Konings, Jozef Gerard Leo
(1994)
Gross job flows and wage determination in the U.K.: Evidence from firm level data.
PhD thesis, London School of Economics and Political Science.
Abstract
This thesis studies important evolutions in three areas in labour economics: the flow approach, the efficiency wage hypothesis and unions. In part one I discuss gross job flows in the U.K., while part II is concerned with wage determination and firm performance. I give an introduction in chapter I where I motivate the study of gross job flows and I highlight the importance of spillovers from the product market to the labour market and vice versa. In chapter II I analyze a pattern of gross job creation and destruction in the U.K. during the 70's and early 80's. At any point in time and even within narrowly defined sectors simultaneous creation and destruction of jobs is observed, the latter being more variable over the cycle. Gross job reallocation, defined as the sum of gross job creation and destruction, is counter cyclical. Chapter III explores the relationship between firm size and job creation and destruction. The largest firms create and destroy most jobs. However, in percentage terms the gross job creation rate is largest in small firms, while the gross job destruction rate is lowest. I further investigate the size distribution dynamics and find that in the long run firms converge towards their average size, while plants do not. The final chapter of part I compares gross job flows across countries and shows the difficulties involved in making a consistent comparison. In part II I analyze vertical spillovers from the labour market to the product market and vice versa. I show that there exists a positive relationship between the wage paid in the firm and its market share performance, only under the hypothesis of efficiency wages. The theory is supported by evidence from firm level panel data. I show that important new insights may be obtained if the product market is explicitly taken into account when analyzing labour problems. Finally, in chapter VI I investigate the impact of unions on employment growth in the U.K. and find that unions have a negative effect on employment growth, but a positive effect on employment levels, although this effect is not robust with respect to time. Moreover, the union effect is weaker the more competitors the firm faces.
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