Interdependencies in Labor Markets
|1. Keynes -- rigid wages assumed as inherent fact over the business cycle.||1a. Market.
1b. Market plus government control
of aggregate demand.
|1a. Unemployment equilibrium. No self
1b. Full employment
|2. Work this out for monetarist theory and institutional labor economics.|
|3. Assume labor is ordinary
incompatible use good.
Productivity known and fixed
(Thurow p.297 or Williamson
|3a. Market competition
3b. Market with unions
|3a. Rigid wage (but usual theory predicts
flexible wage, so situation poorly specified.
3b. Rigid wage
|4. The production function --
Different kinds of labor are complements
with no individual MP.
Info. Cost. MVP unknown and variable.
|4a. Market with SOP1 Wage contour
4b. Market with SOP2 Team incentives
4c. Worker owned, SOP3
See Pencavel & Craig
4d. Sex discrimination allowed/or not
4f. Comparable worth (Bergmann)
|4a. Distr. X among team members
4b. Distr. Y
4c. Distr. Z
4d. Women paid less.
4f. Nurses paid as much as janitors.
|5. Skills endogenously learned
(See PPPC Ch. 6, p. 129-30; Thurow p. 198)
MC=0 when skill transference is
Joint with product manufacture.
|5a. Mkt. With seniority rights
[What if combined with flexible wages
over the business cycle (bonus)
a la Japan?] Loyalty
5b. Mkt. Competition with flexible wages.
|5a. Learning occurs. Training costs low.
Countries like Japan are more productive.
5b. Less learning, higher training costs.
|6. Interdependent preferences.
Productivity variable and embedded
in human mind.
Fairness affects productivity?
People care about relative wages.
|6. What are the structural alternatives?
Does wage flexibility considered above
as a performance variable become a
Social capital creation.
|6. Effect on marginal product?
(Thurow p. 202 & 204.)
|7. Econ. of scale (See PPPC,
Thurow pp. 197-8
How relate to No.4 above?
Can't pay a wage to all = MVP.
|7. What rights (standard operating
procedures) control this
Customary wage contours.
|7. Allocation of surplus?
i.e. wage levels for similar quality labor
Quality labor in different firms with
|8. Inherently lazy or instinct of
Labor as a consumption good.
|8a. Status vs. Incentives, Piece work,
8b. Worker Coop.
|Supervision and training cost.
Degree of alienation.
\810-ssp\labor-mkt.wpd November 1999