Working Paper: NBER ID: w1717
Authors: Charles Brown
Abstract: "Standard rate" wage policies, under which all workers in a particular job receive the same wage, are common for blue-collar workers, especially those covered by collective bargaining agreements and those who work for large employers.This paper analyzes the impact of standard-rate wage setting.There are two important conclusions. First,a standard-rate rule which leaves the employer free to set the rate can either increase or reduce the quality of labor hired. Given empirically likely distributions of alternative wages for workers, it pushes employers toward the middle of the quality distribution. Second, union standard-rate policies allow union?ununion differences in wages for workers of a given qualityto exist even when union employers are free to alter the quality of their workforces.
Keywords: wage setting; labor quality; unions
JEL Codes: J31; J51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| standard-rate wage setting (J38) | labor quality (J24) |
| distribution of alternative wages (J31) | standard-rate wage setting (J38) |
| union standard-rate policies (E64) | wage differences among workers (J31) |
| standard-rate policies (J78) | quality of labor employed (J24) |
| standard-rate policies (J78) | hiring practices (M51) |