Benito, Andrew (1997) Wage premia in the British labour market. PhD thesis, University of Warwick.

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Abstract

The doctoral dissertation considers the existence of non-competitive wage premia in Great
Britain. The research aims to confront the predictions of certain approaches to wage
determination with microeconomic data for Great Britain. In so doing, the analysis is
mindful of the importance of economic theory in order to provide a basis for empirical work
undertaken, which in turn should ideally be focused upon policy-oriented issues.
In addressing the issue of Wage Premia in the British Labour Market, the Thesis also
acknowledges the importance of employing large microeconomic datasets in order to
understand an issue which is essentially concerned with microeconomic behaviour. To this
end, the Thesis employs data at the level of the individual, the establishment and the firm in
the British labour market, carrying out both cross-sectional and longitudinal analyses. Noncompetitive
wages have significant implications for performance alongside wages
themselves. Partly as a result, a concern of the author was to go beyond estimation of wage
equations with additional explanatory variables, in order to consider these aspects of
performance directly. The empirical work reflects this.
In a sense, the body of research traces the three stages of development of the
empirical literature on non-competitive wages. This begins with a study of the wages
received by individual workers according to their industry affiliation. Competitive theory
predicts that contingent upon levels of human capital and non-pecuniary benefits, individuals
working in different industries should earn equal amounts: a law of one-price prevails. The
analysis therefore attempts to detect the presence of non-competitive rents. Further, the
notion that such differentials are non-competitive suggests a relation between their magnitude
and industry profitability. The study represents the first attempt to relate industry
differentials to measures of industry ability-to pay for Great Britain.
Second, a cross-sectional study of turnover and wages is concerned with the issue of
whether an employer may voluntarily pay wages above a market-clearing level in order to
prevent employees from quitting the place of work. The paper provides the first
microeconomic evidence of wage as well as union effects upon turnover at British
establishments.
Third, the issue of whether the forces of wage determination may differ between
levels of the firm is considered, focusing upon the employee-executive distinction. Two
chapters, employing a large panel of UK companies consider this issue by examining the
determination of company-level wages (Chapter 5) and company financial performance
(Chapter 6).
At the time of writing, one of the most contentious issues in the area of wage
determination in the British labour market refers to the pay of public sector employees and
how this compares to that of the private sector. In Chapter 7, among the first individual-level
estimates of the differential associated with employment in the public sector for Great Britain
are provided.
Finally, the Thesis draws out the policy implications of efficiency wages. Efficiency
Wage theory represents one of the main schools of thought regarding the existence of noncompetitive
wage premia. The issues which arise strike at the core of labour market and
industrial policy-making and include unemployment and minimum wage legislation.

Item Type:	Thesis (PhD)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor
Library of Congress Subject Headings (LCSH):	Wages -- Great Britain, Labor market -- Great Britain, Efficiency wage theory, Competition -- Great Britain
Official Date:	June 1997
Institution:	University of Warwick
Theses Department:	Department of Economics
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Cowling, Keith ; Stewart, Mark, Prof.
Sponsors:	European Commission. Community Research and Development Information Service
Extent:	x, 191 leaves
Language:	eng

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