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Title: The New Economic Segmentation: Work, Inequality, and Market Power

Citation Type: Dissertation/Thesis

Publication Year: 2018

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Abstract: This dissertation considers how changes in organizations and product markets contributed to rising earnings inequality and wage stagnation since the 1970s. The first chapter shows how the spread of unequal bargaining relations between corporate buyers and their suppliers has slowed wage growth for workers. Since the 1970s, market restructuring has shifted many workers into workplaces heavily reliant on sales to outside corporate buyers. These outside buyers wield substantial power over working conditions among their suppliers. During the same period, wage growth for middle-income workers stagnated. By extending organizational theories of wage-setting to incorporate interactions between organizations, I predict that wage stagnation resulted in part from production workers’ heightened exposure to buyer power. Panel data on publicly traded companies shows that dependence on large buyers lowers suppliers’ wages and accounts for 10 percent of wage stagnation in nonfinancial firms since the 1970s. These results are robust to a series of supplementary measures of buyer power; instrumental variable analysis using mergers between buyers; corrections for selection and missing data; and controls for individual worker characteristics like education and occupation. The results show how product market restructuring and new forms of economic segmentation affect workers’ wages. The second chapter assesses the contribution of job reorganization to rising within-firm earnings inequality. During the period of rising U.S. earnings inequality, many employers revived management practices in which complex and routine tasks are divided between higherand lower-paid jobs. This article theorizes this process as job distillation and distinguishes it from other sources of increasing organization-level earnings inequality. To test the earnings effects of job distillation, panel models are fit using linked employer-employee data on employees working for U.S. labor unions. These administrative data include a rare direct measure of task content, which is validated via a survey of union representatives. Variance function regression shows that job distillation increases inequality within organizations. This effect is driven by separating routine and complex tasks across jobs and by lowering earnings as jobs are simplified with respect to tasks. These findings demonstrate that classic concerns in the sociology of work should be brought back into the study of inequality. The distribution of earnings hinges on the allocation of tasks into jobs. The third chapter traces changing patterns of worker mobility across jobs. Since the 1970s, changing employment relations seem to have eroded the role played by organizations in shaping worker mobility and earnings. As internal labor markets have declined, organizations no longer buffer workers from competitive labor markets. Yet at the same time, worker mobility between firms, through the external labor market, has declined. I compare the earnings and occupational attainment effects of job mobility within- and between-organizations. Due to declining worker mobility between-employers, within-organization mobility makes up an increasing share of overall job-to-job mobility. However, contrary to predictions made by theories of internal labor markets, within-firm transitions decreasingly consist of moves associated with earnings increases or upward occupational mobility. Part of this decline in the pay-off to internal moves stems from a shifting mobility age structure, in which a within-firm job changers are older and less likely to benefit from within-firm mobility. These findings suggest that movement between jobs within organizations remains important, but that these moves provide less advantage for workers than they did previously.

Url: http://nrs.harvard.edu/urn-3:HUL.InstRepos:40050143

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Authors: Wilmers, Nathan Eric

Institution: Harvard University

Department: Sociology

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Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

Countries: United States