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N° 2004-12 |
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| September 2004 |
| Regulation and Wage Premia |
Sébastien Jean
Giuseppe Nicoletti |
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| The paper explores the link between wage
premia and the determinants of product market rents. We first estimate 2-digit
industry premia from 1996 wage earnings data by category of worker (age, sex,
education and type of contract) in 10 European countries, the US and Canada. Using
industry-specific regulation data, we then look at the effects of restrictions
to competition and public ownership on wage premia in non-manufacturing industries,
where regulatory conditions vary the most and are better documented. We find that,
given workers' bargaining power, anticompetitive regulations significantly increase
wage premia, reflecting the presence of rents. However, premia decline in industries
dominated by legal public monopolies, suggesting a hump-shaped relationship between
regulation and premia. We show that the hump-shape is consistent with a model
of non-pecuniary rent-sharing between workers and a populist public monopolist. |
Abstract |
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| Regulation, competition, wage premia, rent-sharing, panel data |
Keywords |
| J31, L51, C23 |
JEL classification |
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