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 734, Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: According to standard economic models, adverse demand shocks will lead to bigger employment losses if institutional factors like minimum wages and trade unions prevent real wages from falling. 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 held steady and employment was stagnant. We test the hypothesis by comparing recent changes in wages and employment rates 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. also affected Canada and France. Consistent with the view that labor market institutions in Canada and France reduce wage flexibility, we find that the relative wages of less-skilled workers fell more slowly in Canada than the U.S. during the 1980s, 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.

Keywords: flexibility; international comparisons; wage structure; Canada; France (search for similar items in EconPapers)
JEL-codes: B41 (search for similar items in EconPapers)
Date: 1995-12
References: Add references at CitEc
Citations: View citations in EconPapers (22)

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Related works:
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 (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:pri:indrel:355

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