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Accounting for the Causes and Consequences of Industrial Employment Shift
Author(s) -
COSTRELL ROBERT M.
Publication year - 1994
Publication title -
industrial relations: a journal of economy and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.61
H-Index - 57
eISSN - 1468-232X
pISSN - 0019-8676
DOI - 10.1111/j.1468-232x.1994.tb00344.x
Subject(s) - productivity , economics , compensation (psychology) , drag , labour economics , wage , order (exchange) , regime shift , growth accounting , demographic economics , macroeconomics , total factor productivity , psychology , ecology , physics , finance , ecosystem , biology , psychoanalysis , thermodynamics
This paper analyzes the 1981‐87 employment shifts away from high‐wage industries, using a shift‐share framework, coupled with a two‐sector general equilibrium model. I find that (1) the shift‐share drag on average pay growth was unprecedented in the postwar period, on the order of 1/4‐1/3 percent per year, for hourly compensation; and (2) output shifts, including the trade deficit, were a more important cause of the employment shifts than were rapid productivity growth in manufacturing and other contracting industries. As a result, the shift‐share drag on average pay growth should be interpreted primarily as coming out of aggregate productivity growth, rather than as a redistributional phenomenon.