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A test of competitive labor market theory: The wage structure among care assistants in the south of England

Machin, S; Manning, A; (2004) A test of competitive labor market theory: The wage structure among care assistants in the south of England. IND LABOR RELAT REV , 57 (3) 371 - 385. Green open access

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Abstract

This paper examines the structure of wages in a very specific labor market: care assistants in residential homes for the elderly on England's "sunshine coast." This sector corresponds closely to economists' notion of what should be a competitive labor market, both because it has a large number of small firms undertaking a very homogeneous activity in a concentrated geographical area, and because the workers are neither unionized nor covered by any minimum wage legislation, so that there are effectively no external constraints on the wage-setting process. The authors find that the wage structure deviates in important respects from what would be expected in a competitive labor market. In particular, wage dispersion is small within firms, but large between firms; and the wage dispersion that is present does not seem to be closely related to workers' productivity-related characteristics. A test rejects the hypothesis that unobserved labor quality can explain these findings.

Type: Article
Title: A test of competitive labor market theory: The wage structure among care assistants in the south of England
Open access status: An open access version is available from UCL Discovery
Keywords: JOB SENIORITY, UNEMPLOYMENT, WORKERS, EARNINGS, PRODUCTIVITY, EQUILIBRIUM, EXPERIENCE, DISPERSION, EMPLOYERS, PROFILES
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
URI: https://discovery.ucl.ac.uk/id/eprint/16895
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