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Are Manufacturing Jobs Still Good Jobs? An Exploration of the Manufacturing Wage Premium
This paper explores the factors behind differences in wages between manufacturing and other sectors. Using data from the Current Population Survey, we find that the manufacturing wage premium--the additional pay a manufacturing worker earns relative to a comparable nonmanufacturing worker--disappeared in recent years and that the erosion of the premium has primarily affected workers employed in production occupations, who experienced a wage decline of 2.5 percentage points since the 1990s relative to other workers in production occupations. While the demographic composition and other worker ...
Unions in a frictional labor market
Revised May 2016. We analyze a labor market with search and matching frictions in which wage setting is controlled by a monopoly union. Frictions render existing matches a form of firm-specific capital that is subject to a hold-up problem in a unionized labor market. We study how this hold-up problem manifests itself in a dynamic infinite horizon model with fully rational agents. We find that wage solidarity, seemingly an important norm governing union operations, leaves the unionized labor market vulnerable to potentially substantial distortions because of hold-up. Introducing a tenure ...