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The structure of wages in what should be a competitive labour market

Machin, Stephen and Manning, Alan ORCID: 0000-0002-7884-3580 (2002) The structure of wages in what should be a competitive labour market. CEPDP (532). London School of Economics and Political Science. Centre for Economic Performance, London, UK. ISBN 0753015536

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This paper examines the structure of wages in a very specific labour market, for care assistants in residential homes for the elderly on England''s "sunshine coast". This sector corresponds closely to economists'' notion of what should be a competitive labour market as: (i) there are a large number of small firms undertaking a very homogeneous activity in concentrated geographical areas; and (ii) the workers they employ are not unionized, nor are they covered by any minimum wage legislation so that there are effectively no external constraints on the wage-setting process. We find that the structure of wages does not, in important respects, resemble what we would expect in a competitive labour market. We find there is a small amount of wage dispersion within firms and a correspondingly large amount between firms. And, the wage dispersion that is present does not seem to be closely related to the productivity related characteristics of workers. We propose a test of the hypothesis that unobserved labour quality can explain our findings and reject it. The paper concludes with a discussion of other possible explanations of the patterns in our data.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 2002 the authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HD Industries. Land use. Labor
JEL classification: J - Labor and Demographic Economics > J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining
Date Deposited: 29 Jul 2008 09:49
Last Modified: 16 May 2024 11:27

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