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Work, power and wages: Bargaining power and labor segmentation in the United States, 1870-1980
Abstract
The persistence of wage differentials--differentials that are inconsistent with both human capital theory and conventional Marxian theories of the working class--has led economists to reexamine the structure and historical development of labor markets and the labor process in the U.S. The central thesis of this dissertation is that such economic divisions result from differences in (implicit and explicit) bargaining power, and are the basis for the unequal returns to human capital that characterize segmented labor markets. In this dissertation, three forms of bargaining power are identified: (1) implicit individualistic power based on institutional attributes such as firm-specific human capital, (2) implicit collective power based on solidarity along lines of race, ethnicity and gender, and (3) explicit collective power exercised via unions. These forms of bargaining power are closely associated with occupation. Theoretical models are developed that identify the relationship between workers' power and wage determination. The models, which combine efficiency wage theory with non-cooperative game theory, show that the return to human capital is a function of bargaining power. Thus, groups of occupations with different degrees of bargaining power will exhibit unequal returns to human capital, i.e. they exhibit the characteristics of segmented labor markets. These models provide an explanation of labor segmentation that is microfounded in the process of wage determination. The theoretical wage models are tested econometrically, using wage data for individuals in 1970. The results substantiate the hypothesis that power-based occupational groups constitute distinct segments of the labor market. Limitations on U.S. wage data preclude a direct test of this hypothesis in the pre-War period. As an alternative, data from Massachusetts in the 1900s is used to econometrically demonstrate that occupational power attributes are good predictors of occupational earnings. Statistics identifying divisions among U.S. wage earners are constructed for 1870, 1910, 1950 and 1980. The resulting quantitative history of workers' power differs significantly from previous historical works, which posit labor segmentation as a characteristic of the post-World War II period. The results show that power-based divisions among wage earners existed in 1910, and strongly suggest that labor segmentation is a fundamental characteristic of the modern U.S. economy.
Subject Area
Labor economics|Economic history|Economic theory|Labor relations
Recommended Citation
Wagman, Barnet David, "Work, power and wages: Bargaining power and labor segmentation in the United States, 1870-1980" (1991). Doctoral Dissertations Available from Proquest. AAI9132929.
https://scholarworks.umass.edu/dissertations/AAI9132929