[Temps has] three or five questions:
1. Where is the hypothetical wage spillover in the context of growing
income inequalities during the last twenty-years?
2. What are the differences between "multiple labor markets with
interactions" and a "single" labor market with varying elasticities of
substitution between differing grades (i.e. skilled, unskilled) of labor?
3. If the differences are more than semantic, can this be reconciled
with neoclassical economics? How? Why?
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1. It's negative spill-over. One sinking boat weighs on others.
2. Purely semantic.
3. See #2.
I consulted with my soon-to-be ex-colleague John
Schmitt, who is a real labor economist, and here
are a few more ideas.
The most important is there is little empirical
evidence for spill-over, although the logical mechanisms
still seem straight-forward to me. I mentioned the
literature on public service 'cost disease.' I'm
familiar with the theory side; I would bet the
empirical side is limited.
Another tack is the development lit, wherein is
the notion that the productivity or lack thereof
of agricultural labor either drives labor into
manufacturing or sucks it out, respectively.
This abstracts from deliberate political acts
of expulsion and disenfranchisement which also
affect such outcomes.
Another resembles the idea of a market leader in
imperfect competition that sets a standard that
is followed by other firms (in product pricing).
One could imagine a similar role for manufacturing
labor, relative to services.
Then there is the institutionalist, political story
about bargaining power of labor in one sector (or
its lack) complementing that in other sectors.
Since I need to make a practical decision about
what to believe, the stories, for lack of hard
data, still incline me to come down where
I began.
mbs
