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Interindustry variation in salaries : an empirical study Appelbe, Trent Woods 1969

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INTERINDUSTRY VARIATION I N S A L A R I E S : AN EMPIRICAL STUDY  by TRENT WOODS APPELBE B.A..; U n i v e r s i t y  of B r i t i s h Columbia,  I96I  A THESIS SUBMITTED I N PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS  i n t h e Department o f Economics  We a c c e p t t h i s t h e s i s  as c o n f o r m i n g t o t h e r e q u i r e d  THE UNIVERSITY OF B R I T I S H COLUMBIA S e p t e m b e r , 1969  standard  In presenting t h i s t h e s i s  i n p a r t i a l f u l f i l m e n t of the  r e q u i r e m e n t s f o r an advanced degree a t t h e U n i v e r s i t y o f B r i t i s h Columbia., I a g r e e t h a t  the Library  available  f o r r e f e r e n c e and Study.  I further  agree t h a t  thesis  permission f o r extensive copying of t h i s  f o r s c h o l a r l y p u r p o s e s may be g r a n t e d b y t h e Head o f my  Department pr by h i s r e p r e s e n t a t i v e s . copying or p u b l i c a t i o n not  of this thesis  be a l l o w e d w i t h o u t my w r i t t e n  Department of  ECONOMICS  The U n i v e r s i t y o f B r i t i s h C o l u m b i a V a n c o u v e r 8, C a n a d a Date  s h a l l make i t , f r e e l y  S e p t e m b e r 22, 1969  I t i s understood f o rfinancial  permission.  gain  that sh9.ll  ABSTRACT  The p u r p o s e o f t h i s s t u d y was t o e m p i r i c a l l y investigate salaries  the determinants of the v a r i a t i o n i n w h i t e - c o l l a r  among U n i t e d S t a t e s  m a n u f a c t u r i n g and m i n i n g i n -  dustries. A m o d e l was f o r m u l a t e d , h y p o t h e s i z i n g industry  that  salary variation i s primarily a function  monopoly power, c a p i t a l - l a b o u r regression  inter-  of i n d u s t r y  r a t i o and g r o w t h .  Linear  a n a l y s i s was t o be u s e d t o t e s t t h e m o d e l w i t h  f r o m t h e U.S. B u r e a u o f t h e C e n s u s a n d t h e I n t e r n a l  data  Revenue  Department. C o n c e p t u a l and s t a t i s t i c a l i n measuring the industry and  variables.  p r o b l e m s were Although  encountered  concentration  b a r r i e r s t o e n t r y w e r e t o be u s e d t o g e t h e r i n m e a s u r i n g  monopoly power, i n t h e f i n a l  analysis  that  The m e a s u r e o f i n d u s t r y  h a d t o be r e l i e d u p o n .  i t was  concentration  b a s e d u p o n c h a n g e i n e m p l o y m e n t , t u r n e d o u t t o be for  i t s intended  i n an i n d u s t r y  results indicated  that  t h e amount o f  h a s no e f f e c t u p o n t h e l e v e l o f s a l a r i e s .  P r o b l e m s o f m u l t i c o l l i n e a r i t y made I t i m p o s s i b l e capital-labour  inappropriate  purpose.  The r e g r e s s i o n capital  growth,  and c a p i t a l r e q u i r e m e n t s e f f e c t s .  i  t o isolate the  ii  The e v i d e n c e f u r t h e r concentration the  indicated that  i s a factor i n explaining  r e s u l t s were n o t d e c i s i v e  industry  salary rates.  enough t o a l l o w  any f i r m  However, conclusions  c o n c e r n i n g t h e e f f e c t s o f monopoly power, p a r t i c u l a r l y i n v i e w of the f a c t t h a t  concentration  variable.  i s an i m p e r f e c t m e a s u r e o f t h i s . .  T h u s , one a s s e r t i o n o f t h e h y p o t h e s i s was t e n t a t i v e l y accepted, another rejected, inconclusive.  and f o r t h e t h i r d ,  the evidence  was  CONTENTS  Page L I S T OF TABLES . . .'  . . .  iv v  L I S T OF FIGURES  CHAPTER I. II. III.  INTRODUCTION THE MODEL  .  1  '. . .  8  DATA SOURCES AND MEASUREMENT OF REGRESSION VARIABLES  IV. V.  18  REGRESSION RESULTS . . . . •  36  CONCLUSIONS  50  BIBLIOGRAPHY  52  APPENDICES I. II.  MATCHING OF INDUSTRY DATA DETAILED REGRESSION RESULTS  iii  . . . . . . . .  56 65  L I S T OP TABLES  Page TABLE , I. II.  Industry Variables  21  Occupational.Groupings  f o r Regression  Analysis III.  33  Multiple Regression  Results - Coefficients  of I n d u s t r y V a r i a b l e s IV.  Comparison w i t h Regression  4-0 Results of  Weiss' Study V.  Basic  Industry Data  - VI.  Detailed Regression  VII.  Regression  Results  47 .  59  Results f o rUnionization  iv  6? ...  69  L I S T OF FIGURES  Page FIGURE I.  Wage D e t e r m i n a t i o n U n d e r . M o n o p o l y a n d Competition  14  v  CHAPTER I  INTRODUCTION  The earnings in  subject of i n t e r i n d u s t r y differences  o f s a l a r i e d employees has r e c e i v e d l i t t l e  economic l i t e r a t u r e .  mination  i n the  Most o f t h e r e s e a r c h o n t h e d e t e r -  o f e a r n i n g s has c e n t e r e d  wages o f h o u r l y p a i d w o r k e r s . some s c a t t e r e d  attention  attempts  about t h e a n a l y s i s  In addition,  to explain  of the  t h e r e have been  the v a r i a t i o n i n executive  salaries. Such s t u d i e s ,  however, a r e o f l i m i t e d v a l u e  uting t o a general analysis important that  the  study  unionization,  d i f f e r e n t .classes  of the earnings  t o be o f l e s s I n t e r e s t a's  of s a l a r i e d employees.  Converse-  the existence of d i s c r e t i o n a r y p r o f i t s should exert i t s  maximum I n f l u e n c e u p o n t h e e a r n i n g s less  of employees.  which i s given considerable a t t e n t i o n i n  o f wage l e v e l s , i s l i k e l y  a determinant ly,  There e x i s t  f a c t o r s c o n t r i b u t i n g t o the determination of earnings  are unique f o r these  Notably,  of s a l a r y l e v e l s .  i n contrib-  effect f o rthe rest  none f o r wage  of top executives,  having  o f s a l a r i e d e m p l o y e e s and l i t t l e  or  1  earners.  ^ D i s c r e t i o n a r y p r o f i t s h a v e b e e n d e f i n e d as " t h e d i f f e r e n c e b e t w e e n a c t u a l p r o f i t s and minimum p r o f i t s demanded", O.E. W i l l i a m s o n , " M a n a g e r i a l D i s c r e t i o n a n d B u s i n e s s B e h a v i o r " , A m e r i c a n E c o n o m i c R e v i e w . V o l . 53J> No. 5 (December 1963) j> p. 1035This subject i s explored i n g r e a t e r det3.il i n Chapter I I .  - 2 -  T h u s , a gap e x i s t s i n t h a t t h e r e ' h a s b e e n no t h o r o u g h empirical  study  salary levels. earners  of the i n d u s t r y c h a r a c t e r i s t i c s that I n view of the trend  determine  away f r o m u n i o n i z e d  towards s a l a r i e d employees, knowledge i n t h i s  wage  area  2 becomes i n c r e a s i n g l y i m p o r t a n t .  Hence, t h i s  i n v e s t i g a t e t h e economic v a r i a b l e s t h a t  study  will  influence the inter-  industry salary structure. To ' a c c o m p l i s h salaried  employees w i l l  this,  U.S. C e n s u s d a t a  be m a t c h e d w i t h d a t a  o f U.S. m a n u f a c t u r i n g and m i n i n g i n d u s t r y . the  input f o r multiple regressions  variables that The Chapter IV. be  are responsible  This w i l l  of  section provide  t o determine the i n d u s t r y  r e s u l t s of the regressions  variation.  are presented  i n t r o d u c t o r y chapter  d e v o t e d t o a summary o f t h e l i t e r a t u r e  study  on a c r o s s  f o r any s a l a r y  The r e m a i n d e r o f t h i s  on e a r n i n g s  in will  relevant to this  and t o t h e i m p l i c a t i o n s o f t h e f i n d i n g s o f t h e s t u d y .  C h a p t e r I I e x p l a i n s t h e t h e o r e t i c a l model w h i c h t h e r e g r e s s i o n analysis the b a s i s  i s to test,  and C h a p t e r I I I e x a m i n e s t h e d a t a t h a t i s  of the study.  I n C h a p t e r V, t h e c o n c l u s i o n s  are put  forth.  I n t h e p e r i o d f r o m 19^-7 - 19^5 w h i t e - c o l l a r w o r k e r s i n t h e U.S. ( p r o f e s s i o n a l , m a n a g e r i a l , o f f i c e a n d s a l e s w o r k e r s ) i n c r e a s e d b y 9-6 m i l l i o n w h i l e b l u e - c o l l a r w o r k e r s ( c r a f t s m e n , o p e r a t i v e s and l a b o u r e r s ) were d e c r e a s i n g b y 4 m i l l i o n . I n 1900 w h i t e - c o l l a r w o r k e r s w e r e 17.6 p e r c e n t o f t h e l a b o u r f o r c e and 44.5 p e r c e n t i n 1965. ' F i g u r e s f r o m Manpower R e p o r t o f t h e P r e s i d e n t and A R e p o r t on Manpower R e q u i r e m e n t s , R e s o u r c e s , U t i l i z a t i o n and T r a i n i n g , U n i t e d S t a t e s D e p a r t m e n t o f L a b o r , M a r c h , 1966.  A.  Other Studies  on I n t e r a n d u s t r i e s D i f f e r e n c e s  There has been c o n s i d e r a b l e i n t e r i n d u s t r y v a r i a t i o n i n wage r a t e s .  research  i n Earnings  done o n t h e  The o b j e c t i v e o f t h e s e  s t u d i e s h a s b e e n t o r e l a t e wage l e v e l s t o c e r t a i n k e y i n d u s t r y variables. A study  b a s e d on t h e h y p o t h e s i s  determined by a f i r m s 1  D a v i d R. B r o w n . labour total  " a b i l i t y t o p a y " was made b y  Ability  t o p a y was m e a s u r e d b y s i x v a r i a b l e s --  productivity, concentration, c o s t s , male - female r a t i o ,  i n employment.,  t h a t wage l e v e l s a r e  ratio  seasonal  of labour stability  Analysis i n d i c a t e d that a l l of these  v a r i a b l e s e x c e p t g r o w t h , were s i g n i f i c a n t  costs t o and g r o w t h industry  in- determining  wage  levels. Studies by Garbarino,  Allen,  and G o l d n e r and Ross  i n v e s t i g a t e d t h e i n d u s t r y f a c t o r s a f f e c t i n g wage c h a n g e s , than absolute  wage l e v e l s .  The f i n d i n g s o f t h e s e t h r e e  rather studies  i n d i c a t e t h a t h i g h degrees o f u n i o n i z a t i o n and c o n c e n t r a t i o n a r e  D.R. B r o w n , E x p e c t e d A b i l i t y t o P a y a n d I n t e r i n d u s t r y Wage S t r u c t u r e i n M a n u f a c t u r i n g " , I n d u s t r i a l and L a b o r R e l a t i o n s R e v i e w , V o l . 16, No. 1 ( O c t o b e r , 1962), p p . 45 - 62. J.W. G a r b a r i n o , "A T h e o r y o f I n t e r i n d u s t r y Wage S t r u c t u r e V a r i a t i o n " , Q u a r t e r l y J o u r n a l o f E c o n o m i c s , V o l . 64, No. 3; ( A u g u s t , 1 9 6 5 ) , p p . 282 - 305-~ W. G o l d n e r a n d A.M. R o s s , " F o r c e s A f f e c t i n g t h e I n t e r i n d u s t r y Wage S t r u c t u r e " , Q u a r t e r l y J o u r n a l o f E c o n o m i c s , V o l . 64, No. 2 (May, 1950), p p . 254 - 289. B.T. A l l e n , """"Market C o n c e n t r a t i o n and Wage I n c r e a s e : U.S. Manufacturing, 194? - 1964", I n d u s t r i a l a n d L a b o r R e l a t i o n s R e v i e w , V o l . 21, No. 1 ( A p r i l , 1968), p p . 353 - 555.  _ 4 -  two  major f a c t o r s  results not  i n promoting  are of l i m i t e d  effects  unionization,  However,  these  a p p l i c a b i l i t y t o t h i s -study as t h e y  deal w i t h the a c t u a l l e v e l The  r i s i n g wages.  do  o f wages.  o f t h e s e two  variables,  concentration  and  u p o n wage l e v e l s , w e r e a l s o i n v e s t i g a t e d i n an  5 empirical  s t u d y by Weiss.  these  v a r i a b l e s were s i g n i f i c a n t  two  Regression  results  indicated  that  i n e x p l a i n i n g wage l e v e l s  f o r most o c c u p a t i o n a l g r o u p s t e s t e d b u t  o n l y i n the absence  of  o t h e r i n d u s t r y v a r i a b l e s and p e r s o n a l c h a r a c t e r i s t i c s .  When  individual personal characteristics  age,  r a c e and the  such  a r e a of r e s i d e n c e were i n t r o d u c e d i n t o the r e g r e s s i o n s ,  significance  disappeared.  of the  i n d u s t r y v a r i a b l e s i n most  Weiss concludes  concentrated  i n d u s t r i e s get  there i s l i t t l e  a b e t t e r q u a l i t y o f w o r k e r and  o r no m o n o p o l y p r o f i t  be  drawn, e x c e p t  is  a complex p r o c e s s . succeed  accruing to labour. no  firm conclusions  can  p e r h a p s t h a t t h e d e t e r m i n a t i o n o f wage l e v e l s No m o d e l w i t h one  o r two  simple v a r i a b l e s  s t u d i e s on t h e d e t e r m i n a t i o n o f e x e c u t i v e compen-  s a t i o n h a v e b e e n f e w e r i n number and more l i m i t e d popular  hence  i n e x p l a i n i n g wage v a r i a t i o n .  The  One  cases  t h a t i n p a y i n g h i g h e r wages,  In surveying this l i t e r a t u r e ,  can  as e d u c a t i o n ,  e m p i r i c a l e x e r c i s e has  in  scope.  b e e n t o compare f i r m  size  -^L.W. W e i s s , " C o n c e n t r a t i o n and L a b o r E a r n i n g s " , A m e r i c a n E c o n o m i c R e v i e w , V o l . 56, No. 1 ( M a r c h , 1966),  pp. 96~^~117..  - 5 -  and  firm profitability  as v a r i a b l e s  explaining  the  level  of  6 executive, incomes. f i r m s i z e i s the  The  results  to  model.  s a l a r i e s as  that  of t h e s e  more I m p o r t a n t e x p l a n a t o r y v a r i a b l e .  f i n d i n g , however, i s of l i t t l e credible  indicate  I t i s not  interest  In the  surprising that  i t is likely  This  a b s e n c e of  firm size  is  a proxy f o r such v a r i a b l e s  monopoly power, c a p i t a l - l a b o u r  ratio,  two,  a  related as  profitability  and  c o m p e n s a t i o n of the  top  unionization. I n another study, the e x e c u t i v e was  f o u n d t o be  s i g n i f i c a n t l y and  t o m o n o p o l y p o w e r , as m e a s u r e d b y  positively  c o n c e n t r a t i o n and  related  entry  7 barriers.  This finding  d e a l s o n l y with, the ever, the that,  was  executive i n each f i r m . tested  modern c o r p o r a t i o n ,  i s b a s e d on  the  e x e c u t i v e s have the  How-  theory discre-  p o w e r t o d i s t r i b u t e p r o f i t s "to e m p l o y e e s as w e l l  stockholders. indicate  s i n g l e top  hypothesis that  i n the  tionary  i s of l i m i t e d i n t e r e s t h e r e f o r i t  that  The i t may  fact that be  the  a line  findings  support t h i s  of t h o u g h t w o r t h  as  to  theory  pursuing.  D.R. R o b e r t s , E x e c u t i v e C ompensat i o n , I l l i n o i s , F r e e P r e s s o f G l e n c o e , 1959, p. 50, 62>. J.W. McGuire, J.S.Y. C h i n , and A.O. E l b i n g , " E x e c u t i v e s , S a l e s and P r o f i t s " , A m e r i c a n E c o n o m i c R e v i e w , V o l . 52, No. 4 ( S e p t e m b e r , 1962), pp. 7 5 3 " 61. O.E. Williamson, Managerial D i s c r e t i o n B u s i n e s s B e h a v i o r " , American Economic Review, V o l . (December, 1 9 6 3 ) , pp. 1033 1057.  and 53, No.  5  - 6 -  B.  I m p l i e a t i o n s of T h i s The  c o u l d he  operate  p o s s i b l e i m p l i c a t i o n s f o r economic t h e o r y  drawn f r o m the  several.  Study  f i n d i n g s of the p r e s e n t  I f i t i s found t h a t f i r m s possessing at g r e a t e r than c o m p e t i t i v e  c o s t s , due  study  that  are  m o n o p o l y power to  higher  s a l a r y p a y m e n t s , t h e n c o n c l u s i o n s - c o u l d 'be d r a w n a b o u t t h e t o s o c i e t y of i m p e r f e c t of income f r o m the salaried  competition.  T h e r e w o u l d be  T h e r e w o u l d a l s o be  instance, i n h i s estimate  m o n o p o l y , assumed t h a t t h e r e  to  the  a misallocative effect,  g r e a t e r t h a n t h a t commonly a t t r i b u t e d t o m o n o p o l y . for  a transfer  consumers of the monopoly p r o d u c t  employees.  Harberger,  of t h e ' m i s a l l o c a t i v e c o s t e x i s t s no  cost  of  difference i n costs  g  under monopoly or c o m p e t i t i o n . incur higher  I f i n fact monopolistic  c o s t s , t h e n the m i s a l l o c a t i o n of resources  m o n o p o l y w i l l be  due  to  even g r e a t e r t h a n Harberger c a l c u l a t e d .  Such a f i n d i n g would a l s o c a s t l i g h t upon the managerial  d i s c r e t i o n and  behavior.  I f p o t e n t i a l monopoly p r o f i t s salaries,  are  t h e n i t c o u l d be  r e l a t i o n s h i p between s a l a r i e s  power w o u l d l e n d s u p p o r t  to the theory  firm  absorbed by  of p r o f i t  Failure  and  A.C. H a r b e r g e r , " M o n o p o l y Power and R e s o u r c e A l l o c a t i o n " , A m e r i c a n . E c o n o m i c R e v i e w , V o l . 44, No. 2 :r  monopoly  maximization.  8 (May, 1954), pp. 77 ~ ^7.  the  said that  management i s e x e r c i s i n g i t s d i s c r e t i o n o v e r p r o f i t s . a significant  opposing  p r o f i t m a x i m i z i n g t h e o r i e s of  f i r m i n the form of h i g h e r  to find  firms  - 7 -  Finally, interindustry  i f evidence  v a r i a t i o n i n salaries, conclusions could  drawn about e x e c u t i v e If  i s found of s i g n i f i c a n t  q u a l i t y and m o b i l i t y  s a l a r y v a r i a t i o n was  between  f o u n d t o be c o m p l e t e l y  personal characteristics  of the employees, then  s a i d that the i n d u s t r i e s  paying  an employee of h i g h e r q u a l i t y . interindustry be' u n i f o r m  v a r i a t i o n , then  and m o b i l i t y  high.  higher  be  industries.  accounted f o r by i t could  be  s a l a r i e s are g e t t i n g  I f there  i s no s i g n i f i c a n t  e m p l o y e e q u a l i t y c a n be s a i d t o  CHAPTER I I  THE MODEL  The h y p o t h e s i s  t o he t e s t e d i s t h a t f o r g i v e n  o c c u p a t i o n a l groups the i n t e r i n d u s t r y v a r i a t i o n i n s a l a r i e s is  a f u n c t i o n p r i m a r i l y of three  i n d u s t r y v a r i a b l e s --  monopoly  p o w e r , g r o w t h , and t h e c a p i t a l - l a b o u r r a t i o . A.  Monopoly  Power  The r e a s o n f o r b e l i e v i n g t h a t i n d u s t r i e s p o s s e s s i n g m o n o p o l y p o w e r , and h e n c e t h e p o t e n t i a l f o r m o n o p o l y pay h i g h e r tion.  salaries,  lies  i n the theory  There I s c o n s i d e r a b l e  management o f t h e modern shareholders  support  profits,  of managerial  discre-  f o r the view t h a t the  corporation i s responsible to the  f o r a minimum l e v e l  t h a t l e v e l has c o n s i d e r a b l e  of p r o f i t s  only,  and b e y o n d  discretion i n dealing with  The phenomenon t h a t i s r e s p o n s i b l e f o r t h i s ventional p r o f i t maximizing theory  departure  of f i r m behavior  profits.' f r o m con-  i s the  ^O.E. W i l l i a m s o n , The E c o n o m i c s o f D i s c r e t i o n a r y Behavior: Managerial Objectives i n A Theory of the Firm, E n g l e w o o d C l i f f s , P r e n t i c e - H a l l , 19b~5~. C a r l K a y s en, '""The Corporation: How Much Power? What S c o p e ? " , i n The C o r p o r a t i o n i n M o d e r n S o c i e t y , E d w a r d S. Mason, e d . , C a m b r i d g e , H a r v a r d U n i v e r s i t y P r e s s , 1959W.J. B a u m o l , B u s i n e s s B e h a v i o r , V a l u e and G r o w t h , New Y o r k , M a c m i l l a n , 1959-  - 8 -  _ 9-  separation  o f o w n e r s h i p f r o m management.  Over t h e l a s t  d e c a d e s t h e t r e n d h a s "been away f r o m c o r p o r a t e o r more p o w e r f u l  individuals.  with the vast majority  several  o w n e r s h i p b y one  Today t h e change i s a l m o s t  of corporate  stock  total  i n t h e hands o f  2 financial  institutions  and s m a l l  investors.  Both these  are p r i m a r i l y i n t e r e s t e d i n maximizing t h e i r stock market d e a l i n g s . corporations. acceptable  Only i f earnings  level  this profit.level interference profits  Neither  fall  i s maintained,  through o f managing  b e l o w a c e r t a i n minimum be a r o u s e d .  Provided  management e n j o y s t h e  of the f i r m .  a b o v e t h e minimum l e v e l  discretion  i s i n the business  canthese stockholders  free operation  income  groups  I t f o l l o w s t h a t any  c a n be d e a l t w i t h  at the  o f management. T h u s , one o b v i o u s ivay f o r t o p management t o e x e r c i s e  this  d i s c r e t i o n would be t o pay t h e m s e l A r e s  higher  salaries.  There i s r e a s o n t o b e l i e v e t h a t t h i s w o u l d i n t u r n have a positive  e f f e c t upon t h e e a r n i n g s  o f w h i t e - c o l l a r employees  2 F o r e v i d e n c e on t h e change f r o m p r i v a , t e o w n e r s h i p t o management c o n t r o l o f U.S. c o r p o r a t i o n s , s e e R . J . L a r n e r , "The 200 L a r g e s t N o n f i n a n e i a l C o r p o r a t i o n s " , A m e r i c a n E c o n o m i c R e v i e w , V o l . 56, No. 4, P a r t I ( S e p t e m b e r , 1966), p p . 777 - T&7.  3 ^Baumol i n d i c a t e s t h a t t h e minimum a c c e p t a b l e p r o f i t l e v e l i s determined by competitive conditions I n the c a p i t a l market. I t must p e r m i t s u f f i c i e n t l y h i g h d i v i d e d p a y m e n t s a n d reinvestment i n the f i r m t o ensure t h a t i n v e s t o r s are content to continue holding the stock. B a u m o l , op. c i t . , p. ^1.  10 -  in the lower stratas.  Another way would be to pay generous  salaries for the purpose of purchasing employee goodwill and public approval.  Firms with considerable monopoly power might  be particularly conscious of the value of a good public image. It also follows that the function of management in hiring and retaining good employees is simplified through the paying of higher .salaries.  The pressure to keep the salary budget down  w i l l be less than in-competitive industries and hence these costs might be allowed to creep up either deliberately or through inattention. 1.  Measurement of Monopoly Power For the purposes of this study, monopoly power w i l l  be measured by concentration and barriers to entry.  Generally  the higher the concentration ratio the stronger w i l l be the recognition of mutual dependence among firms.  Hence concen-  tration is a good measure of the ability of firms to t a c i t l y agree to charge a monopoly price. i n f a l l i b l e measure.  Obviously i t is not an  Other industry variables such as the  homogeneity of the product, the price leadership situation,  ^H.A. Simon, "The Compensation of Executives," Sociometry, Vol.- 20, No. 4 (December, 1957),.pp. 32 - 35. ^The theory of managerial discretion is concerned with the ability of the firm to reap monopoly profits, rather than the action of doing so. Management may pass on discretionary profits .to the consumer as well as to the employees, hence less than the profit maximizing price would be charged. The objective of such strategy might be to maximize sales or else to purchase public approval.  - 11 -  the  s t a t e o f i n t e r - f i r m c o m m u n i c a t i o n s and t h e t h r e a t o f new  entrants, the  a l lwill  industry.  have an e f f e c t upon t h e p r i c i n g p o l i c y o f  Of t h e s e , t h e t h r e a t o f e n t r y I s t h e o n l y  v a r i a b l e that lends In  itself  Joe B a i n ' s  t o measurement.  a u t h o r i t a t i v e w o r k on t h i s  subject,  6 b a r r i e r s to entry are c l a s s i f i e d i n t o four types. product  differentiation,  a d v a n t a g e s .and c a p i t a l  economies of s c a l e ,  requirements.  b a r r i e r , which i n c l u d e s such patent least  absolute  The a b s o l u t e  cost  cost  e s t a b l i s h e d f i r m a d v a n t a g e s as  c o n t r o l and m o n o p o l i z a t i o n important  These are  of resource  s u p p l i e s , i s the  o f t h e f o u r and p r o b a b l y t h e most d i f f i c u l t t o  7 measure.  Hence, a n a t t e m p t  other three types attempt  will  of-barriers,  be o n l y p a r t i a l l y  explained i n detail  Harvard  will  be made o n l y t o m e a s u r e t h e  although  as i t t u r n s o u t , t h i s  successful.  This w i l l  be  i n Chapter I I I .  ^ J . S . B a i n , B a r r i e r s t o New C o m p e t i t i o n , C a m b r i d g e , U n i v e r s i t y P r e s s , , 1963, pp. 167 - 169. 7  Ibid.,  p.  149.  B.  I n d u s t r y Growth I n d u s t r y growth i s thought  higher salaries  f o r two r e a s o n s .  higher p r o f i t s . industry, supply until  t o he a d e t e r m i n a n t  Firstly,  g r o w t h u s u a l l y means  When demand i s r i s i n g f o r t h e p r o d u c t  e n t r y o f new f i r m s i s n e v e r i n s t a n t a n e o u s .  i s t o a g r e a t e r or l e s s e r degree i n e l a s t i c . supply catches  their  ability  salaries ees  second reason  t h a t growth r e s u l t s  p e r f e c t l y mobile,  determining  the growth i n d u s t r y w i l l  higher salaries w i l l  Manage-  on h i g h e r profits. i n higher  Thus, t h e p r i c e  have t o pay h i g h e r  Of more i m p o r t a n c e  in  be t h e l a g i n s u p p l y o f ,  t o demand f o r , w o r k e r s t r a i n e d  growth i n d u s t r y . until  normal  To t h e e x t e n t t h a t w o r k e r s a r e n o t  s a l a r i e s t o e n t i c e t h e m t o move.  up  i nthe  f o l l o w s f r o m t h e i n c r e a s e d d e r i v e d demand f o r e m p l o y -  i n the growth i n d u s t r y .  relative  Thus,  t o charge higher p r i c e s .  i n t h e same way i t does w i t h m o n o p o l y The  Hence,  higher than  ment h a s t h e d i s c r e t i o n t o e x p e n d t h e s e p r o f i t s salaries  o f an  up w i t h demand, t h e f i r m s p r o d u c i n g  growth I n d u s t r y are i n a p o s i t i o n t o reap p r o f i t s through  of  i n the s k i l l s  of the  of the workers w i l l  be b i d  s u p p l y c a t c h e s up w i t h demand. Industry growth w i l l  employment o v e r  a ten-year  be m e a s u r e d b y c h a n g e i n  period. •  - 13 -  C.  C a p i t a l Labour  Ratio  Those i n d u s t r i e s w i t h a h i g h c a p i t a l l a b o u r be  expected t o pay h i g h e r  wages and s a l a r i e s  ratio  s a l a r i e s because t h e pressure  down w i l l  be w e a k e r .  may  t o keep  Payroll costs w i l l  be  o f l e s s c o n c e r n t o management c o m p a r e d t o c o s t s o f s e c u r i n g capital  or of purchasing  e q u i p m e n t t h a n t h e y w o u l d be i n a more  labour .intensive industry. intensive w i l l disruptions probable  Those f i r m s t h a t are. c a p i t a l  be more c o n c e r n e d w i t h a v o i d i n g i n e f f i c i e n c y o r  due t o e m p l o y e e d i s s a t i s f a c t i o n .  t h a t s a l a r y p a y m e n t s will This variable w i l l  Hence, i t i s  be more g e n e r o u s .  be m e a s u r e d b y t h e r a t i o  of t o t a l  a s s e t s t o number o f e m p l o y e e s .  D.  Conflicting It  Theory  may be t r u e t h a t , b e c a u s e o f t h e i r l a r g e  f i r m s w i t h monopoly power i n t h e p r o d u c t  size,  market a l s o possess  8 monopsonistic  power i n p u r c h a s i n g  labour.  In this  situation,  n e o c l a s s i c a l theory would lead t o the c o n c l u s i o n that tic  f i r m s pay lower,  marginal of l a b o u r  n o t h i g h e r , wages.  revenue product i n determining  monopolis-  The f i r m e q u a t e s t h e  of labour t o the marginal t h e q u a n t i t y t o employ.  f a c t o r cost For the  8 J o a n R o b i n s o n , among o t h e r s , b e l i e v e d t h a t monopsony power m i g h t o f t e n e x i s t a t t h e l e v e l o f t h e f i r m . See J o a n R o b i n s o n , The E c o n o m i c s o f I m p e r f e c t C o m p e t i t i o n , L o n d o n , M a c m i l l a n , 1961, p. 296. ' —  14  -  monopolist-monopsonist both  -  these  u n d e r c o m p e t i t i o n ; h e n c e he w i l l  values w i l l  be l e s s  p a y l o w e r wages.  than  This i s  shown i n F i g u r e 1 w h e r e , u n d e r c o m p e t i t i o n , a q u a n t i t y OC o f l a b o u r i s e m p l o y e d a t a wage o f OD.  The m o n o p o l i s t  employs  o n l y OM u n i t s o f l a b o u r a t wage OP.  Price  of Labour  ,  MFC  Q  Supply  C  M  •Q  uan  "ki"ky  o r >  Labour  FIGURE 1 Wage D e t e r m i n a t i o n and C o m p e t i t i o n  Under Monopoly  T h i s p r e d i c t i o n o f L o w e r wages u n d e r m o n o p o l y i s b a s e d upon t h e e x i s t e n c e o f an upward s i p p i n g s u p p l y curve to the firm.  This  i n t u r n depends m a i n l y upon t h e a s s u m p t i o n  of c o n s i d e r a b l e i m m o b i l i t y of l a b o u r . among w h i t e - c o l l a r w o r k e r s , to  ensure e l a s t i c  of labour  It islikely  a sizeable proportion,  supply curves, w i l l  be  mobile.  that, sufficient  - 15 -  •Neoclassical  theory also  of p r o f i t m a x i m i z a t i o n . chapter,  depends upon t h e a s s u m p t i o n  I t has been a l l e g e d  that i n general the behavior  diverges from s t r i c t  earlier  i n this  of m o n o p o l i s t i c f i r m s  p r o f i t maximization.  Under  these  c o n d i t i o n s t h e d e t e r m i n a t i o n o f wages and s a l a r i e s c a n n o t be completely  explained by marginal p r o d u c t i v i t y Probably  a more s e r i o u s t h r e a t t o t h i s  proposed model o f s a l a r y mobility  of workers.  The e x t e n t  workers.  study's  determination i s the question of  v a r i a t i o n w i l l be i n v e r s e l y of w h i t e - c o l l a r  theory.  of i n t e r i n d u s t r y  salary  r e l a t e d t o t h e degree of m o b i l i t y  A s u f f i c i e n t l y h i g h degree of  m o b i l i t y may c a u s e t h e s a l a r y v a r i a t i o n t o be  statistically  insignificant.  E.  Unionization No s t u d y o f t h e d e t e r m i n a t i o n o f e a r n i n g s  the v a r i a b l e its  effect  of u n i o n i z a t i o n .  Is d i f f i c u l t Salaried  significant  extent.  However, f o r s a l a r i e d  can ignore employees,  t o assess.  employees a r e n o t themselves One s t u d y  unionization Q  of w h i t e - c o l l a r  potential.  This figure  on t h e s u b j e c t  unionized to a estimates  w o r k e r s a t a b o u t 11 p e r c e n t o f  Is roughly confirmed  b y a more  thorough  q A d o l f S t u r m t h a l , W h i t e - C o l l a r Trade Unions: Contemporary Developments i n I n d u s t r i a l S o c i e t i e s , Urbana, U n i v e r s i t y of- I l l i n o i s Pres"s^ 1966^ p] 3387 v  - 16 -  study that  estimates unionization figures f o rthe w h i t e - c o l l a r  groups t h a t  are analyzed i n t h i s  18 p e r c e n t f o r C l e r i c a l Professional, Technical for Sales  Workers.  purposes of t h i s  1 0  study.  The f i g u r e s a r e :  and K i n d r e d W o r k e r s , 9 p e r c e n t f o r and K i n d r e d W o r k e r s , a n d 12 p e r c e n t  These f i g u r e s a r e n e g l i g i b l e , f o r t h e  study, because the m a j o r i t y  of these  unionized  w h i t e - c o l l a r workers are not i n manufacturing i n d u s t r i e s . of them a r e I n t h e r e t a i l are m u s i c i a n s ,  railway  trade  or telephone industry,  c l e r k s or post o f f i c e workers.  Most  or they None o f  t h e s e o c c u p a t i o n s o r i n d u s t r i e s a r e w i t h i n t h e scope of t h i s study. The here.  p r o b l e m o f u n i o n i z a t i o n , however, does n o t end  I t i s possible  t h a t t h e degree o f u n i o n i z a t i o n  o f wage  e a r n e r s i n an i n d u s t r y may a f f e c t t h e s a l a r y l e v e l s o f t h e w h i t e - c o l l a r workers.  Unfortunately,  neither  theory nor  e m p i r i c a l w o r k h a s much t o s a y a b o u t t h i s p r o b l e m . on t h e i m p o r t a n c e o f t h i s  Conclusions  r e l a t i o n s h i p c a n o n l y be t e n t a t i v e l y  d r a w n f r o m w h a t i s known a b o u t t h e e f f e c t o f u n i o n i z a t i o n  upon  i n t e r i n d u s t r y wage l e v e l s . One o f t h e most c o m p l e t e s t u d i e s  on u n i o n i s m and  wages i n d i c a t e s t h a t u n i o n i s m i s n o t a m a j o r f a c t o r I n e x p l a i n i n g t h e i n t e r i n d u s t r y wage s t r u c t u r e .  I t i s s t a t e d t h a t most o f  B. S o l o m o n and R.K. B u r n s , " U n i o n i z a t i o n o f W h i t e C o l l a r Employees: Extent., P o t e n t i a l and I m p l i c a t i o n s " , J o u r n a l o f B u s i n e s s , V o l . 36, No. 2., ( A p r i l , 1963) , pp. 151.  - 17 -  the  wage d i s p e r s i o n  other f a c t o r s . interindustry  wage s t r u c t u r e ,  of n e g l i g i b l e  s a l a r i e s among  I t c a n b e assumed t h a t  be e v e n l e s s .  Influence of unionism w i l l  be a f a c t o r  must he a c c o u n t e d f o r by-  I f u n i o n i s m has o n l y a m i n o r e f f e c t upon t h e  1 1  upon s a l a r i e s w i l l the  among i n d u s t r i e s  i t s effect  T h u s , a l t h o u g h some t e s t s o f  be a t t e m p t e d ,  i t i s assumed t o  importance i n the determination of  industries.  H . G . L e w i s , U n i o n i s m and R e l a t i v e Wages i n t h e United States. C h i c a g o , U n i v e r s i t y o f C h i c a g o P r e s s , ±9b~3, 11  ^ o i i  '—'—-—  CHAPTER I I I  DATA SOURCES AND MEASUREMENT OF REGRESSION VARIABLES  A.  General  D e s c r i p t i o n of Data  Figures personal  f o r salary, occupation,  characteristics  are reported  i n d u s t r y and v a r i o u s  f o r 180,000 i n d i v i d u a l s  i n t h e l / l O O O s a m p l e o f t h e i 9 6 0 U.S. C e n s u s o f P o p u l a t i o n . This  data  relevant  i s a v a i l a b l e o n m a g n e t i c t a p e and when m a t c h e d w i t h t h e industry v a r i a b l e s , provides The  turing the  study  and m i n i n g  covers  a cross  industries,  the regression input.  s e c t i o n o f 6 3 U.S. m a n u f a c 2  a l l unregulated.  i n d u s t r y v a r i a b l e s i s drawn from t h r e e  g r o w t h and c o n c e n t r a t i o n a r e t a k e n article. but  1  This  The d a t a f o r  sources.  Figures f o r  from the appendix of Weiss'  appendix i s not p r i n t e d w i t h t h e j o u r n a l  may b e o b t a i n e d  from t h e author.  3  article,  A d v e r t i s i n g s a l e s and  4 assets  d a t a come f r o m U.S. income t a x data..  Finally,  figures  "'"Bureau o f t h e C e n s u s , U.S. C e n s u s o f P o p u l a t i o n and Housing: i 9 6 0 l / l O O O and l/lOOOO, Two N a t i o n a l S a m p l e s o f t h e Population of the United States. 2 See •5 See  Table I f o r a l i s t  of these  industries.  F o o t n o t e i n W e i s s , _op. c i t . , p.  I n t e r n a l Revenue S e r v i c e , S t a t i s t i c s 1959-1960,  pp. 58  -  60.  -  18  -  101. o f Income  f o r number o f e m p l o y e e s a n d number o f e s t a b l i s h m e n t s f r o m t h e 1 9 5 8 U.S. It years  and o f M i n i n g . i n that  f o r w h i c h t h e v a r i o u s d a t a i s r e p o r t e d do n o t  exactly  D  the  The f i g u r e s f r o m t h e p o p u l a t i o n c e n s u s a r e f o r 1 9 5 9 ;  while those remaining  i s evident that there  taken  i s a discrepancy  coincide.  c e n s u s a r e f r o m 1 9 5 8 . The  from the m a n u f a c t u r i n g  i n d u s t r y f i g u r e s are r e p o r t e d f o r the  periods ending then,  Censuses o f M a n u f a c t u r i n g  are  accounting  between J u l y 1959 and June i 9 6 0 .  the average r e p o r t i n g p e r i o d f o r these  Presumably  figures  i s the  year 1959- . Another minor d i s c r e p a n c y e x i s t s because f i g u r e s are f o r 1959; w h i l e a l l other data f o r the refers t oA p r i l  i960,  the time  first  individuals  a t w h i c h t h e c e n s u s was t a k e n .  Thus, i f an i n d i v i d u a l changed o c c u p a t i o n or the  salary  f o u r months o f i 9 6 0 ,  or industry i n 1959,  t h e d a t a would be i n e r r o r .  A more s e r i o u s p r o b l e m w i t h t h e data, i s t h a t some f i g u r e s are reported f o r a d e t a i l e d but  others  are a v a i l a b l e  industry classification,  o n l y f o r a major i n d u s t r y breakdown.  T h i s problem a r i s e s because the p o p u l a t i o n census industries not  according t o a unique three d i g i t  correspond  t o the Standard  Industrial  classifies  c o d e t h a t does  Classification  5 ^Bureau o f the Census, U n i t e d S t a t e s Census o f Manufacturers: 1 9 5 8 , Volume I . B u r e a u o f t h e Census, U n i t e d S t a t e s C e n s u s o f M i n e r a l I n d u s t r i e s : 1 9 5 8 , Volume I .  -  c o d i n g u s e d "by t h e comparable source attempt  other sources. of earnings  industries.  other to  on t h e t h r e e d i g i t b a s i s .  I shows t h e r e s u l t s  s e e n t h a t c o n c e n t r a t i o n and  f o r a l l 63  S i n c e t h e r e e x i s t s no  d a t a , t h e r e i s no c h o i c e b u t  t o match i n d u s t r y f i g u r e s Table  be  20  of t h i s matching.  growth f i g u r e s are  However, f o r t h e  other  I t can-  available  variables,  f i g u r e s f o r t h e m a j o r i n d u s t r y g r o u p s must be u s e d f o r t h e more d e t a i l e d c l a s s i f i c a t i o n s . industry c l a s s i f i c a t i o n  While  seem u n r e a s o n a b l e ,  be m e a n i n g f u l .  for instance, to attribute  a d v e r t i s i n g - s a l e s .or 0340113,1-13,13our r a t i o s t o the  individual textile Further detail  variables  B.  I t does the  for a l l textiles  industries. on t h e d e v e l o p m e n t o f t h e i n d u s t r y  i s given i n Appendix I.  D e t a i l e d ' D e s c r i p t i o n of V a r i a b l e s F o l l o w i n g i s a d e t a i l e d account  and  inconsistency i n  o b v i o u s l y d e t r a c t s from the q u a l i t y  the data, the v a r i a b l e s should s t i l l not  this  content  regressions.  o f . t h e measurement  o f e a c h o f t h e v a r i a b l e s t o be u s e d i n t h e  of  TABLE I INDUSTRY VARIABLES  IND 126 136 146 156  NAME Metal Mining Coal Mining C r u d e P e t . & N a t . Gas Non-Metalic Mining L u m b e r a n d Wood  206 207 208 209  Sawmills, Planing M i l l s , M i s c . Wood P r o d u c t s F u r n i t u r e and F i x t u r e s  237 238 239  Millwork  0.0003 0.0009 0.'0020 0.0038  45.53 n . o 4 22.85 20.18  '1886. 284. 386. 323.  102 74 98 117  o.oo4o o.oo4o o.oo4o 0.0122  10.29 10.29 10.29 7.05  120 168 108 82  0. 0. 0. 0. 0.  ADV  58 29 32 27  102 44 112 114  38 15 21 15  59 32 29 . 39 •  $'000  $'000  i4i, i4i, i4i. 24l,  Products  Glass and Glass Products Cement, C o n c r e t e , Gypsum a n d P l a s t e r S t r u c t u r a l Clay Products P o t t e r y and R e l a t e d P r o d u c t s Misc. Non-Metalic Minerals Primary  CAP/REQS  GROWTH  Products  S t o n e . C l a y and G l a s s 216 217 218 219 236  CAP-LAB  CONC  48  . .  155  0070 0070 0070 0070 0070  73 73 73 73 73-  580, 580, 580, 580, 580,  23-97 23.97 23-97  4077. 4077. 4077.  15. 15. 15. 15. •15.  Metal Industries  B l a s t Furnaces, S t e e l Works, E t c , O t h e r P r i m a r y I r o n and S t e e l Primary, Non-Ferrous Metals  56 49 53  94 io4 139  0.oo44 o.oo44 0.oo44  ro  TABLE  IND  NAME Fabricated Metal  246 247 248  Except  CAP-LAB '  CAP/REQS,  CONC  GROWTH  ADV  38 39 36  111 135 l 8 l  O.OO89 0.0089 O.OO89  11.15 11.13 11.13  78 163 131  0.0105 0.0105 0.0105  14.94 14.94 14.94  675. 675. 675.  $'000  $'000  Products  C u t l e r y , Hand T o o l s , H a r d w a r e F a b r i c a t e d S t r u c t u r a l Metal Prods. Misc. Fab. Metal Products Machinery  (Continued)  '  475. 475. 475.  Electrical  256 257 258  Farm M a c h i n e r y O f f i c e , C o m p u t i n g & A c c t g . Mach. Misc. Machinery  44 72 39  259  Electrical  51 "  176  0.0173  12.74  1767.  267  Motor V e h i c l e s and Eqpt.  72  100  0.0081  78.67  7254.  258 144 120  0.0028 0.0028 0.0028  9.69 9.69 • 9.69  2242. 2242. 2242,  51 77 45  222 137 85  . 0.0226 0.0226 0.0226  15.33 15.33 15.33  30  103  Machinery  T r a n s p o r t a t i o n Equipment Except 268 269 276-  286 287 289 296  Auto  A i r c r a f t and P a r t s S h i p and Boat B u i l d i n g and R e p a i r R a i l r o a d and Misc. Transp. Eqpt. Instruments  and R e l a t e d  Mfgrs.  52 45 • 52  .  Products  P r o f e s s i o n a l Eqpt. and S u p p l i e s • P h o t o g r a p h i c Eqpt. and S u p p l i e s Watches/Clocks, Etc. "Miscellaneous  .  o.oi84 •  7.91  ' !  1289. 1289. 1289.  317.  TABLE  IND  NAME Food and K i n d r e d  ontinued)  CONC  GROWTH  28 56 34  119 154  Meat P r o d u c t s Dairy Products Canning and P r e s e r v i n g Grain M i l l Products Bakery Products Confectionery & Related Products Beverages M i s c . Food P r e p a r a t i o n s  26 34 49  329  Tobacco  68  346 347 348 349 356  Products  359 367  K)0(f'  0.0192 0.0192 0.0192 0.0192 0.0192 0.0192 0.0488 0.0192  12.07 12.07 12.07 12.07 12.07 12.07 25.45 12.07  499  93  0.0547  39-14  6560  18 44 47 274l  108  0.0062 0.0062 0.0062 0.0062 0.0062  9.90 9.90 9.90 9.90 9.90  1163 1163 1163 1163 1163  11 26-  110 135  0.0098 0.0098  3.82 3.82  154 154  45 27 4l  128 143 1 0 6 -•  o.oo84 o.oo84 • o.oo84  17.96 17.96 17.96  1893 1893 1893  49  j?6  137 123 • 134 101 105 126 •  499 499 499 499 499 944 499  Surfaces  87 66 67 98  .  •  Textiles  A p p a r e l and A c c e s s o r i e s Misc. Fab. T e x t i l e s Paper and A l l i e d  386 387 389  8  Products  Knitting Mills D y i n g and F i n i s h i n g F l o o r Coverings- Except Hard Y a r n , T h r e a d and F a b r i c Misc. T e x t i l e s Fabricated  ^OOQ  Products  306 307 308 309 316 317 318 319  Textile Mill  ADV  Products  P u l p , P a p e r , and P a p e r b o a r d Paperboard Containers M i s c . Paper and P u l p P r o d u c t s  TABLE I ( C o n t i n u e d  IND  NAME Printing  396 398  Newspapers P r i n t i n g & P u b l i s h i n g E x c . Newsp. and A l l i e d  and Coal  436 437 438  52 26  130 135  0.0076 0.0076  9.43 9-43  230. 230,  74 44 25 42  109 196 117 134  0.0379 0.0379 0.0379 0.0379  33.19 33.19 33.19 33.19  2052, 2052, 2052, 2052.  47 50  98 136  o.oo46 o.oo46 •  221.85 221.85  24719. 24719.  51 21  114 205  0.0164 0.0164  i 4 . i l i4.ii  1100, 1100,  20 28 21  69 97 90  0.0112 0.0112 0.0112  5.28 5.28 5.28  $'000  .  $'000  and L e a t h e r  ' •  '  Products  Rubber Products Misc. P l a s t i c Products Leather  ADV  Products  Petroleum Refining Misc. Pet. & Coal Products Rubber and P l a s t i c s  426 429  CAP/REQS.  GROWTH  Products  Synthetic Fibres Drugs and M e d i c i n e s P a i n t s , V a r n i s h and R e l a t e d P r o d u c t s M i s c . C h e m i c a l s and R e l a t e d P r o d u c t s Petroleum  4l6 419  CAP-LAB  C0NC  and P u b l i s h i n g  Chemicals 406 407 408 409  .  Products  Leather Tanning, E t c . F o o t w e a r Except Rubber Leather Products Except  Footwear  •  407. 407. 407.  - 25 -  1.  Salary For  e a c h i n d i v i d u a l w o r k e r , p r i v a t e wage and " s a l a r y  income, i n c l u d i n g bonuses, i s r e p o r t e d i s t o be t h e d e p e n d e n t v a r i a b l e  i n the  I n d i v i d u a l s were s e l e c t e d in  Persons w i t h  their' salary  f o rthe regression of e r r o r s  a n y s e l f employment i n c o m e  income c o u l d  This  regressions.  s u c h a way as t o m i n i m i z e t h e p o s s i b i l i t y  data. as  by the census.  w e r e  sample i n the  rejected  be d i s t o r t e d i n t w o ways.  It  m i g h t be l o w i f t h e y a r e w o r k i n g a t t h e i r s a l a r i e d employment on  a casual  inflated  or part-time basis.  Conversely,  i t m i g h t be  i f t h e y were e m p l o y i n g t h e m s e l v e s i n a s a l a r i e d  position.  S t i g l e r has p o i n t e d  corporations  out t h a t  p r o f i t s of c l o s e l y  may o f t e n be w i t h d r a w n i n t h e f o r m o f  held  executives'  salaries. T h o s e i n d i v i d u a l s who h a d n o t w o r k e d a t l e a s t 50 weeks i n 1959 w e r e a l s o r e j e c t e d .  It is likely  who c h a n g e d o c c u p a t i o n o r I n d u s t r y voluntarily period  that  many i n d i v i d u a l s  i n 1959 w o u l d h a v e b e e n  o r i n v o l u n t a r i l y unemployed f o r a t l e a s t a b r i e f  of time.  Hence, b y r e j e c t i n g s u c h p e r s o n s , d a t a  errors  o f t h i s t y p e w i l l be r e d u c e d .  G.J. S t i g l e r , C a p i t a l and R a t e s o f R e t u r n i n Manufacturing Industries. Princeton, Princeton University  1963,  pp. 125"'- 127.  Press  - 26 -  2.  Concentration The f i g u r e s u s e d a r e 1958  ratios  calculated  scaled  up f o r t h o s e p r o d u c t s s e l l i n g  product markets. national  I t was  or  regional  on t h e a v e r a g e ,  concentration  national ratios for  f o r t h o s e s o l d on  concentration  r a t i o s were  local scaled  factors.  Product D i f f e r e n t i a t i o n T h i s b a r r i e r t o new  several  i n local  r a t i o s f o r . p r o d u c t s s o l d on  Hence t h e a p p l i c a b l e  3.  The r a t i o s h a v e b e e n  on r e g i o n a l m a r k e t s and 2.67  up b y t h e s e  concentration  found, by W e i s s , t h a t  m a r k e t s w e r e I.98 t i m e s t h e n a t i o n a l  markets.  firm  on p r o d u c t s h i p m e n t s .  concentration  those sold  four  entrants  c a n be a t t r i b u t e d t o  s o u r c e s , n o t a b l y c u s t o m e r s e r v i c e , p r o d u c t d e s i g n and  advertising  intensity.  However,  i n d u s t r i e s , B a i n found that  i n h i s study of twenty  a d v e r t i s i n g " i s c o n s i s t e n t l y the. 7  most i m p o r t a n t f a c t o r I n e s t a b l i s h i n g p r o d u c t d i f f e r e n t i a t i o n . Therefore, that  i t i s t h e r a t i o of a d v e r t i s i n g  expenditure to  sales  i s u s e d as a m e a s u r e o f p r o d u c t d i f f e r e n t i a t i o n . It  s h o u l d be n o t e d t h a t w h i l e  advertising  i s important  i n e s t a b l i s h i n g p r o d u c t d i f f e r e n t i a t i o n , and hence monopoly power, t h e r e i s a l s o a r e l a t i o n s h i p i n t h e o p p o s i t e d i r e c t i o n . F i r m s p o s s e s s i n g m o n o p o l y power c a n , i n many c a s e s , be to  s p e n d more on a d v e r t i s i n g e f f o r t t h a n c o m p e t i t i v e  The g r e a t e r  i s t h e p r o d u c t d i f f e r e n t i a t i o n and  ^ B a i n , _op. c i t . , pp. 122 - 24.  expected  firms.  concentration  - 27 -  i n an  i n d u s t r y , t h e more e a c h f i r m w i l l  a d v e r t i s i n g expenditure, other  firms.  Also,  competition,  due  t o the  oligopolists  a d v e r t i s i n g and of  as t h e r e  other  are  sales  be  to gain  from  less "spillover"  u n c e r t a i n t i e s of  to  price  often hypothesized  to  prefer  i n c r e a s i n g e x p e n d i t u r e s as  a  form  competition. 4.  Economies of  Scale  Considerable  e f f o r t was  measuring the conclusion  r e a c h e d was  that  plant,  i f the  new  entrant,  situation,  choices.  He. c a n  the  Secure i n the advantage, the  over  i s not.  i s faced  o r he  can  i n d o i n g so l o w e r t h e  e s t a b l i s h e d f i r m s can  sized  market.  with  two  or firm, at  enter  producing  selling price. i s a t a, d i s -  charge a p r i c e greater  They p o s s e s s a degree of  than  monopoly  supply.  T h e r e i s no  concept i s s t r a i g h t f o r w a r d ,  measurement  a g r e e m e n t on c r i t e r i a f o r c h o o s i n g  o r minimum e f f i c i e n t  addition,  data.  optimal  knowledge t h a t p o t e n t i a l c o m p e t i t i o n  While t h i s  optimal  i n e s t a b l i s h i n g an  p o t e n t i a l entrant  minimum a t t a i n a b l e c o s t . control  this  s c a l e become a s i g n i f i c a n t b a r r i e r  operate a sub-optimal s i z e d plant  o u t p u t and  final  a v a i l a b l e t e c h n i q u e s and  t h a n minimum a t t a i n a b l e c o s t s ,  optimal  of  The  o r f i r m , must s e c u r e a s i z e a b l e p o r t i o n o f t h e  In t h i s  higher  problem  a m e a n i n g f u l measure of  derived with  Economies of l a r g e to entry  a p p l i e d t o the  economies of s c a l e b a r r i e r t o e n t r y .  v a r i a b l e c a n n o t be  the  will  stand  i t is virtually  s i z e of p l a n t  impossible  or f i r m .  to design  the  In  a measure  that  - 28 -  takes  account  of the  shape o f t h e  i s a serious shortcoming  industry cost curves.  f o r knowledge of t h e r a t e of d e c l i n e  o f u n i t c o s t as minimum e f f i c i e n t essential Finally,  i n e v a l u a t i n g the  size  i s approached i s  importance  of the  scale harrier.  the p r o b l e m i s f u r t h e r c o m p l i c a t e d by  diseconomies  This  of l a r g e s c a l e .  the concept  T h i s c a n p r e s u m a b l y be  of  avoided  at t h e p l a n t l e v e l by d u p l i c a t i n g o p t i m a l s i z e d p l a n t s . However, i n t h e .case, o f f i r m s , diseconomies  do  exist.  i t i s quite conceivable  E m p i r i c a l evidence  to c l a r i f y  that this  problem i s n o n - e x i s t e n t . ^ D e s p i t e t h e s e p r o b l e m s , t h e r e have been attempts m e a s u r e t h e b a r r i e r s t o e n t r y due  t o economies of  scale.  Presumably, because of the q u e s t i o n of diseconomies firms, these scale. this  Two  attempts  have c o n c e n t r a t e d  of these measures  to  of l a r g e  on p l a n t e c o n o m i e s  investigated i n detail  w e r e  of for  study. The  t h e U.S. plants  first,  by. B a i n , t a k e s  Census of M a n u f a c t u r i n g  advantage of t h e f a c t  gives i n d u s t r y data,  that  grouping  i n t o s i z e c l a s s e s , s i z e b e i n g m e a s u r e d by number o f Q  employees.  H i s measure i s a r r i v e d  at by  expressing the  added of t h e average s i z e d p l a n t .in the l a r g e s t a percentage  of i n d u s t r y v a l u e  added.-  measure i s t h a t the c h o i c e of t h e g  The  size class  weakness of  o p t i m a l o r minimum  See  B a i n , _op.  c i t . , pp.  6l  q .See  B a i n , _op.  c i t . , pp.  69,  -  62. _ 75.  value as  this  efficient  - 29 -  plant size i s essentially  arbitrary.  T h i s v a l u e was c a l c u l a t e d f o r t h e i n d u s t r i e s  i n this  s t u d y , h u t t h e r e s u l t s a p p e a r e d t o he m e a n i n g l e s s a s a m e a s u r e of the- economies o f s c a l e h a r r i e r .  For instance, the calcula-  t i o n s g i v e a s l i g h t l y h i g h e r measure  of economies o f s c a l e t o  the major i n d u s t r y group t e x t i l e s ' , t h a n t o t r a n s p o r t a t i o n e q u i p m e n t^. 10 In the largest ments p r o d u c i n g  size class,  t e x t i l e s had t e n e s t a b l i s h -  a v a l u e added o f $236,5^5,000 w i t h  I n d u s t r y v a l u e added o f $4,857,638,000. of s c a l e measure corresponding  o f .0049.  T h i s gave a n economy  F o r t r a n s p o r t a t i o n equipment t h e  f i g u r e s w e r e .134 e s t a b l i s h m e n t s  $9,244,433,000 v a l u e added c o m p a r e d i n d u s t r y f o r a measure  total  o f .0045.  producing  t o $15,283,694,000 f o r t h e  Textiles  i s the textbook  e x a m p l e o f a c o m p e t i t i v e , e a s e o f e n t r y i n d u s t r y and t r a n s p o r t a t i o n equipment automobiles,  i s dominated by I n d u s t r i e s m a n u f a c t u r i n g  a i r p l a n e s and s h i p s i n w h i c h economies o f s c a l e  i n production, are of great importance. is  C l e a r l y , Bain's  measure  o f no v a l u e f o r t h e i n d u s t r y d a t a c l a s s i f i c a t i o n s u s e d i n  this  study. The  o t h e r measure  o f economies o f s c a l e g i v e n  c o n s i d e r a t i o n was t h a t u s e d i n a r e c e n t s t u d y on t h e s o u r c e s o f  "^See U.S. C e n s u s p. 2 - 3.  of Manufacturing  1958, V o l . 1,  - 30 -  m o n o p o l y power. " plant  T h i s measure i s d e r i v e d by  s i z e among t h e  largest plants  o f i n d u s t r y o u t p u t and  t a k i n g the  a c c o u n t i n g f o r 50  d i v i d i n g by t o t a l  average  per  output i n the  cent  relevant  market. T h i s measure s u f f e r s from a l l the comings l i s t e d firms..  above.  I t s choice  apparently  I t ignores  p o s s i b l e economies of  o f a minimum e f f i c i e n t p l a n t  arbitrary.  I t does n o t  of d e c l i n e of u n i t c o s t s  as p l a n t  not  data,  i m p o s s i b i l i t y -no  size  economies of s c a l e b a r r i e r c o u l d not  and  the  amount o f c a p i t a l  with a plant t o be may  difficulty  --  I t was  concluded  e f f e c t i v e l y be  that  measured  C a p i t a l Requirements capital  e n t r y g e n e r a l l y f o l l o w s from the i s the  of the  abandoned.  Measurement of t h e  It  rate  increases.  made.  the  5.  size is  of c a l c u l a t i n g the measure w i t h a v a i l a b l e  a t t e m p t a t c a l c u l a t i o n was  i d e a was  large  attempt t o measure the  I n v i e i v o f t h e s e s h o r t c o m i n g s and if  t h e o r e t i c a l short-  requirements b a r r i e r to  economies of s c a l e measure.  required to enter  o r f i r m o f minimum e f f i c i e n t  a b a r r i e r . t o entry  charge higher  on t h e  the  size.  grounds t h a t the  industry This  capital  i n t e r e s t rates to p o t e n t i a l entrants  compared t o e s t a b l i s h e d f i r m s .  i s said  I t Is thought that  market  as  as t h e  amount  ^ S . Comanor and T.A. W i l s o n , " A d v e r t i s i n g M a r k e t S t r u c t u r e and P e r f o r m a n c e " , The R e v i e w o f E c o n o m i c s and S t a t i s t i c s , V o l . 44, No. 4, "(November, I 9 6 7 ) , pp. 423 - 440.  -  31  of c a p i t a l gets l a r g e r , t h i s  -  difficulty  or e x t r a c o s t  of  obtain-  12 ing capital  for entry  increases.  Without a value  f o r the  economies of s c a l e v a r i a b l e ,  p r e c i s e measurement i s d i f f i c u l t . of the  capital  c a l c u l a t e d by  required  However, an  to enter w i t h  dividing total  assets  approximation  a single plant  by  the  was  number o f p l a n t s  in  13 the  industry.  of the  '  capital  from the  This  required  it  required  should  to enter  be  t o b u i l d and  6.  C a p i t a l - Labour This  1950  absolute  industry.  It suffers  discussed  i t measures the  o p e r a t e an  measure  economies  amount  of  average s i z e d p l a n t , relative  capital  Ratio  i s m e a s u r e d by  dividing total  industry assets  by  employees. Growth The  by  an  a m e a n i n g f u l a p p r o x i m a t i o n of the  among i n d u s t r i e s .  number o f  an  previously  H o w e v e r , as  barriers  7.  meant t o be  shortcomings of the  of s c a l e measures. capital  i s not  measure u s e d i s i 9 6 0  industry  i n d u s t r y employment  divided  employment.  12  B a i n , _op.  c i t . , pp.  145,  146.  ] 3 The U.S. C e n s u s o f M a n u f a c t u r i n g g i v e s i n d u s t r y data, on e s t a b l i s h m e n t s r a t h e r t h a n p l a n t s . An e s t a b l i s h m e n t i s a p r o d u c i n g l o c a t i o n and t h e r e f o r e a m u l t i - p l a n t s i t e shows up as o n l y one e s t a b l i s h m e n t . I t i s n o t a v i t a l d i s t i n c t i o n and i n t h i s , a s ' i n most s t u d i e s , t h e two t e r m s a r e u s e d more o r less interchangeably.  - 32 -  8.  Occupation  and  T h e s e a r e two ing salary levels. v a r i a t i o n due is  Sex o f t h e most i m p o r t a n t f a c t o r s  determin-  I t i s desirable to eliminate salary  t o t h e s e two v a r i a b l e s when r e g r e s s i o n a n a l y s i s  a p p l i e d t o the model.  This i s accomplished  by g r o u p i n g  the  r e g r e s s i o n o b s e r v a t i o n s i n t o s a m p l e s t h a t a r e homogeneous w i t h r e s p e c t t o o c c u p a t i o n and Occupations  sex.  t o be t e s t e d w e r e s e l e c t e d f r o m t h e f o u r  w h i t e - c o l l a r groups i n the p o p u l a t i o n census.  The  groups  P r o f e s s i o n a l T e c h n i c a l and K i n d r e d W o r k e r s , M a n a g e r s , and  P r o p r i e t o r s Except  Sales Workers.  An  Farm, C l e r i c a l  Officials  and K i n d r e d W o r k e r s  o c c u p a t i o n c o u l d be  and  selected for testing  o n l y i f i t w o u l d p r o v i d e a sample w i t h i n d i v i d u a l s o v e r a r e a s o n a b l e number o f t h e m a n u f a c t u r i n g i n d u s t r i e s t o be t e s t e d .  are  and  Thus, a m a j o r i t y of t h e  mining occupations  s u c h as a r c h i t e c t s ,  d e n t i s t s , bank t e l l e r s  c o u l d n o t be u s e d .  A l s o , only occupations t h a t would provide  sufficient c o u l d be civil  observations f o r meaningful  chosen.  and  distributed  insurance  regression analysis  T h u s , many o c c u p a t i o n s s u c h as  e n g i n e e r s and  economists,  s t a t i s t i c i a n s c o u l d n o t be t e s t e d as  would have been l e s s t h a n t e n o b s e r v a t i o n s i n the f i n a l This process  o f s e l e c t i o n and  o c c u p a t i o n s shown i n T a b l e draftsmen,  mechanical  proprietors,  e l i m i n a t i o n y i e l d e d the  II.  Four  agents,  of t h e s e  there sample.  fifteen  occupations,  e n g i n e e r s , managers, o f f i c i a l s  and t y p i s t s c o r r e s p o n d t o g r o u p s t e s t e d  and i n Weiss'  TABLE - I I  OCCUPATIONAL GROUPINGS FOR REGRESSION ANALYSIS  OCCUPATION NAME  SEX  NO.  OBSERVATIONS  Accountants  Male  100  Chemists  Male  53  Draftsmen  Male  llil-  Industrial  Engineers  Male  58  Mechanical  Engineers  Male  110  Male  25  Engineers- (NEC)*  Male  33  P e r s o n n e l and L a b o r R e l a t i o n s Workers  Male  22  Professional, Technical and K i n d r e d W o r k e r s (NEC)  Male  56  Managers, O f f i c i a l s and P r o p r i e t o r s  Male  532  Bookkeepers  Female  99  Secretaries  Female  239  St enographer s  Female  50  Typists  Female  58  Sales  Engineers  Salesmen and S a l e s c l e r k s  (NEC)  Male  322  1871  *NEC means N o t E l s e w h e r e  Classified  -  study.  S i n c e he was most i n t e r e s t e d i n t h e d e t e r m i n a t i o n o f  wages, r a t h e r t h a n his  -  3h  study  s a l a r i e s , most o f t h e o c c u p a t i o n s  came f r o m t h e l a b o u r i n g g r o u p s . For  each o c c u p a t i o n a l group e i t h e r a l l males o r a l l  f e m a l e s were s e l e c t e d f o r t h e r e g r e s s i o n sample. p a t i o n s were almost c o m p l e t e l y other,  s o i t was d e c i d e d  cost l i t t l e tions  Most  occu-  homogeneous i n one s e x o r t h e  t o make t h e m c o m p l e t e l y  so.  This  i n t h e way o f s a m p l e s i z e a n d e l i m i n a t e d  due t o a n i m p o r t a n t 9.  tested i n  and unwanted  distor-  variable.  Pe r s o n a l C h a r a c t e r i s11c s For  each i n d i v i d u a l  employee, s i x p e r s o n a l  character-  i s t i c s w e r e r u n as i n d e p e n d e n t v a r i a b l e s i n t h e r e g r e s s i o n s , i n a n a t t e m p t t o a c c o u n t f o r some o f t h e s a l a r y v a r i a t i o n . The  c h a r a c t e r i s t i c s are education,  rural  residence,  size  of place  age, southern  of residence  residence,  and r a c e .  Educa-  t i o n i s measured by t h e h i g h e s t grade o f s c h o o l o r year o f u n i v e r s i t y completed, but there  i snot a unique value  v a r i a b l e f o r each grade and y e a r .  There i s a v a l u e  of t h e  of three  f o r t h o s e whose h i g h e s t g r a d e c o m p l e t e d was o n e , t w o , t h r e e o r four, six, years  a value  o f f o u r f o r t h o s e whose h i g h e s t  a n d s o on up t o t w e l v e of college.  a, v a l u e  f o r t h o s e who f i n i s h e d f i v e  Southern residence  o f one i f t h e i n d i v i d u a l  otherwise.  RuraT r e s i d e n c e  14  W e i s s , op. c i t . ,  g r a d e was f i v e o r o r more  i s a dummy . v a r i a b l e w i t h  r e s i d e d i n t h e south,  zero  i s a dummy v a r i a b l e w i t h a v a l u e  p p . .102 - 10 J>.  - 35 -  o f one i f t h e i n d i v i d u a l o u t s i d e a. S t a n d a r d wise.  r e s i d e d o u t s i d e an u r b a n i z e d  Metropolitan Statistical  S i z e of place i s a v a r i a b l e w i t h a value  one f o r a r u r a l f a r m t o t w e l v e more.  Area,  i s white  zero  other-  ranging  from  f o r a p l a c e o f one m i l l i o n o r  R a c e i s a dummy v a r i a b l e w i t h a v a l u e  individual  area, o r  o f one i f t h e  and does n o t 'have a S p a n i s h  surname,  zero  otherwise. 10.  Unionization T h i s measure  percentage  i s taken  from Weiss'  I t i s the  o f e m p l o y e e s i n e s t a b l i s h m e n t s w h e r e more t h a n  the production workers are covered agreements.  study.  by c o l l e c t i v e  half  bargaining  CHAPTER I V  REGRESSION RESULTS  M u l t i p l e r e g r e s s i o n a n a l y s i s was u s e d t o t e s t t h e hypothesized  r e l a t i o n s h i p between s a l a r i e s  and i n d u s t r y  m o n o p o l y p o w e r , c a p i t a l - l a b o u r r a t i o and g r o w t h . Regression  i n p u t was c r e a t e d b y m a t c h i n g i n d u s t r y  data from the v a r i o u s sources w i t h the data f o r i n d i v i d u a l s from t h e p o p u l a t i o n census. values  o f t h e v a r i a b l e s f o r t h e i n d u s t r y - i n w h i c h he was  employed.  The r e s u l t i n g d a t a r e c o r d c o n t a i n i n g s a l a r y ,  characteristics observation. 1871  E a c h p e r s o n was a s s i g n e d t h e  such  and i n d u s t r y p a r a m e t e r s I s a r e g r e s s i o n  From t h e o r i g i n a l  census sample o f 1 8 6 , 0 0 0  records,  o b s e r v a t i o n s w e r e s e l e c t e d o v e r .15 o c c u p a t i o n s .  constitutes a small, very Chapter  personal  select  sample.  This  As e x p l a i n e d i n  I I I , t o be s e l e c t e d an i n d i v i d u a l had t o s a t i s f y t h e  c o n d i t i o n s o f b e i n g e m p l o y e d I n one o f t h e 6 3 i n d u s t r i e s i n Table  I , h a v i n g w o r k e d 5 0 - 5 2 weeks i n 1 9 5 9 ,  employment i n c o m e , a s w e l l a s b e i n g o c c up a t I o n - s e x  h a v i n g no s e l f -  i n one o f t h e d e s i g n a t e d  g r oups„  Two b a s i c s e t s o f l i n e a r  r e g r e s s i o n s were r u n ,  w i t h o n l y t h e i n d u s t r y v a r i a b l e s and t h e o t h e r w i t h characteristics  added.  The two r e g r e s s i o n e q u a t i o n s  -  36  -  one  personal were:  -  37  -  '1)  S = b . + b C + b^AS + b_,CR + b,,CL + b G o 1 2 5 4 J? "r 5  (2)  S = b + b.,C + b„AS + b C R + b,,CL + b G + o 1 2 3 4 5  x  1  n  r  v  c  b^-A + b, E + b R S + b„RR + b-, „SP + b -,R o ( o 9 10 -11 7  where:  Q  n  S = Salary C = Concentration AS = A d v e r t i s i n g - S a l e s  Ratio  CR ~ C a p i t a l R e q u i r e m e n t s CL = C a p i t a l - L a b o u r R a t i o • '  G - Growth E = Education A = Age RS = Dummy w i t h v a l u e 1 i f r e s i d e n c e i n s o u t h RR = Dummy w i t h v a l u e 1 i f r u r a l  residence  SP = S i z e o f p l a c e o f r e s i d e n c e R = Dummy w i t h v a l u e 1 i f r a c e According t o the reasoning  i s white  o f t h e model i n Chapter I I ,  the f i v e  i n d u s t r y v a r i a b l e s s h o u l d a l l have p o s i t i v e  cients.  Growth, t h e c a p i t a l - l a b o u r r a t i o and t h e t h r e e  power v a r i a b l e s ,  coeffimonopoly  c o n c e n t r a t i o n , a d v e r t i s i n g / s a l e s and c a p i t a l  requirements, area l l hypothesized  t o have a p o s i t i v e  effect  i n the determination of industry salaries. No p r e d i c t i o n s w e r e made a s r e g a r d s t h e c o e f f i c i e n t s •of t h e o t h e r v a r i a b l e s a s t h e y w e r e i n s e r t e d equations  i n the regression  o n l y t o a c c o u n t f o r some o f t h e v a r i a t i o n  i n salaries.  However, i t w o u l d be e x p e c t e d tion, and  age, s i z e  those  of place  of residence  o f t h e two r e s i d e n c e The  that the c o e f f i c i e n t s  o f educa-  a n d r a c e w o u l d be p o s i t i v e  dummy v a r i a b l e s n e g a t i v e .  f i r s t problem e n c o u n t e r e d upon r u n n i n g t h e  r e g r e s s i o n s was t h e d i s c o v e r y o f a c r i t i c a l l y  h i g h degree of  c o l l i n e a r i t y between t h e c a p i t a l ' r e q u i r e m e n t s and c a p i t a l labour variables.  F o r 12 o f t h e 15 o c c u p a t i o n s ,  correlation coefficient than In  .9-  of these  arbitrarily  decided  high  standard  degree.  e r r o r s , i t was  requirements  variable  No o t h e r p r o b l e m s o f m u l t i c o l l i n e a r i t y  encountered. The  s e c o n d d i s c o v e r y made f r o m t h e i n i t i a l r e g r e s s i o n  r u n s was t h a t t h e r e was v e r y l i t t l e cients  greater  but not t o t h i s  t o drop t h e c a p i t a l  from the r e g r e s s i o n runs. were  t w o v a r i a b l e s was  C o l l i n e a r i t y was e x p e c t e d  order t o avoid extremely  the simple  difference i n the c o e f f i -  of t h e v a r i a b l e s between equations  only important  (.1)  and ( 2 ) .  The  d i f f e r e n c e b e t w e e n t h e two s e t s o f r e g r e s s i o n s  was i n t h e amount o f v a r i a t i o n a c c o u n t e d f o r .  With equation ( l )  2  the values personal  of R  were c o n s i s t e n t l y l e s s t h a n  but with the  c h a r a c t e r j . s t i e s added i t ranged between .1 This  r e s u l t was e x p e c t e d .  o c c u p a t i o n a l groups s a l a r i e s w i l l personal  .1,  and  .5.  In thew h i t e - c o l l a r  vary g r e a t l y according t o  c h a r a c t e r i s t i c s , - p a r t i c u l a r l y experience  and e d u c a t i o n .  W i t h much o f t h i s v a r i a t i o n a c c o u n t e d f o r b y t h e age a n d y e a r s in  s c h o o l v a r i a b l e s , t h e r e g r e s s i o n r e s u l t s become more m e a n i n g -  ful.  - 39 -  Along w i t h the c a p i t a l requirements v a r i a b l e , and  size  neither  o f p l a c e w e r e d r o p p e d f r o m t h e r e g r e s s i o n r u n s as o f t h e m a c c o u n t e d f o r any o f t h e v a r i a t i o n  Thus, t h e independent v a r i a b l e s  capital-labour  ratio,  r e s i d e n c e and r u r a l  capital the of  advertising/sales  growth, education,  age,  southern  of t h e m u l t i p l e  r e g r e s s i o n s are summarized  a r e shown.  r e s u l t s w o u l d n o t be s u b s t a n t i a l l y one o r t w o a s t e r i s k s  of the  P a r a l l e l r u n s w e r e made w i t h  requirements i n p l a c e of c a p i t a l - l a b o u r  two-tailed  ratio,  F o r each o c c u p a t i o n only the c o e f f i c i e n t s  variables  significant  salary.  residence.  The r e s u l t s i n Table I I I .  In  i n the remainder of the  r e g r e s s i o n runs were c o n c e n t r a t i o n ,  industry  race  indicates  t o check  different.  The  that  presence  that the c o e f f i c i e n t i s  a t t h e f i v e p e r c e n t o r one p e r c e n t l e v e l on a T-test.  regression results all  the variables 2  and  values of R .  1  Table VI I n Appendix I I presents in full  these  d e t a i l showing the c o e f f i c i e n t s  along with standard errors,  F-  of  probabilities  A c c o r d i n g t o t h e model i n Chapter I I , t h e s i g n s of the  coefficients  the  results  i n T a b l e I I I s h o u l d a l l be p o s i t i v e .  do n o t o f f e r u n a m b i g u o u s s u p p o r t f o r t h e h y p o t h e s i s .  The s i g n s a r e m i x e d and f e w o f t h e c o e f f i c i e n t s Careful  Clearly,  analysis  of the c o e f f i c i e n t s  are s i g n i f i c a n t .  f o r each v a r i a b l e  is  ' n e c e s s a r y i n o r d e r t o f o r m u l a t e any c o n c l u s i o n s .  "'"See A p p e n d i x I I f o r a n e x p l a n a t i o n o f t h e t e s t .  TABLE I I I MULTIPLE REGRESSION RESULTS - COEFFICIENTS OF INDUSTRY V A R I A B L E S SALARY RELATED TO 4 INDUSTRY AND 4 PERSONAL V A R I A B L E S  Ac c o u n t a n t s Chemists  100  -  l.8o  53  +  7.91  114  Draftsmen  ADVERTISING  ' CAPITAL) ' (REQ. )  CAPITAL LABOUR  - 10470.  -  .04  -  +  +  .17*  -  978.2  4.20  6.49  + 18.56*  -  3.36  .18  +  .42  -  3.93  -  4.84  +  58  +  15.74  - 99260.*  +  .35  +  18.76  Eng.  110  +  19.24  +  +  .05  +  2.62  Engineers  25  +  87.12  -129500.  -2.13  Mechanical  18330. 26330.  GROWTH -  + 24.69*  I n d u s t r i a l Eng. Sales  CONCENTRATION  NUMBER OBSER.  OCCUPATION  -120.  -29.0  Engineers  (NEC)  33  +117.72  -130100.  -  .38  .- 95.51  -21.19  Personnel  and L a o o u r R e l a t i o n s  22  +  30.83  +  82480.  -  .03  -  3.55  -  2.48  Profess.,  Tech. & K i n d r e d  Workers  56  +  4.58  +  27050.  -  -57  -  2. 23  -  4.20  Managers,  Officials & Proprietors  532  -  10.47  +  17780.  +  .03  -  1.39  -  4.oo  Bookkeepers  99  -  1.91  -  5812.  -  .02  -  2.19  +  5.71  Secretaries  239  + 21.35**  -  5552.  +  .04*  +  4.99*  +  .88  - 11220.  -  .03  -  3.5^  +  1.42  Stenographers  50  +  Typists  58  + 29.55*  +  2105.  -  .04  -  3.89  -  2.25  322  - 57.77*  -  9563.  +  .12  +  10.63  -  5.7  S a l e s m e n and S a l e s c l e r k s  14.34  ( R e g r e s s i o n s were r u n w i t h C a p i t a l R e q u i r e m e n t s i n p l a c e o f C a p i t a l L a b o u r - o n l y t h e one c o e f f i c i e n t i s shown a s t h e r e was a n e g l i g i b l e c h a n g e I n t h e o t h e r c o e f f i c i e n t s . )  - 41 -  1.  Cone e n t r a t i o n T h i s i s t h e one v a r i a b l e  f o r t h e model.  that  offers  strong  support  The c o e f f i c i e n t o f c o n c e n t r a t i o n i s p o s i t i v e  11 o u t o f 15 t i m e s a n d t h r e e o f t h e s e t i m e s i t i s s i g n i f i c a n t . •A b i n o m i a l t e s t was a p p l i e d having at l e a s t  t o measure t h e p r o b a b i l i t y o f  11 s a m p l e c o e f f i c i e n t s o f t h e same s i g n . i f t h e  coefficient  o f c o n c e n t r a t i o n was i n f a c t  probability  o f .5 f o r e i t h e r  the  probability  coefficients that  a positive  i s .119.  be r e j e c t e d  coefficient  o r 11 n e g a t i v e  However, on a p p l y i n g a o n e - t a i l e d  t o .059.-  The n u l l  test,  hypothesis  at t h e six. p e r cent l e v e l o f s i g n i f i c a n c e .  unfortunate r e s u l t of a s i g n i f i c a n t , negative i n t h e S a l e s m e n and S a l e s c l e r k s  sample c a n p o s s i b l y  e x p l a i n e d by the c o m p o s i t i o n of t h i s o c c u p a t i o n a l  group.  Salesmen w i l l  generally  salesclerks.  Y e t t h i s d i f f e r e n t i a l , i s u n l i k e l y t o be  by  sign,  i s , a s s u m i n g t h e c o e f f i c i e n t o f c o n c e n t r a t i o n c a n n o t be  The  be  Assuming a  or a negative  o f h a v i n g a t l e a s t 11 p o s i t i v e  negative, t h i s probability f a l l s can  zero.  age o r e d u c a t i o n .  I t i s possible  concentrated industries clerks  earn considerably higher s a l a r i e s  that  the firms  than  explained  i n t h e more  employ a g r e a t e r p r o p o r t i o n o f s a l e s -  t o salesmen, hence t h e i n v e r s e r e l a t i o n s h i p  between  c o n c e n t r a t i o n and s a l a r i e s . Taking t h i s factor results  into consideration,  of the binomial t e s t , the regression  s a i d t o o f f e r support f o r the hypothesis that  along with the  results  c a n be  industry  c o n c e n t r a t i o n has a p o s i t i v e • 2.  e f f e c t upon s a l a r i e s .  Advertising The r e s u l t s f o r t h i s v a r i a b l e  Advertising/sales intensity  results  that  i s a s i m p l e , e f f e c t i v e measure of  However, t h e r e a r e e i g h t  must be 3.  advertising  negative c o e f f i c i e n t s i n  and one o f them i s s i g n i f i c a n t .  product d i f f e r e n t i a t i o n i s a f a c t o r  rates  poor.  and s h o u l d be a g o o d p r o x y f o r t h e p r o d u c t d i f f e r e n t i a -  tion barrier. the  are s u r p r i s i n g l y  The  hypothesis  i n explaining  salary  rejected.  C ap 11 a l R e q u 1 r e m e n t s Although t h i s variable  positive  sign,  Is twice s i g n i f i c a n t with  a  i t has a n e g a t i v e s i g n n i n e out of f i f t e e n  times.  The n u l l h y p o t h e s i s o f no r e l a t i o n s h i p  capital  r e q u i r e m e n t s b a r r i e r t o e n t r y and s a l a r i e s c a n n o t be  rejected.  However, i n v i e w o f t h e l a c k  measuring t h i s v a r i a b l e , from these r e g r e s s i o n 4.  capital  requirements.  of p r e c i s i o n i n  no f i r m c o n c l u s i o n s c a n be  drawn  results.  C a p i t a l - L a b our The r e s u l t s  between the  Ratio  f o r this variable  w e r e t h e same as f o r  Again, the c o n f l i c t i n g p o s i t i v e  negative c o e f f i c i e n t s prevent r e j e c t i o n  and  of the n u l l h y p o t h e s i s .  Due t o t h e e x t r e m e l y h i g h d e g r e e o f c o l l i n e a r i t y .between t h e s e t w o v a r i a b l e s , be s e p a r a t e d o u t .  A l l that  their individual effects c a n be s a i d  i s that  cannot  i t appears  - 43 -  t h a t t h e amount o f c a p i t a l e f f e c t upon 5•  salaries.  Growth These r e s u l t s  With  i n a n i n d u s t r y does n o t h a v e an  are strongly contrary t o the hypothesi  12 o u t o f 15 n e g a t i v e  coefficients,  an h y p o t h e s i s  growth has a n e g a t i v e e f f e c t upon s a l a r i e s  c o u l d he  that  accepted.  T h i s i s c o n t r a d i c t o r y t o most t h e o r y , h u t t h e e x p l a n a t i o n f o r these  perverse  results probably l i e s  i n t h e method o f measure-  ment o f t h e v a r i a b l e . Change i n employment was u s e d a s a m e a s u r e o f g r o w t h mainly because these the d e t a i l e d considered  f i g u r e s w e r e t h e o n l y ones a v a i l a b l e  I n d u s t r y breakdown.  a poor measure.  for  I n r e t r o s p e c t , i t must be  Itfails  t o take  i n t o account t h e  i n t r o d u c t i o n of labour saving i n n o v a t i o n s , thus u n d e r s t a t i n g t h e g r o w t h r a t e f o r t h e more p r o g r e s s i v e  industries.  T h i s w e a k n e s s c a n be i l l u s t r a t e d  through  comparison  w i t h a s i m i l a r g r o w t h m e a s u r e b a s e d on v a l u e  added.  industries,  Machines, and  Office,  Dairy Products,  Computing and A c c o u n t i n g  t h e g r o w t h r a t e s c a l c u l a t e d on  ment/1950 employment a r e 1 5 3 a n d 154 i n Table  I.  b a s e d o n 1958  respectively,  However, t h e g r o w t h f o r t h e s e value  added/194? v a l u e  i960  F o r two  employa s shown  two I n d u s t r i e s  a d d e d a r e 193  a n d 14?.  2 V a l u e added f i g u r e s a r e t a k e n f r o m B u r e a u o f t h e Census, U n i t e d S t a t e s Census o f M a n u f a c t u r e r s : 1947 a n d I958.  _ 44 -  As a g r o w t h m e a s u r e ,  v a l u e added may  he d i s t o r t e d b y  p r i c e c h a n g e s , b u t i t w o u l d more a c c u r a t e l y r e f l e c t  relative change  in  demand, w h i c h i s t h e r e l e v a n t f a c t o r . Not o n l y i s c h a n g e  i n employment a. weak m e a s u r e o f  g r o w t h , b u t t h e r e i s r e a s o n t o t h i n k t h a t i t m i g h t be related to salaries. w o u l d be more i n t e n t increase  industries paying higher  on a c h i e v i n g g r o w t h w i t h a  i n employment.  substituting measured  Those  inversely salaries  minimal  T h e r e w o u l d be g r e a t e r e m p h a s i s  other factors  of p r o d u c t i o n f o r labour.  Growth  b y i n c r e a s e i n employment w o u l d t e n d t o be l e s s f o r  the higher paying  industries.  T h u s , n o t o n l y i s change  i n employment a n  Inaccurate  m e a s u r e o f g r o w t h , b u t i t m i g h t w e l l be b i a s e d t o w a r d s a higher r a t e of growth f o r lower paying o f t h i s measurement p r o b l e m , l i t t l e effect  In l i g h t  c a n be c o n c l u d e d  about the  rates.  Unionization Regressions  were r u n t o d e t e r m i n e what e f f e c t  degree of u n i o n i z a t i o n of p r o d u c t i o n w o r k e r s has upon The  results  unionism f o r these of  .50  showing  industries.  of i n d u s t r y growth upon s a l a r y 6.  on  showed, as e x p e c t e d ,  are h i g h l y c o l l i n e a r .  occupations.  salaries.  t h a t c o n c e n t r a t i o n and The  correlation  two v a r i a b l e s r a n g e d f r o m .20  f o r t h e 15  the  coefficients  t o .79 w i t h a  median  - 45 -  When u n i o n i s m suggest t h a t  was r u n a l o n e  I t i sa significant  However, when u n i o n i s m  against  salary,  results  explanatory v a r i a b l e .  was r u n w i t h c o n c e n t r a t i o n  i n t h e same  m u l t i p l e r e g r e s s i o n , o n l y 8 o u t o f 15 o f i t s c o e f f i c i e n t s w e r e p o s i t i v e a n d none o f them  significant.  This problem of c o l l i n e a r i t y between c o n c e n t r a t i o n and  unionism  h a s h a m p e r e d most r e s e a r c h  efforts to isolate  4 the  e f f e c t s of these-variables. The one r e s e a r c h e r  who wa„s a p p a r e n t l y  unconcerned  w i t h t h i s p r o b l e m o f m u l t I c o l l i n e a r i t y was W e i s s , concentration, unionism  and t h e p r o d u c t  He i n c l u d e d  of t h e two i n h i s  5  multiple  regressions. If  i sunlikely,  however, t h a t t h e e f f e c t s o f  u n i o n i z a t i o n and c o n c e n t r a t i o n c a n be d e t e r m i n e d multiple  regression analysis.  recourse  t o the a p r i o r i  Conclusions  reasoning  through  must be r e a c h e d by-  I n Chapter I I .  There a r e  s t r o n g r e a s o n s f o r b e l i e v i n g t h a t m o n o p o l y power a n d h e n c e concentration w i l l ever  there  be i m p o r t a n t  i slittle  theory  i n explaining salaries/  or evidence t o support  How-  the belief  t h a t t h e degree of u n i o n i z a t i o n of p r o d u c t i o n workers  will  See T a b l e V I I , A p p e n d i x I I , f o r r e s u l t s .  United  ^See H.G. L e w i s , U n i o n i s m a n d R e l a t i v e Wages i n 'the S t a l e s , The U n i v e r s i t y o f C h i c a g o P r e s s , C h i c a g o ^ 1963,  "'Weiss, op. c i t . , p. '98.  - 46' -  significantly Therefore,  affect  of w h i t e - c o l l a r  i t seems l o g i c a l t o a t t r i b u t e ,  most o f t h e v a r i a t i o n two  the salaries  i n salaries  that  t o concentration,  i s explained  by these  variables. 7.  Comparison With Weiss It  i s of i n t e r e s t  t o compare t h e r e s u l t s  to those of Weiss, since the data  and t o a c e r t a i n  a p p r o a c h , o f t h e two s t u d i e s a r e s i m i l a r . concentrated for four  on h o u r l y p a i d wage e a r n e r s ,  salaried  occupations  that  p r o p r i e t o r s (NEC) a n d t y p i s t s .  for concentration,  t h e main v a r i a b l e  i n common, a r e shown i n T a b l e I V .  of t h i s  study-  extent the  Although Weiss he d i d r u n r e g r e s s i o n s  are covered by t h i s  They a r e d r a f t s m e n , m e c h a n i c a l e n g i n e e r s , and  employees.  managers,  Regression  study.  officials  coefficients  t h a t t h e two s t u d i e s  have  TABLE I V COMPARISON WITH REGRESSION RESULTS OF WEISS' STUDY SALARY RELATED TO CONCENTRATION ALONE AND TO CONCENTRATION ALONG WITH OTHER INDUSTRY AND PERSONAL VARIABLES - ONLY C O E F F I C I E N T S FOR CONCENTRATION SHOWN  WEISS' OCCUPATION  No. Oh s r ,  Me an Salary  STUDY  T H I S STUDY  C one. A l one  Cone. W i t h Other Variables  No. Ob s r .  Mean Salary  Cone. Alone  Cone. W i t h Other Variables  Draftsmen  150  5763  44.36* (13O0)  5.773 (72.08)  114  6389  24.21* (10.72)  24.6Q* (12.33)  Mechanical Engineers  126  8998  24. 32 (26.73)  .5249 (152.7)  110  1 LOil O.l  s J•  20,43 (30.40)  19.24 (31.83)  Managers . Officials, & Proprietors  693  IO980  31.03 (24.05)  11. 23  532  11840  -12.98 (26.81)  -10.47 (28.99)  Typists  126'  2693  13.78 (10.52)  58  3256  25.41* (9.69)  29.55* (11.23)  ; 116.40) -13.14 (78.66)  • i n d i c a t e s s i g n i f i c a n c e a t t h e 5% l e v e l . S t a n d a r d e r r o r s a r e shown I n b r a c k e t s i m m e d i a t e l y b e l o w t h e c o e f f i c i e n t s .  '  - 48 -  The  d i f f e r e n c e i n sample s i z e s between t h e two s t u d i e s  i s l a r g e l y a c c o u n t e d f o r b y t h e f a c t t h a t e m p l o y e e s who d i d not work a t l e a s t but  5 0 weeks i n 1 9 5 9 w e r e d r o p p e d f r o m t h i s  not from Weiss'.  are lower. typists,  This  Apparently  e x p l a i n s why W e i s s ' mean  f o r draftsmen,  the i n c l u s i o n of these  study,  salaries  mechanical engineers  and  employees d i d not b i a s t h e  sample f o r o r a g a i n s t c o n c e n t r a t i o n .  Looking  at the c o e f f i c i e n t s  f o r c o n c e n t r a t i o n when i t was t h e o n l y I n d u s t r y v a r i a b l e i n the  regression, the results  o f t h e two s t u d i e s a r e a l m o s t  identical. For the managerial noticeably different.  This  occupation  group, t h e r e s u l t s are  discrepancy  may b e due t o t h e f a c t  •that a l l i n d i v i d u a l s w i t h any s e l f - e m p l o y m e n t income were dropped by t h i s study.  Many o f t h e s e  excluded  p e r s o n s were  employed by s m a l l f i r m s i n u n c o n e e n t r a t e d i n d u s t r i e s received l i t t l e observations favour  o r no s a l a r y  The i n c l u s i o n o f t h e s e  i n the r e g r e s s i o n s would b i a s the r e s u l t s i n  of a stronger  centration. problem.  income.  and  relationship  I t i s not c l e a r  between s a l a r i e s and con-  e x a c t l y how W e i s s h a n d l e d  I f he d i d n o t d r o p a l l e m p l o y e e s w i t h  i n c o m e , t h e n h i s r e s u l t s w o u l d be d i f f e r e n t ,  this  self-employment  and perhaps  biased. The  r e s u l t s f o r t h e two s t u d i e s a r e d e c i d e d l y  d i f f e r e n t , when t h e c o n c e n t r a t i o n i s r u n w i t h a l l o t h e r variables.  Part of t h i s d i f f e r e n c e i s probably  t h a t t h e t w o s t u d i e s i n c l u d e d somewhat d i f f e r e n t  due t o t h e f a c t i n d u s t r y and  _ 49 -  personal variables.  Most of t h e d i f f e r e n c e , however, i s l i k e l y -  due t o t h e f a c t t h a t W e i s s i n c l u d e d t h e t h r e e variables, together  collinear  c o n c e n t r a t i o n , u n i o n i z a t i o n and t h e i r  i n t h e same r e g r e s s i o n e q u a t i o n .  by the very h i g h standard  This  product i s confirmed  error f o r concentration.  CHAPTER V  CONCLUSIONS  The that  model t h a t t h i s  study  interindustry salary variation  significant ratio,  s e t out t o t e s t p r e d i c t s i s determinated,  to a  e x t e n t , -by i n d u s t r y m o n o p o l y p o w e r , c a p i t a l - l a b o u r  and g r o w t h .  The r e s u l t s  of t h e l i n e a r  regression  a n a l y s i s do. n o t l e a d t o a s i m p l e  c o n c l u s i o n of acceptance or  r e j e c t i o n o f t h e model.  they  Rather,  acceptance of c e r t a i n aspects and  suggest t e n t a t i v e  of t h e model, r e j e c t i o n of others  f o r some o f t h e h y p o t h e s e s t h e e v i d e n c e i s s i m p l y i n -  conclusive. This for  f a i l u r e t o e s t a b l i s h conclusive evidence,  o r a g a i n s t t h e m o d e l , c a n be b l a m e d l a r g e l y  measurement.  While the earnings  data  c o n s i s t e n t l y accurate  and  concentration  meaningful.  Economies o f s c a l e c o u l d n o t be measured, c a p i t a l were o n l y r o u g h l y  a p p r o x i m a t e d and w h i l e  -  50  -  requirements  a d v e r t i s i n g was  e a s i l y m e a s u r e d , i t s u f f e r e d , as d i d t h e o t h e r s , aggregation.  employees  difficulties.  Of t h e m o n o p o l y p o w e r m e a s u r e s , o n l y c a n be c o n s i d e r e d  on p r o b l e m s o f  on i n d i v i d u a l  was g o o d , t h e I n d u s t r y v a r i a b l e s c a u s e d  either  from  -  The  capital-labour  aggregate basis with  and  r a t i o had  t o be  i t was  m e a s u r e d on  highly  available  c h a n g e i n employment was T h i s b e i n g the  b e h a v i o u r of the  growth  D e s p i t e the clusions  can  indicates  be  that  d e g r e e of  collinear  h a v e t o be  the  as  indicate  that  j u d g e d a weak m e a s u r e o f  growth  was  regression  results.  amount o f c a p i t a l i n an The  same c a n  industry  be  the  effect  rates.  The  evidence  has  no  the  the  h i g h enough t o  Regression  proportion  the  of  suggest t h i s  strongest conclusion  industry  c h a r a c t e r i s t i c s i s a c o m p l e x one.  results  a, p o s i t i v e unanimous,  positive  relationship.  that  can  be  drawn  r e l a t i o n s h i p between s a l a r i e s The  i s u n d o u b t e d l y d e t e r m i n e d by  interrelated variables.  Much e f f o r t w o u l d be  successfully  test  d e v e l o p and  important c o n t r i b u t i o n  s t u d y of  and  interindustry a large  number  required  a complete model, but t o the  will  concentration  r e s u l t s were n e i t h e r  study i s that  an  The  said for  performance of the  from the  structure  con-  of monopoly power  c a s e i n most s t u d i e s .  Perhaps the  the  intensity.  s i g n i f i c a n t , but  c o e f f i c i e n t s was  salary  l e a r n e d from  I n d u s t r y c o n c e n t r a t i o n does e x e r t  e f f e c t upon s a l a r y strongly  basis,  measurement p r o b l e m s , t e n t a t i v e  c o n c l u s i o n s on  i s the  a detailed  variable.  based upon the  variable,  industry  drawn f r o m the  advertising Any  on  case, l i t t l e  e f f e c t upon s a l a r y l e v e l s .  be  an  c a p i t a l requirements.  i n demand.  nor  -  i n addition,  G r o w t h was but  51  to  i t would  economics.  of  BIBLIOGRAPHY  A.  Bain,  BOOKS  J.S. B a r r i e r s t o New C o m p e t i t i o n . U n i v e r s i t y P r e s s , 1956• '  Baumol, W i l l i a m J . New Y o r k ,  Cambridge,  Harvard  B u s i n e s s B e h a v i o r , "Value and G r o w t h . Macmillan, 1959»  Bowen, W.G. Wage B e h a v i o r i n t h e P o s t w a r P e r i o d : A n Empirical Analysis. 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The E c o n o m i c s o f D i s c r e t i o n a r y B e h a v i o r : Managerial O b j e c t i v e s i n a Theory of t h e Firm. E n g l e w o o d C l i f f s , P r e n t i c e - H a l l , I96IL  B.  Allen,  ARTICLES  B.T. " M a r k e t C o n c e n t r a t i o n a n d Wage I n c r e a s e : U.S. M a n u f a c t u r i n g , 1947 - 1964." I n d u s t r i a l and L a b o r R e l a t i o n s R e v i e w , V o l . 21, No. 1 ( M a r c h 1966), PP. 353 - 365.  B r o w n , D.G.. " E x p e c t e d A b i l i t y t o P a y a n d I n t e r i n d u s t r y Wage S t r u c t u r e i n M a n u f a c t u r i n g . " I n d u s t r i a l and L a b o r R e l a t i o n s R e v i e w , V o l . 16, N o . ~ l ( O c t o b e r igh~2) , pp. 45 -~61T. •Comanor, S. a n d W i l s o n , T.A. " A d v e r t i s i n g Market S t r u c t u r e and P e r f o r m a n c e . " Review o f Economics and S t a t i s t i c s , V o l . 49, No. 4 (November I90T) , p p . 4 2 3 - ^W. Garbarino,  J.W. "A T h e o r y o f I n t e r i n d u s t r y Wage S t r u c t u r e Variation." Q u a r t e r l y J o u r n a l of Economics, V o l . 64, No. T ~ ( A u g u s t l 9 5 o y r ~ p p - 2&2' - 305. r  G o l d n e r , W. a n d R o s s , A.M. "Forces A f f e c t i n g t h e Interi n d u s t r y Wage S t r u c t u r e . " Quarterly Journal of E c o n o m i c s , V o l . 64, No. 2 "pfey 1950)7 p p . 254 H a r b e r g e r , A.C. "Monopoly A m e r i c a n Economic pp. 77 ~^7,  281.  and Resource A l l o c a t i o n . " R e v i e w . V o l , 44, No. 2 (May 1954),  Herrnstadt, I.L. "Comment on 'Monopoly a n d Wages'." C a n a d i a n J o u r n a l o f Economics and P o l i t i c a l S c i e n c e , V o l . 27, No. 3 ( A u g u s t 1 9 6 T ) , p p . 428 - 4 38^  - 54 -  Kaysen, C a r l "The C o r p o r a t i o n : How Much Power? What S c o p e ? " i n The C o r p o r a t i o n i n M o d e r n S o c i e t y , E d w a r d S. Mason, e d . , C a m b r i d g e , H a r v a r d U n i v e r s i t y P r e s s , 1959Lamer,  R.J. "The 200 L a r g e s t N o n f i n a n e i a l C o r p o r a t i o n s . " A m e r i c a n E c o n o m i c R e v i e w , V o l . 56, No. 4  XSeptemher 196F)7~pp. 777 - 787.  M c G u i r e , J.W., C h i u , J.S.Y. and E l b i n g , A.O. "Executives' Incomes, S a l e s and P r o f i t s . " A m e r i c a n Economic R e v i e w , V o l . 52, No. 4 ( S e p t e m b e r 1962") , pp. 753 - 761. S i m o n , H.A. "The C o m p e n s a t i o n o f E x e c u t i v e s . " Sociometry, V o l . 20, No. 4 (December 1957), pp. 32 - 35S h w a r t z m a n , D. " M o n o p o l y and Wages." C a n a d i a n J o u r n a l o f E c o n o m i c s a n d P o l i t i c a l S c i e n c e , V o l . 26, No] 3 "(August I 9 6 0 ) , pp. 428 - 438. S o l o m o n , B. a n d B u r n s , R.K. " U n i o n i z a t i o n of W h i t e - C o l l a r Employees: E x t e n t , P o t e n t i a l and I m p l i c a t i o n s . " J o u r n a l o f B u s i n e s s , V o l . 36, No. 2 " ( A p r i l 1963), pp."141 - lb~5~. W e i s s , L.W. " C o n c e n t r a t i o n and L a b o r E a r n i n g s . " American E c o n o m i c R e v i e w , V o l . 56, No. '1 ( M a r c h 1960") ,  pp. 96 - 117.  W i l l i a m s o n , O.E. " M a n a g e r i a l D i s c r e t i o n and B u s i n e s s Behavior." A m e r i c a n E c o n o m i c R e v i e w , V o l . 53, No. 5  (December ±9b~5T, pp. .1033 - 1057".  Y o r d o n , W.J. " A n o t h e r L o o k a t M o n o p o l y and Wages." C a n a d i a n J o u r n a l o f Economics and P o l i t i c a l S c i e n c e , V o l . 27, No. 3 ( A u g u s t 1961), pp. 373 - 379-  C.  U.S. GOVERNMENT PUBLICATIONS  Bureau o f t h e Census, U n i t e d . ' 1947. Vol. I.  S t a t e s Census  of  Manufacturers:  Bureau of t h e Census, U n i t e d 1958. Vol. I.  States  of  Manufacturers:  Census  B u r e a u . o f t h e Census, U n i t e d S t a t e s Census Industries: 195~87 V o l . I .  of Mineral  B u r e a u o f t h e C e n s u s , U.S. C e n s u s e s o f P o p u l a t i o n a n d H o u s i n g i960. 1 / I 0 0 " 0 ~ a n d 1 / 1 0 0 0 0 , Two N a t i o n a l S a m p l e s o f ~ the P o p u l a t i o n of t h e United S t a t e s , D e s c r i p t i o n and D o c u m e n t a t i o n . I n t e r n a l Revenue S e r v i c e , S t a t i s t i c s June i 9 6 0 .  o f Income:  July 1959 -  APPENDIX I  MATCHING OF  As  indicated  s t u d y comes f r o m t h r e e  1.  INDUSTRY DATA  i n Chapter sources:  S t a t i s t i c s o f Income, 1959  I n t e r n a l Revenue S e r v i c e , U.S. source  I I I , industry data f o r t h i s  - I960, p u b l i s h e d b y  Treasury  p r o v i d e s d a t a on i n d u s t r y s a l e s ,  2.  U.S.  Census of M a n u f a c t u r e r s :  of M i n e r a l I n d u s t r i e s : t h e C e n s u s , U.S. establishments 3.  1958,  advertising.  '1958, and U.S.  " C o n c e n t r a t i o n and L a b o r E a r n i n g s " b y L.W.  appendix of t h i s concentration.  96  -  117.  c o n c e n t r a t i o n d a t a were T a b l e  The  original  sources  In  The and  g r o w t h d a t a o r i g i n a l l y came f r o m t h e  i960 p o p u l a t i o n c e n s u s e s .  Manufacturing  pp.  here. Weiss  a r t i c l e provided f i g u r e s f o r growth The  Census  F i g u r e s f o r number o f  number o f e m p l o y e e s a r e t a k e n f r o m  t h e A m e r i c a n E c o n o m i c R e v i e w , M a r c h 1966,  and  a s s e t s and  This  b o t h p u b l i s h e d by t h e B u r e a u o f  D e p a r t m e n t o f Commerce. and  Department.  the  1950  for  IV of C o n c e n t r a t i o n R a t i o s i n  I n d u s t r i e s , P a r t I (Senate  - 56 -  Judiciary,  1962)  'and  -  U.S.  Census of M i n e r a l The  d e v e l o p e d as  57  -  i n d u s t r y v a r i a b l e s t o be follows.  A total  o f 6j5  i n d u s t r i e s were s e l e c t e d f o r the according  t o the  population  on  Statistics  of the  They were  concentration  s t u d y s i n c e he  a v a i l a b l e only  The  on  o f Incorne does n o t  a detailed industry level.  Statistics  population  census.  f i g u r e s were a s s i g n e d  reported  report  the  each group t h e s e  detailed industry  Census of M a n u f a c t u r e r s r e p o r t s minor f o u r - d i g i t b a s i s .  employment f i g u r e s f r o m t h i s  c h o s e n on t h e  same b a s i s  as t h e  assets  as  figures the  major groups aggregate classifications.  industry data  and  However,  the  s o u r c e must  d a t a from the  on  be  Statistics  ome. The  major i n d u s t r y c l a s s i f i c a t i o n s  f o r the  and  m a n u f a c t u r i n g censuses correspond e x a c t l y , but  two  cases f o r which the  Kindred  the  required  establishment  differ.  them  Major i n d u s t r y f i g u r e s from  For  t o the  the  a major i n d u s t r y b a s i s  and  Inc  classified  r e m a i n d e r of  a major t w o - d i g i t  of  mining  f i g u r e s were  o f Income w e r e m a t c h e d b y name t o t h e  The  s t u d y were  m a n u f a c t u r i n g and  study.  t h r e e - d i g i t code.  i n d u s t r y d a t a was the  G r o w t h and  from Weiss'  t o the  used i n the  t h r e e - d i g i t i n d u s t r y code u t i l i z e d by  census.  taken d i r e c t l y according  1958.  Industries:  These are  Statistics  o f Income  i n Transportation  P r o d u c t s where Motor V e h i c l e s  Beverages are  reported  separately  by  the  there  are  classification  E q u i p m e n t and and  population  Equipment Statistics  Food  and  and o f ' I n c orne.  S i n c e i t i s d e s i r e d t o h a v e as d e t a i l e d •as i s p o s s i b l e , t h i s  classification  an i n d u s t r y  i s used.  breakdown  Figures f o r  B e v e r a g e s a r e d e v e l o p e d f r o m t h e Census of M a n u f a c t u r e r s by f o r t h e 208X f o u r - d i g i t  summing f i g u r e s are Malt Liquors  (20-82), M a l t  industries.  These  ( 2 0 8 3 ) , Wine and B r a n d y  (2084),  D i s t i l l e d L i q u o r e x c e p t B r a n d y (2085), b o t t l e d a n d c a n n e d soft  drinks  (2086) and f l a v o r i n g s  (2087).  I n o r d e r t o match  t h e F o o d and K i n d r e d ' P r o d u c t s f i g u r e s t o t h o s e f r o m t h e Statistics  o f Income, t h e s e B e v e r a g e s f i g u r e s w e r e  subtracted  f r o m F o o d and K i n d r e d ' P r o d u c t s ( 2 0 ) . Similarly,  the f i g u r e s f o r Motor V e h i c l e s  and  E q u i p m e n t w e r e d e v e l o p e d b y summing t h o s e f o r T r u c k and Bus Bodies Parts  (37-13), T r u c k T r a i l e r s (3717).  (3715), and M o t o r V e h i c l e s  and  These t o t a l s were s u b t r a c t e d from t h o s e f o r  T r a n s p o r t a t i o n Equipment  (37) t o o b t a i n t h e p r o p e r f i g u r e s f o r  matching. The r e s u l t s  of t h i s  i n d u s t r y . m a t c h i n g a r e shown i n  T a b l e V and t h e c a l c u l a t e d v a r i a b l e s . i n d u s t r y d a t a was  i n Table I.  e n t e r e d on p u n c h e d c a r d s s o as t o be i n a  form f o r computer i n p u t .  I t was  t h e n matched w i t h t h e  p o p u l a t i o n census data which i s stored individual  This  on m a g n e t i c t a p e .  employee s e l e c t e d f r o m t h e p o p u l a t i o n - c e n s u s  Each was  assigned the industry v a r i a b l e s corresponding t o the threedigit  i n d u s t r y i n w h i c h he was  employed.  The r e s u l t i n g  a g a i n on m a g n e t i c t a p e , c o n s t i t u t e d an o b s e r v a t i o n f o r regression  analysis.  record,  TABLE V BASIC INDUSTRY DATA  I NT)  UNIONIZATION  NAME  Acc^rpo O  D  $' 000 126 136 146. 156  Metal Mining Coal Mining C r u d e P e t . & N a t . Gas Non-Metalic Mining Lumber, and Wood  206 207 208 209  218 219 23o  an-jaa  •  ADVERTISING  $'000 '  $ 000  NO. EST.  NO. EMF.  !  94 99 13 30  4211305 2324810 7146456 2356819  1791980 1884238 4450769 1769976  518 1716 9086 6769  2233 8178 18501 7306  92501 210519 312800 116812  50  5333283  7193236  28558  37789  518302  43 47 50  5333283 5333283 2449833  7193236 7193236 4945371  28558 28558 60459  37789 37789 10160  518302 518302 347599  95  8713029  10581391  74279  15022  554042  69 65 60 85  • 8713029 8713029 8713029 8713029  10581391 10581391 10581391 10581391  74279 74279 74279 74279  15022 15022 15022 15022  554042 554042 554042 554042  Products  Logging Sawmills, Planing M i l l s , Millwork M i s c . Wood P r o d u c t s F u r n i t u r e and F i x t u r e s S t o n e , C l a y and G l a s s  216 217  q f l T p q  °  Products  G l a s s and G l a s s P r o d u c t s Cement, C o n c r e t e , Gypsum and P l a s t e r S t r u c t u r a l Clay Products P o t t e r y and R e l a t e d P r o d u c t s Misc. Non-Metalic Minerals  TABLE V  IND  NAME  Primary Metal 237 238 239  248  B l a s t F u r n a c e s , S t e e l Works, etc. Other Primary Iron & S t e e l Primary, Non-Ferrous Metals  SALES  ADVERTISING  NO. EMP.  $'000  $' 000  $'000  99 75 83  26282013 26282013 26282013  27194223 27194223 27194223  118575 118575 118575  6446 6446 6446  1096359 1096359 1096359  60  11772597  18712082  167205  24782  1057986  73 73  11772597 11772597  18712082 18712082  167205 167205  24782 24782  1057986 1057986  Products  C u t l e r y , Hand T o o l s , H a r d w a r e Fabricated S t r u c t u r a l Metal Products • Misc. Fab. Metal Products Machinery  NO. EST.  ASSET'S  Industries  Fabricated Metal 246 247  UNIONIZATION  (Continued)  Except  Electrical  256 257 258  Farm M a c h i n e r y O f f i c e , C o m p u t i n g & A c c t g Mach. Misc. Machinery  90 42 69  20137931 20137931 20137931  24938517 24938517 24938517  262160 262160 262160  29839 29839 29839  1348245 1348245 1348245  259  Electrical  73  '14300144  22500260  389261  8091  1122284  267  Motor V e h i c l e s  98  16561217  24273354  196745  2283  210519  Machinery and E q u i p m e n t  TABLE V  I NT)  i^I0ILT  NAME  IZATION  T r a n s p o r t a t i o n Eqpt Except  268 269 276  and R e l a t e d  ASSETS  SALES  ADVERTISING  $'000  $'000  $'000  '  9694529 9694529 9694529  16465594 16465594 16465594  46287 46287 46287  4324 4324 4324  100571 100571 100571  3526 3526 3526  296558 296558 296558  14273  57143  36061 36061 36061 36061  1492617 1492617 1492617 1492617  Products  P r o f e s s i o n a l Eqpt and S u p p l i e s P h o t o g r a p h i c Eqpt and S u p p l i e s Watches, C l o c k s , E t c . "  53 43 90  4545251 4545251 4545251  6200826 6200826 6200826  296  M i s c e l l a n e o u s Mfgrs  55  4518551  7249222  139904 139994139994 133726  83 6l 69 ' 74  18010406 18010406 l8010406 l8oio4o6  50112468 50112468 50112468 50112468  963744 963744 963744 963744  306 307 308 309  NO. EMP.  82 70 50  286 287 289  Food and K i n d r e d  NO. EST.  Auto  A i r c r a f t and P a r t s Ship & Boat B u i l d i n g & R e p a i r R a i l r o a d & Misc. Transp. Eqpt Instruments  (Continued)  2  Products  " Meat P r o d u c t s Dairy Products Canning and P r e s e r v i n g Grain M i l l Products  ABLE V  INT)  NAME  UNIONIZATION  $' 000  $'000  $'000  NO. EST.  NO. EMP.  1492617 1492617 1492617  5248563  8215474  401319  5558  206197  60  3306120  4817872  263388  504  84467  31 50  8929065 8929065  14196673 14196673  88344 88344  7675 7675  901677 901677  62 . 24 39  8929065 8929065 8929065  14196673 14196673 14196673  88344 '88344 88344  7675 7675 7675  901677 901677 901677  64  32  • 4507669 4507669  1184383411843834  115827 115827  29297 29297  1180517 1180517  90 62 71  9977017 9977017 9977017  11579374 11579374 11579374  97458 97458 97453  5271 5271 5271  555398 555398 . 555398  318  Beverages  70  329  Tobacco  Products  349 356  Knitting Mills Dying and F i n i s h i n g F l o o r Coverings Except Hard Surfaces Y a r n , T h r e a d and F a b r i c Misc. Textiles  359 367  A p p a r e l and A c c e s s o r i e s Misc. Fan. T e x t i l e s Paper and A l l i e d  386 387 389  ADVERTISING  36061 36061 36061  50 51 72  346 3^7 348  SALES  963744 963744 963744  B a k e r y Product's C o n f e c t i o n e r y & R e l a t e d Prodticts M i s c . Food P r e p a r a t i o n s  Textile Mill  ASSETS  18010406 50112468 i8oio4o6 • 50112468 i8oio4o6 50112468  316 317 319  Products  (Continued)  Products  Pulp, Paper & Paperboard Paperboard Containers Misc. Paper & Pulp Products  TABLE V  IND  Printing 396 39°  406 407 408 409  Except  C h e m i c a l s and A l l i e d  Products  Synthetic Fibres Drugs and M e d i c i n e s P a i n t s , V a r n i s h and R e l a t e d Products M i s c . C h e m i c a l s and R e l a t e d Products and C o a l  ADVERTISING  £'000  $ 000  $'000  90  8146482  12238036  92601  35368  864101  56  8146482  12238036  92601  35368  864101  75 33  23202242 23202242  26065022' 26065022  986856 986856  11309 11309  699166 699166  67  23202242  26065022  986856  11309  699166  70  23202242  26065022  986856  11309  699166  90  39748483 39748483  36004854 36004854  164859 164859  1608 1608  179166 179166  81 50  4906503 4906503  7737607 7737607  127152 127152  4462 4462  349050 349050  1  NO. EST  NO. EMP.  Products  416 • P e t r o l e u m R e f i n i n g 419 Misc. Pet. & Coal Products Rubber and P l a s t i c s  426 42°/  SALES  and P u b l i s h i n g  Newspapers Printing & Publishing Newspapers  Petroleum  ASSETS  UNIONIZATION  NAME  (Continued)  Products  Rubber P r o d u c t s Misc. P l a s t i c Products  OA  TABLE V  IND  NAME  L e a t h e r and L e a t h e r 436 437 438  IZATION  (Continued)  ASSETS  $'000  $'000  $'000  1843319 1843319 1843319  3907359 3907359 3907359  43585 43585 43585  Products  Leather Tanning, e t c . Footwear Except Rubber L e a t h e r Products Exc. Footwear  67 48 48  4534 4534 4534  349050 349050 349050  APPENDIX I I  DETAILED REGRESSION  RESULTS  T a b l e V I shows i n d e t a i l •regressions.  the results  of the m u l t i p l e  F o r e a c h o c c u p a t i o n t h e number o f o b s e r v a t i o n s ,  t h e mean s a l a r y ,  the constant  term  and t h e c o e f f i c i e n t s  of  t h e f o u r i n d u s t r y v a r i a b l e s and f o u r p e r s o n a l v a r i a b l e s a r e shown. In brackets shown t h e s t a n d a r d  immediately  below each c o e f f i c i e n t i s  e r r o r of the c o e f f i c i e n t .  below t h i s  i s t h e F~ p r o b a b i l i t y ,  calculated  by d i v i d i n g  and  calculated,  statistic  t h e c o e f f i c i e n t by i t s s t a n d a r d  squaring the resulting  obtaining a value  where F i s a  Immediately  term.  error  This i s the p r o b a b i l i t y  of F g r e a t e r than  of  o r e q u a l t o t h e one  given that the c o e f f i c i e n t  i s actually  At t h e f a r r i g h t hand s i d e o f t h e t a b l e ,  zero. the value  2 of R , t h e c o e f f i c i e n t  of m u l t i p l e determination, i s given  and u n d e r n e a t h t h a t i s t h e s t a n d a r d As  e x p l a i n e d i n Chapter  IV, t h e h i g h ' c o l l i n e a r i t y  between t h e c a p i t a l requirements -  65-  e r r o r of t h e estimate.  and c a p i t a l l a b o u r v a r i a b l e s -  66  necessitated runs.  t h e d r o p p i n g o f one o f t h e m f r o m t h e r e g r e s s i o n  Thus, t h e c a p i t a l  i n Table V I .  r e q u i r e m e n t s v a r i a b l e does n o t appear  Regressions run with t h i s v a r i a b l e i n place of  c a p i t a l - l a b o u r produced  almost i d e n t i c a l r e s u l t s .  Table V I I gives  the regression  made w i t h t h e u n i o n i z a t i o n v a r i a b l e .  r e s u l t s f o r t h e runs  The c o e f f i c i e n t s a r e  shown f o r u n i o n i z a t i o n when i t was t h e o n l y run. are  industry  Then c o e f f i c i e n t s f o r u n i o n i z a t i o n and  concentration  shown when b o t h w e r e r u n i n t h e same r e g r e s s i o n .  presence  o f one o r t w o a s t e r i s k s I n d i c a t e s  5 ^ o r l°/o l e v e l  on a, 2 - t a i l e d T - t e s t .  variable  The  significance at the  TABLE VI  MULTIPLE REGRESSION RESULTS SALARY RELATED TO 4 INDUSTRY AND 4 PERSONAL VARIABLES  CONCENTRATION  ADVERTISING  + 977.4 (2126.1)  - 1.80 (15.33) (.8733)  - 10470. (19610.) (.6013)  1,3, 7503  - 2097. (3081.)  + 7.91 (32.27) (.7945)  Draftsmen  114, 6389  + 576.8 (1807.)  Industrial Engineers  58, 8145  Mechanical Engineers  RSQ  4.20 (3.65) (.1513)  - 6.49 (5.04) (.1980)  + 317.4 (469.5) (.5079)  ^ 93.0 (17.58) (.0000)  + 362.0 (154.7) (.0204)  -  + 978.2 (21630.) (.9165)  18.56 (7.77) (.0203)  - 3.36 (11.29) (.7602)  +1060. (648.2) (.1023)  ^ 57.33 (29.29) (.0538)  + 630.4 (168.7) (.0006)  - 698.8 (722.9) (.3413)  .4360 (1991.)  + 24.69 (12.33) (.0452)  + 18330. (20510.) (.3773)  .4221 (5.29) (.8957)  - 3.93 (4.30) (.3664)  - 145.3 (410.2) (.7222)  i- 90.53 (15.75) (.0000)  1- 203.1 (136.9) (.1376)  - 92.34 (354.4) (.7840)  .3244 (1476.)  + 50.29 (3756.)  + 15.74 (41.43) (.7039)  - 99260. (43040.) (.0241)  <- 18.76 (30.56) (.5494)  - 4.84 (10.15) (.6402)  - 984.8 (1397.) ( .4910)  +103.1 (33.52) (.0035)  + 479.1 (309.8) (.1245)  - 973.4 (990.5) (.3325)  .2969 (2781.)  110, 9494  - 1063. (3988.)  + 19.24 (31.83) (.5543)  + 26330. (54360.) (.6345)  + 2.62 (11.75) (.8083)  • .491 (8.53) ( .9089)  + 354.7 (1078.8) (.7392)  +102.57 (42.60) (.0171)  ^ 523.0 (280.2) (.0616)  -2180. (1272.) (.0858)  .1107 (3972.)  Sales Engineers  25, 11950  -15750. (26100.)  + 87.12 (292.5) (.7619)  -129500. (164000.) (.4466)  -120.8 (176.5) (.5100)  -29.03 (54.31) (.5944)  -2561. (3546.) (.4867)  +491.4 (242.7) (.0574)  +1232. (1746.) (.4967)  +1600. (6398.) (.7927)  .3877 (6949.)  Engineers (NEC)  33, 9520  -15540. (9715.8)  +117.7 (87.4) (.1879)  -130100. (104300.) (.2223)  - 95.51 (95.06) (.3267)  -21.19 (21.90) (.3451)  -2589. (3442.) (.4652)  +381.7 (112.1) (.0024)  +1216. (625.2) (.0609)  -5104. (3212.) (.1215)  .4577 (5310.)  Accountants (Std. Err.) (F Prob)  100, 7208  Chemists  AGE  RURAL  SOUTH  CONSTANT  CAP/LAB  EDUCATION  GROWTH  N,M  OCCUPATION  61.1 (459.7) ( .8640)  .2854 (1846.)  TABLE VI  MULTIPLE REGRESSION RESULTS SALARY RELATED TO 4 INDUSTRY AND 4 PERSONAL VARIABLES  EDUCATION  RURAL  RSQ  + 93.0 (17.58) (.0000)  + 362.0 (154.7) (.0204)  • 61.1 (459.7) (.8G40)  .2854 (1846.)  +1060. (648.2) (.1023)  + 57.33 (29.29) (.0538)  + 630.4 (168.7) (.0006)  - 698.8 (722.9) (.3413)  .4360 (1991.)  - 3.93 (4.30) (.3664)  - 145.3 (410.2) (.7222)  + 90.53 (15.75) (.0000)  + 203.1 (136.9) (.1376)  - 92.34 (354.4) (.7840)  .3244 (1476.)  + 18.76 (30.56) (.5494)  - 4.84 (10.15) (.6402)  - 984.8 (1397.) (.4910)  +103.1 (33.52) (.0035)  + 479.1 (309.8) (.1245)  - 973.4 (990.5) ( .3325)  .2969 (2781.)  + 26330. (54360.) ( .6345)  + 2.62 (11.75) (.8083)  - .491 (8.53) ( .9089)  + 354.7 (1078.8) (.7392)  +102.57 (42.00) (.0171)  + 523.0 (280.2) (.0616)  -2180. (1272.) (.0858)  .1107 (3972.)  + 87.12 (292.5) (.7619)  -129500. (164000.) ( .4466)  -120.8 (176.5) (.5100)  -29.03 (54.31) (.5944)  -2561. (3546.) ( .4867)  +491.4 (242.7) (.0574)  +1232. (1746.) (.4967)  +1600. (6398.) (.7927)  .3877 (6949.)  +117.7 (87.4) (.1879)  -130100. (104300.) (.2223)  - 95.51 (95.06) ( .3267)  -21.19 (21.90) (.3451)  -2569. (3442.) (.4652)  +381.7 (112.1) (.0024)  +1216. (625.2) (.0609)  -5104. (3212.) (.1215)  .4577 (5310.)  CONCENTRATION  ADVERTISING  CAP/LAB  GROWTH  SOUTH  4.20 (3.65) (.1513)  - 6.49 (5.04) (.1980)  + 317.4 (469.5) (.5079)  + 978.2 (21630.) (.9165)  18.56 (7.77) (.0203)  - 3.36 (11.29) (.7602)  + 24.69 (12.33) (.0452)  + 18330. (20510.) (.3773)  .4221 (5.29) (.8957)  + 50.29 (3756.)  • 15.74 (41.43) (.7039)  - 99260. (43040.) (.0241)  110, 9494  - 1063. (3988.)  + 19.24 (31.83) (.5543)  Sales Engineers  25, 11950  -15750. (26100.)  Engineers (NEC)  33, 9520  -15540. (9715.8)  N,M  CONSTANT  Accountants (Std. Err.) (F Prob)  100, 7208  + 977.4 (2126.1)  -  1.80 (15.33) (.8733)  - 10470. (19610.) (.6013)  Chemists  53, 7503  - 2097. (3081.)  + 7.91 (32.27) (.7945)  Draftsmen  114, 6389  + 576.8 (1807.)  Industrial Engineers  58, 8145  Mechanical Engineers  OCCUPATION  AGE  - 69 -  TABLE V I I  REGRESSION RESULTS FOR UNIONIZATION  OCCUPATION  UNIONIZATION ALONE  Accountants  -10.97  Chemists Draftsman  UNIONIZATION  CONCENTRATION  9.09  +  +13.82"  • 31  -  +24.03*  + 20.02  + 15.17  -  . 23 1.16  Industrial  Engineers  +30.14  + 13.45  - 15.37  Mechanical  Engineers  +17.10  + 20.08  +  Engineers  -61.65  - 99.31  +243.3  E n g i n e e r s (NEC)  +66.23  - 25.06  + 80.18  P e r s o n n e l and Labour R e l a t i o n s Workers  -29.48  -105.9  +180.22  P r o f . , Tech. and K i n d r e d W o r k e r s (NEC)  -  3.98  -.  5.36  + 14.74  •Managers, O f f i c i a l s and P r o p r i e t o r s  +  9-99  + 16.20  - 19.1c  Bookkeepers  +  2.50  +  .91  +  Secretaries  +12.35**  +  .04  + 23.04**  Stenographers  +  -  4.39  + 21.83  Typists  +30.39**  + 29.28  + 11.75  Salesmen and S a l e s c l e r k s  -  + 14.17  - 71.25**  Sales  1.92  4.08  2.28  6.68  

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