This book explores the relationship between job duration, seniority, and earnings. Drawing on research in labor economics, the authors provide a comprehensive guide to understanding the factors that influence earnings over time. Economists and researchers will find this book to be an essential resource. This work has been selected by scholars as being culturally important, and is part of the knowledge base of civilization as we know it. This work is in the "public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant.

The distribution of income, the rate of pay raises, and the mobility of employees is crucial to understanding labor economics. Although research abounds on the distribution of wages across individuals in the economy, wage differentials within firms remain a mystery to economists. The first effort to examine linked employer-employee data across countries, The Structure of Wages:An International Comparison analyzes labor trends and their institutional background in the United States and eight European countries. A distinguished team of contributors reveal how a rising wage variance rewards star employees at a higher rate than ever before, how talent becomes concentrated in a few firms over time, and how outside market conditions affect wages in the twenty-first century. From a comparative perspective that examines wage and income differences within and between countries such as Denmark, Italy, and the Netherlands, this volume will be required reading for economists and those working in industrial organization.

Selected papers from a conference held in honour of Professor Dale T. Mortensen upon the occasion of his 65th birthday. It includes papers on some of Professor Dale T. Mortensen's current research topics, as well as additional theoretical papers, and micro- and macro-econometric papers.

WAGES are of prime importance in any advanced economy such as ours. They affect us all far more than seems evidenced in our concern about them. Everyone buys wages, in a sense, with every purchase he makes. And three-fourths of all incomes in the United States represent pay for work done in the employ of another. So nearly every one of us is on both sides of the wage exchange, in one way or another. We all know in a general way that wages have been rising for a long time in this country, but there is evidence aplenty that the economic principles which apply to wage problems are not well understood. Probably they are no better understood now than in the early thirties when measures adopted to combat the depression proved to be such colossal failures. Fearing another depression like that which followed World War I, we now seem enmeshed in chronic and progressive inflation, which Lenin once said was a sure and simple way to destroy the capitalist system. Our “prosperity” now seems to be riding on the horns of a dilemma that will surely end in the destruction of capitalism unless we can resolve this problem which in large measure is a wage problem. I shall deal with the wage problem in a manner that may seem oversimplified. Basic principles always have a way of seeming simple. Yet if they be principles, they can no more be oversimplified than can the law of gravity or the listing of chemical elements be oversimplified. What is needed in our complex society of millions of products sold by millions of business units to over a hundred million traders through billions of transactions each year is to get back to simple economic principles. These are working tools for solving problems that seem more complex than they really are. Two Roadblocks In helping another person to resolve this wage problem, it seems to me that two roadblocks to his understanding may first have to be removed. They obstruct a thorough insight into the wage problem. One roadblock is the difference between money wages and real wages, which results in serious misconceptions. In a period of inflation such as we have long been enduring, or of deflation, a comparison of money wages in two separate years tells you no more about their relative worth than would a comparison of a daily wage in the United States with that of Chile — $10 as compared with 5,000 pesos, for instance. Money wages must first be converted into real wages before we can see their patterns of change. The other roadblock has to do with the effect of unions on wages. If you were to describe an elephant to a person who has never seen one and who had never even seen a picture of one, you probably would not describe a flea and then say that an elephant doesn’t look like that. This would not be very helpful unless the person believed that an elephant looked like a flea. In the case of unions, there seems to be a firm and widespread belief about their effect on wages such that this question must be dealt with at the outset. So we shall start there. When speaking of wages and what makes them rise, the meaning will be the over-all level of wages — the general welfare, in that sense. To speak otherwise of wages, such as wage rates for one or a few persons, would involve special situations which are not the object of this discussion. A bank robber might succeed in gaining a high wage for his hour of work; a few persons, through power and special privilege, might likewise gain some short-time advantages at the expense of the others who work. But such gains of some wage earners at the expense of other wage earners are not the aim or meaning of this analysis of why wages rise.

One of the most stylized facts in labor economics is the finding that wages tend to rise with job duration but what is the role of productivity between this relation? Intuitively, it seems rather unspectacular that experienced workers' earnings are higher than otherwise comparable junior workers', but economic literature offers three competing theories explaining this phenomenon. A unique database from a single professional sports industry, covering the past decade of player performance and wages in the National Basketball Association (NBA) is used to test the superiority of one model over others in explaining players' upwards sloping age-earnings profiles. The empirical results show little evidence of the notion that player wages are solely determined on the basis of their productivity. Findings are rather in accordance with shirking and matching ideas: Returns to tenure are found to be significant but it's magnitude is reduced when the spurious bias - stemming from OLS - is controlled for. The fact that tenure remains considerably large - unaffected of productivity - but is simultaneously mitigated due to job match specific effects, is in harmony with incentive and matching arguments.Joachim Prinz, born 1971, studied economics at the University of Trier, Copenhagen Business School and American University, Washington D.C. From 1999-2001 he was a scientific co-worker at the University of Greifswald, Department of Economics. Since 2001 University of Witten/ Herdecke.

A deep question in economics is why wages and salaries don't fall during recessions. This is not true of other prices, which adjust relatively quickly to reflect changes in demand and supply. Although economists have posited many theories to account for wage rigidity, none is satisfactory. Eschewing "top-down" theorizing, Truman Bewley explored the puzzle by interviewing--during the recession of the early 1990s--over three hundred business executives and labor leaders as well as professional recruiters and advisors to the unemployed. By taking this approach, gaining the confidence of his interlocutors and asking them detailed questions in a nonstructured way, he was able to uncover empirically the circumstances that give rise to wage rigidity. He found that the executives were averse to cutting wages of either current employees or new hires, even during the economic downturn when demand for their products fell sharply. They believed that cutting wages would hurt morale, which they felt was critical in gaining the cooperation of their employees and in convincing them to internalize the managers' objectives for the company. Bewley's findings contradict most theories of wage rigidity and provide fascinating insights into the problems businesses face that prevent labor markets from clearing. Table of Contents: Acknowledgments 1. Introduction 2. Methods 3. Time and Location 4. Morale 5. Company Risk Aversion 6. Internal Pay Structure 7. External Pay Structure 8. The Shirking Theory 9. The Pay of New Hires in the Primary Sector 10. Raises 11. Resistance to Pay Reduction 12. Experiences with Pay Reduction 13. Layoffs 14. Severance Benefits 15. Hiring 16. Voluntary Turnover 17. The Secondary Sector 18. The Unemployed 19. Information, Wage Rigidity, and Labor Negotiations 20. Existing Theories 21. Remarks on Theory 22. Whereto from Here? Notes References Index Reviews of this book: In Why Wages Don't Fall During A Recession, [Truman Bewley] tackles one of the oldest, and most controversial, puzzles in economics: why nominal wages rarely fall (and real wages do not fall enough) when unemployment is high. But he does so in a novel way, through interviews with over 300 businessmen, union leaders, job recruiters and unemployment counsellors in the north-eastern United States during the early 1990s recession...Mr. Bewley concludes that employers resist pay cuts largely because the savings from lower wages are usually outweighed by the cost of denting workers' morale: pay cuts hit workers' standard of living and lower their self-esteem. Falling morale raises staff turnover and reduces productivity...Mr. Bewley's theory has some interesting implications...[and] has a ring of truth to it. --The Economist Reviews of this book: This contribution to the growing literature on behavioral macroeconomics threatens to disturb the tranquil state of macroeconomic theory that has prevailed in recent years...Bewley's argument will be hard for conventional macroeconomists to ignore, partly because of the extraordinary thoroughness and honesty with which he evidently conducted his investigation, and the sheer volume of evidence he provides...Although Bewley's work will not settle the substantive debates related to wage rigidity, it is likely to have a profound influence on the way macroeconomists construct models. In particular, the concepts of morale, fairness, and money illusion are almost certain to play a big role in macroeconomic theory. His demonstration that there exist in reality simple, robust behavioral patters that cannot plausibly be founded on traditional maximizing behabior also raises the prospect of a more empirically oriented, more behavioral macroeconomics in the future. --Peter Howitt, journal of Economic Literature Reviews of this book: I think any scholar interested in labour markets and wage determination should read this well-written, lively, and highly stimulating book...[It] provides a fresh view and a lot of complementary background knowledge about how experienced people in the field see the employment relationship and what is actually crucial. Knowledge of this sort is all too rare in economics, and Truman Bewley's truly impressive study can serve as a role model for future investigations. --Simon G'chter, Journal of Institutional and Theoretical Economics To call this book a breath of fresh air is an understatement. The direct insights are fascinating, and Truman Bewley's use of them is sharp and insightful. Labor economists and macroeconomists have a lot to think about. --Robert M. Solow, Nobel Laureate, Institute Professor of Economics, Emeritus, Massachusetts Institute of Technology Truman Bewley set out to conduct a handful of interviews with business executives to gain some theoretical inspiration, and his project blossomed into over 300 interviews with business people, labor leaders and consultants. He is truly the accidental interviewer of economics. Time and again, he found that workers behave like people, not atomistic, selfish economic agents. His insights will engage and enrage economic theorists and empiricists for years to come. --Alan Krueger, Bendheim Professor of Economics and Public Affairs, Princeton University

This innovative text grounds the economic analysis of labor markets and employment relationships in a unified theoretical treatment of labor exchange conditions. In addition to providing thorough coverage of standard topics including labor supply and demand, human capital theory, and compensating wage differentials, the text draws on game theory and the economics of information to study the implications of key departures from perfectly competitive labor market conditions. Analytical results are consistently applied to contemporary policy issues and empirical debates. Provides a coherent theoretical framework for the analysis of labor market phenomena Features graphical in-chapter analysis supplemented by technical material in appendices Incorporates numerous end-of-chapter questions that engage the analysis and anticipate subsequent results Includes innovative chapters on employee compensation methods, market segmentation, income inequality and labor market dynamics Balances theoretical, empirical and policy analysis