Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/20534
Authors: 
Pischke, Jörn-Steffen
Year of Publication: 
2004
Series/Report no.: 
IZA Discussion paper series 1268
Abstract: 
Labor market institutions, via their effect on the wage structure, affect the investment decisions of firms in labor markets with frictions. This observation helps explain rising wage inequality in the US, but a relatively stable wage structure in Europe in the 1980s. These different trends are the result of different investment decisions by firms for the jobs typically held by less skilled workers. Firms in Europe have more incentives to invest in less skilled workers, because minimum wages or union contracts mandate that relatively high wages have to be paid to these workers. I report some empirical evidence for investments in training and physical capital across the Atlantic, which is roughly in line with this theoretical reasoning.
Subjects: 
frictional labor markets
human capital
changes in wage inequality
JEL: 
J24
J23
E24
J31
E22
Document Type: 
Working Paper

Files in This Item:
File
Size
309.8 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.