Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France

David Card, Francis Kramarz () and Thomas Lemieux

No 5487, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Standard models suggest that adverse labor demand shocks will lead to bigger employment losses if institutional factors like minimum wages and trade unions prevent downward wage adjustments. Some economists have argued that this insight explains the contrast between the United States, where real wages fell over the 1980s and aggregate employment expanded vigorously, and Europe, where real wages were (roughly) constant and employment was stagnant. We test this hypothesis by comparing changes in wages and employment rates over the 1980s for different age and education groups in the United States, Canada, and France. We argue that the same forces that led to falling real wages for less-skilled workers in the U.S. affected similar workers in Canada and France. Consistent with the view that labor market institutions are more rigid in France, and more flexible in the U.S., we find that relative wages of less-skilled workers fell the most in the U.S., fell somewhat less in Canada, and did not fall at all in France. Contrary to expectations, however, we find little evidence that wage inflexibilities generated divergent patterns of relative employment growth across the three countries.

JEL-codes: J31 (search for similar items in EconPapers)
Date: 1996-03
Note: LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (74)

Published as David Card & Francis Kramarz & Thomas Lemieux, 1999. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," The Canadian Journal of Economics / Revue canadienne d'Economique, vol 32(4).

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Journal Article: Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France (1999)
Working Paper: Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France (1995)
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