Kennedy, Thomas E. (Professor of economics)
M.A. (Master of Arts)
Department of Economics
Weiss; Leonard W; Industrial concentration; Wages
A considerable amount of research has been compiled on the relationship between market concentration and wages. In most of the studies, a positive association between the two is hypothesized. Numerous theoretical explanations have been offered about a positive wage/concentration pattern. This thesis attempts to explore those theories as well as test one version of the relationship. Using data at the industry level obtained mostly from the Census of Manufacturers of 1977, the wage/concentration and wage/unionization relationship are found to be positive. However, when an interacting variable, concentration multiplied by unionism, is included in the regression the effects of the two variables are found to be more complex. The interaction term is positive and highly significant. The coefficients on the concentration and unionism variables become negative and insignificant. Coefficients on the concentration and unionism variables reflect the effect of the given variable when the other variable takes on a zero value (e.g., the effect of concentrati when no unions are present). These findings suggest that both these factors in the absence of the other might have a minimal and statistically insignificant depressing effect on wages The positive sign of the interaction term is contrary to a previous study done by Leonard W. Weiss entitled "Concentration & Labor Earnings" which can be found in the Arne rican Economic Re vi ew, Volume 1, March 1966. This finding is significant because it suggests the concentration and unionization variables reinforce rather than substitute for each other in generating higher wages.
Peters, Carol A., "The effect of market concentration on labor earnings" (1984). Graduate Research Theses & Dissertations. 5527.
v, 35 pages
Northern Illinois University
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