Modeling the Effects of Industrial Structure on Wages and Benefits

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Abstract
Previous research on the role of industrial structure in the earnings determination process has focused on concentration and unionization as barriers to competitive market forces. This focus has tended to discount the role of other dimensions of industrial structure in the process of earnings determination. Previous research has also been limited by a restrictive focus on manufacturing industries. This article addresses these issues by estimating a model of industrial structure and earnings that systematically considers dimensions of industrial structure other than concentration and unionization and that is estimated across all industries. The principal findings include an affirmation of the powerful roles of trade unions and government involvement in influencing both wages and benefits and the discovery of a negative effect of market concentration. These findings are interpreted within a resource perspective that views organizational structure as providing a source of potential power for both workers and owners in their struggle over improving earnings versus holding down labor costs. It is hoped that these findings will stimulate theoretical debate in this field as well as motivating the development of data sets that are more adequate for evaluating the role of industrial structure across all industries.