to estimate earnings differentials based on nominal wages, wa...

European collective bargaining systems have the reputation of imposing rigidity on the labor market, which leads to high unemployment, in particular when compared to the USA system. Portugal is one of the OECD economies with highest wage °exibility and lowest unemployment rate, despite having typically European labor market institutions |collective bargaining sets wages for unionized as well as...

This paper examines how returns to education are related to occupation choices. Specifically, I investigate the returns to attending a two-year college and a four-year college and how these returns to education differ from a blue-collar occupation to a white-collar occupation. To address the endogenous education and occupation choices, I use a finite mixture model. I show how the finite mixture...

Can Insider Power Affect Employment? Do firms reduce employment when their insiders (established, incumbent employees) claim higher wages? The conventional answer in the theoretical literature is that insider power has no influence on employment, provided that the newly hired employees (entrants) receive their reservation wages. The reason given is that an increase in insider wages gives rise t...

Interactions between Private and Public Sector Wages We examine the interactions between public and private sector wages per employee in OECD countries. The growth of public sector wages and of public sector employment positively affects the growth of private sector wages. Moreover, total factor productivity, the unemployment rate and the degree of urbanisation are also important determinants o...

This paper examines the role of differences in various non-cognitive traits, specifically the “big five”, positive and negative reciprocity, locus of control and risk aversion, for gender inequalities in wages and employment. Using the 2004 and 2005 waves of the German Socio-Economic Panel, evidence from regression and decomposition techniques suggests that, although non-cognitive traits influe...

In this paper we characterise the selection into parenthood for men and women separately and estimate effects of motherhood and fatherhood on wages. We apply propensity score matching exploiting an extensive high-quality register-based data set augmented with family background information. We estimate net effects of parenthood and find that mothers receive 7.4% lower average wages compared to n...

In this paper we combine the efficiency wage and union-firm bargaining approaches to wage determination to produce a unified model that encapsulates both. We find that combining efficiency wages and union-firm bargaining leads to higher wages, confirming an original insight of Summers. We also find that increases in bargaining power and monopoly power on the goods market have a stronger impact ...

In models recently published by several influential macroeconomic theorists, rigidity in the real wages that firms pay newly hired workers plays a crucial role in generating realistically large cyclical fluctuations in unemployment. There is remarkably little evidence, however, on whether employers’ hiring wages really are invariant to business cycle conditions. We review the small empirical li...

This paper argues that a risk averse of workers after-tax reservation wage the difference between her reservation wage and the tax needed to fund the unemployment insurance system when liquidity constraint binds exists and it is unique. The optimality of unemployment insurance based on the responsiveness of reservation wage to unemployment benefit shows the disincentive effect, i.e. higher unem...