O-ring wage inequality
2007 (English)In: Economica, ISSN 0013-0427, E-ISSN 1468-0335, Vol. 74, no 295, 515-536 p.Article in journal (Refereed) Published
We examine the relationship between technological complexity and wage inequality, using an efficiency wage model that adopts Kremer's O-ring production function. The model has two main implications: (i) when the production process becomes more complex, within-task wage differences increase between plants, and (ii) between-task wage differences increase within plants. We study these implications empirically using industry data providing quantified information on the complexity of the tasks. We find that wages increase in all the tasks with the complexity of the production process. Furthermore, the relationship between the complexity of the tasks and wages is steepest in the firms with more complex production processes.
Place, publisher, year, edition, pages
2007. Vol. 74, no 295, 515-536 p.
Research subject Economics
IdentifiersURN: urn:nbn:se:uu:diva-108556DOI: 10.1111/j.1468-0335.2006.00553.xISI: 000247904700007OAI: oai:DiVA.org:uu-108556DiVA: diva2:236322