TY  - JOUR
AU  - Borjas,George J.
AU  - Ramey,Valerie A.
TI  - Market Responses to Interindustry Wage Differentials
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7799
PY  - 2000
Y2  - July 2000
UR  - http://www.nber.org/papers/w7799
L1  - http://www.nber.org/papers/w7799.pdf
N1  - Author contact info:
George J. Borjas
Harvard Kennedy School
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-1393
Fax: 617/495-9532
E-Mail: gborjas@harvard.edu

Valerie A. Ramey
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-2388
Fax: 858/534-7040
E-Mail: VRAMEY@UCSD.EDU
AB  - This paper examines the link between interindustry wage differentials and subsequent growth of industry variables such as employment, GDP and labor productivity. We find that industries that paid higher than average wages in 1959 experienced significantly lower employment growth and GDP growth in the subsequent 30 to 40 years, while at the same time experiencing higher-than-average growth in the capital-labor ratio and in labor productivity. We argue that the evidence is best explained by a non-competitive model of the interindustry wage structure, as both firms and the market respond to the wage rigidity implied by the long-run persistence of the interindustry wage structure.
ER  -