Linda A. Bell

The incentive for working hard: explaining hours worked differences in the US and Germany

This paper seeks to explain the greater hours worked by Americans compared to Germans in terms of forward-looking labor supply responses to differences in earnings inequality between the countries. We argue that workers choose current hours of work to gain promotions and advance in the distribution of earnings. Since US earnings are more unequally distributed than German earnings, the same extra work pays off more in the US, generating more hours worked. Supporting this inequality-hours hypothesis, we show that in both countries hours worked is positively related to earnings inequality in cross section occupational contrasts and that hours worked raises future wages and promotion prospects in longitudinal data.

Lump-Sum Payments and Profit-Sharing Plans in the Union Sector of the United States Economy

Lump-sum payments and profit-sharing plans became increasingly prevalent in union contracts in the U.S. economy in the 1980s. This paper analyzes the relationship between lump-sums, profit sharing, labor costs and employment, in firm-level panel data for the union sector of the U.S. economy. In general, the firm-level data suggest that profit sharing has a statistically significant effect of lowering labor cost growth. Profit sharing also appears to increase employment growth and reduce employment variability, but these results are not statistically significant. This evidence is generally consistent with hypotheses regarding the introduction of performance-related pay (Weitzman, 1984 and 1985). The effects of lump-sums, on the other hand, are not consistent with hypotheses regarding performance-related pay. Lump-sums do not appear to lower labor cost growth or increase employment growth, and increase rather than decrease employment variability. Copyright 1993 by Royal Economic Society.

Differences in Work Hours and Hours Preferences by Race in the U.S.

Significant differences exist in actual and preferred work hours by race. Specifically, black males work 20 percent fewer annual hours than white males. The differences between black and white women are small. Black workers are significantly more likely than white workers to prefer additional work and fewer are satisfied with their current hours of work. I use the hours-inequality hypothesis of Bell and Freeman (1995,1997) to evaluate the extent to which race differences in work hours and hours preferences are related to race differences in incentives. I demonstrate that whereas white workers work longer hours in response to overall wage variation in their relevant labor market cell, black workers react to the wage variation among black workers but not to the variation overall. The fact that labor market incentives are different for otherwise similar black and white workers is difficult to reconcile with standard competitive theory.

The Causes of Increasing Interindustry Wage Dispersion in the United States

Using establishment-level data from a variety of sources, this study documents and analyzes the consistent rise in interindustry wage dispersion in the United States between 1970 and 1987. The authors attribute about 60% of the rise in this measure of wage dispersion to competitive market factors, such as changes in the demographic and occupational mix of industrial sectors. They find, however, that noncompetitive factors also play an important part in this trend. The most important noncompetitive factor is a strong link between the long-term trends in industry wages and productivity growth, which appears to stem largely from rent-sharing behavior among industries.

Union Wage Concessions in the 1980s: The Importance of Firm-Specific Factors

This paper evaluates the effects of firm performance and firm characteristics on concession outcomes over the years 1980–87. Across similar firms, the author finds, concessions were inversely related to stock price and employment growth. Concessions were also most likely in small firms, in firms paying high wages, and in firms with relatively low union coverage. The effect of firm performance and firm characteristics on the likelihood of concessions was uniform across concessions of differing severity and was stable in magnitude over the eight-year period.