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Author: Rufolo, Anthony M.
Resulting in 1 citation.
1. Hirsch, Werner Z.
Rufolo, Anthony M.
Determinants of Municipal Wages: Some Tests of the Competitive Wage Hypothesis
Research in Urban Economics 2 (1982): 309-27
Cohort(s): Older Men
Publisher: JAI Press, Inc.
Keyword(s): Human Capital; Private Sector; Public Sector; Wage Theory

Wage setting is a complicated phenomenon since wages are only one aspect of an employee's compensation. In a competitive labor market, wages should adjust for the skill requirements of a job and for the difficulty or hazards the position presents. Wages also should reflect fringe benefits, the efforts of individual workers, and so on. If wage differentials do arise for noncompetitive reasons, a competitive labor market might offset many of the effects. To evaluate effectively whether local governments do indeed pay "too much," it is necessary to determine how market forces impact on wage-setting behavior and worker selection. The hypothesis that local governments simply pay the competitive or prevailing wage for each occupation is tested and rejected. However, when "human capital" considerations are used in a separate test, it is not possible to reject the hypothesis that wages are determined the same way in both the public and private sectors although some evidence still suggests that the public sector departs from the competitive model in rewarding various "personal characteristics." It is not possible from the data to determine whether cities get certain "human capital" only because they happen to pay high wages for other reasons, or whether they pay high wages to attract well-qualified individuals.
Bibliography Citation
Hirsch, Werner Z. and Anthony M. Rufolo. "Determinants of Municipal Wages: Some Tests of the Competitive Wage Hypothesis." Research in Urban Economics 2 (1982): 309-27.