Wages, Profits and Rent-sharing

Download or read book Wages, Profits and Rent-sharing written by David G. Blanchflower and published by . This book was released on 1992 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper uses CPS data from 1964 to 1985 to test for the existence of rent-sharing in US tabor markets, Using an unbalanced panel from the manufacturing sector, and random-effects and fixed-effects specifications, the paper finds that changes in wages are explained by movements in lagged levels of profitability and unemployment. The results appear to be consistent with rent-sharing theory (or a labor contract framework with risk-averse firms) and to be inconsistent with the competitive labor market model. The paper estimates the unemployment elasticity of pay at approximately -0.03, and the profit elasticity of pay at between 0.02 and 0.05.