Contracting-out and the Interindustry Wage Structure: Do Norms of Internal Equity Matter in Wage Determination?

Samuel G. Berlinski
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Samuel G. Berlinski: Oxford University

No 1053, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: This paper compares the wage of a worker performing an activity for an outside contractor with the wage that the firm contracting for this service would have paid were this worker on its payroll (i.e., working in-house). If norms of internal equity were a binding constraint, the wage paid by the outside contractor should not be expected to be identical to the in-house wage. Our results, obtained using data from the U.S. Current Population Survey and the Input-Output matrix, are consistent with the view that norms of internal equity are binding.

Date: 2000-08-01
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