Evidence of efficiency wage payments in uk firm level panel-data
The authors explicitly model the vertical spillovers that result from imperfections in both labor and product markets. They model the vertical spillovers from wage determination in an upstream labor market to market share performance in a downstream product market and vice versa. Rent sharing due to efficiency wages is shown to create a unique downstream vertical spillover, while rent sharing due to wage bargaining creates a two-way vertical spillover. Using U.K. firm level panel data, the authors show that downstream spillovers due to efficiency wage payments and union activity exist and constitute general direct evidence of efficiency wage payments in U.K. companies. Copyright 1994 by Royal Economic Society.