Do outside options drive wage inequalities in retained jobs? Evidence from a natural experiment

Veronika Lukesch, Thomas Zwick*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

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.
Original languageEnglish
Pages (from-to)127-153
Number of pages27
JournalBritish Journal of Industrial Relations
Volume62
Issue number1
Early online dateOct 2023
DOIs
Publication statusPublished - Mar 2024

Keywords

  • LABOR-MARKET OUTCOMES
  • ENTRY REGULATION
  • SEARCH
  • ENTREPRENEURSHIP
  • INSTITUTIONS
  • DISPERSION
  • INSURANCE
  • MODEL

Fingerprint

Dive into the research topics of 'Do outside options drive wage inequalities in retained jobs? Evidence from a natural experiment'. Together they form a unique fingerprint.

Cite this