NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Efficiency Wages and the Wage Structure

Alan B. Krueger, Lawrence H. Summers

NBER Working Paper No. 1952 (Also Reprint No. r1183)
Issued in May 1989
NBER Program(s):   LS   EFG

This paper examines differences in pay for equally skilled workers in

different industries. The major finding is that there is substantial

dispersion in wages across industries, even after allowing for measured and

unmeasured labor quality, working conditions, fringe benefits, transitory

demand shocks, threat of unionization, union bargaining power, firm size and

other factors. Some direct evidence in favor of efficiency wage theories is

presented. The evidence suggests that industry wage differentials are

successful in eliciting better performance through reduced turnover and

increased effort.

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Published: Krueger and Summers, "Efficiency Wages and the Inter-Industry Wage Structure," from Econometrica, Vol. 56, No. 2, March 1988, pp. 259-293.

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