Showing papers on "Spillover effect published in 1976"

Spillovers in Wage Determination in U.S. Manufacturing Industries

Abstract: HE main objective of this paper is to suggest an econometric technique for identifying and testing the existence and structure of the spillover effects in the wage determination process. The main notion underlying the socalled spillovers hypothesis is that the wage settlements achieved by the ill' industry's bargaining units reflect not only the traditional labor and product market forces affecting the it"' industry but also the wage settlements achieved by the jth industry's bargaining units. The terminology used to describe this process has varied considerably-pattern wage-adjustment, key-bargains, spillovers, imitation and dynamic market-interdependence.1 The research strategy underlying this paper is to decompose the wage changes into two components -a deterministic component that can be explained in terms of exogenous labor and product market forces, industry specific or economy-wide, and a residual component. Does this residual wage component stand for purely random effects or does it represent some spillover effects? One can study the covariance structure of the residual wage vector to make inferences about the dynamic interdependence in wage movements between different industries. The plan of the paper is as follows: In section I a brief review of the literature is presented. In section II the underlying theoretical model is explained and the estimates of the empirical model are presented. In section III some simulation experiments of the spillover structure are presented. In section IV the conclusions and policy implications are discussed. 1. Literature Review