Wage Determination in Labor-Managed Firms under Market-Oriented Reforms: Estimates of Static and Dynamic Models

Estrin, Saul; Svejnar, Jan

In this paper we present a framework for analyzing the wide wage dispersion observed in a suddenly decentralized socialist system with workers′ control. We model a process through which workers may appropriate capital rents as income and, using Yugoslav data from the 1960s and 1970s, we estimate a dynamic approximation to an earnings equation and an equation derived directly from a dynamic model. Our principal finding is that the appropriation of capital rents by workers does not account for the wide interindustry earnings differentials observed in the relatively free market, Yugoslav environment of the 1960s and 1970s.


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Also Published In

Journal of Comparative Economics

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Academic Units
International and Public Affairs
Published Here
July 15, 2016