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The World Bank

By William F. Maloney and Eduardo Pontual Ribeiro

Abstract

Abstract: Using very detailed firm level data from Mexico, this paper uses quantile analysis to study the demand for two classes of labor and the determinants of their wages. Unions appear to have a strong positive impact on the quantity of unskilled labor employed but none on wages except for the 10 th (lowest) quantile of unskilled workers. This suggests an extreme example of “efficient bargaining ” rather than more common “monopoly union ” behavior and that wage objectives are limited to maintaining a floor for poorly paid workers. Very significant efficiency wage effects are identified both in labor demand and in the wage equations suggesting that even in the absence of minimum wages or union power, substantial segmentation of the labor force will remain in LDCs. The paper offers the first use of quantile analysis in firm level analysis of labor demand and the first use of correct standard errors in 2SLS quantiles

Year: 1999
OAI identifier: oai:CiteSeerX.psu:10.1.1.199.7256
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