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- Title
Do outside options drive wage inequalities in retained jobs? Evidence from a natural experiment.
- Authors
Lukesch, Veronika; Zwick, Thomas
- Abstract
We provide evidence that suggests that a reduction in outside wage options reduces wage increases in retained jobs. We use the natural experiment of a reform that reduced outside wage options for employees in deregulated crafts occupations in comparison to employees in not reformed crafts occupations. To avoid estimation biases from general reform effects on wages, we concentrate on employees active in crafts occupations who worked for employers in the industry and commerce sectors and exclude employees in the crafts sector. Four years after the reform, the wages of treated employees in deregulated crafts were 5 per cent lower than wages of employees in not reformed occupations (control group). The reform, therefore, led to wage differentiation between comparable employees. The wage effects are concentrated in employers with high general wage increases after the reform and they can be found even at individual employers.
- Subjects
INCOME inequality; WAGE increases; ESTIMATION bias; WAGES
- Publication
British Journal of Industrial Relations, 2024, Vol 62, Issue 1, p127
- ISSN
0007-1080
- Publication type
Article
- DOI
10.1111/bjir.12771