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Interindustry variation in salaries : an empirical study

University of British Columbia

The purpose of this study was to empirically investigate the determinants of the variation in white-collar salaries among United States manufacturing and mining industries. A model was formulated, hypothesizing that inter-industry salary variation is primarily a function of industry monopoly power, capital-labour ratio and growth. Linear regression analysis was to be used to test the model with data from the U.S. Bureau of the Census and the Internal Revenue Department. Conceptual and statistical problems were encountered in measuring the industry variables. Although concentration and barriers to entry were to be used together in measuring monopoly power, in the final analysis it was concentration that had to be relied upon. The measure of industry growth, based upon change in employment, turned out to be inappropriate for its intended purpose. The regression results indicated that the amount of capital in an industry has no effect upon the level of salaries. Problems of multicollinearity made it impossible to isolate the capital-labour and capital requirements effects. The evidence further indicated that industry concentration is a factor in explaining salary rates. However, the results were not decisive enough to allow any firm conclusions concerning the effects of monopoly power, particularly in view of the fact that concentration is an imperfect measure of this variable. . . Thus, one assertion of the hypothesis was tentatively accepted, another rejected, and for the third, the evidence was inconclusive.

Text

2011-05-18

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http://hdl.handle.net/2429/34681

Economics

University of British Columbia

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