A theoretical and empirical examination of wage differentials findsthat traditional theories of competition do not explain why workers with identical skills are paid differently.

Hedonic Wage Equilibrium examines empirically and theoretically the properties of the equilibrium wage function.

The contentious debates regarding minimum wages have produced little agreement so far on the extent to which it affects employment. The dissertation intends to provide a better understanding of minimum wage impacts on employment. The literature review considers both the theoretical models and empirical studies, as well as providing a detailed examination of their methodologies. Two empirical studies form the core of the dissertation. One study estimates the minimum wage impacts using state-level CPS data from 1979 to 2011 in a panel regression framework. The other study explores a natural experiment due to a legislated increase of the minimum wage in Missouri but not in Kansas. Comparing firms in the Kansas City metropolitan area on both sides of the state boundary, the analysis considers minimum wage effects at both the firm-level and individual-level for various groups of firm sizes and different earners. The analysis is performed on multiple selected broad industries. This dissertation finds that in general minimum wage reduces total employment. However, the impacts of minimum wage policy do vary substantially across industries and across groups. Firms with no more than 10 employees and new firms are more likely to experience increase in employment with the increase of minimum wages. In addition, due to substitution effects, people with wages above the minimum wages could get increased chance of being employed from this policy. In contrast, most of the estimates for people who work very few hours are insignificant. However, in the industries with higher proportions of low wage workers, that is, in retail trade and food industries, the probability of being employed for these employees is reduced. The major policy implication is that our empirical findings throw light on the importance of distinguishing between industries and between workers with different earnings.

This volume seeks to go beyond the microeconomic view of wages as a cost having negative consequences on a given firm, to consider the positive macroeconomic dynamics associated with wages as a major component of aggregate demand.

Foreign-owned firms are often hypothesized to generate productivity "spillovers" to the host country, but both theoretical micro-foundations and empirical evidence for this are limited. We develop a heterogeneous-firm model in which ex-ante identical workers learn from their employers in proportion to the firm's productivity. Foreign-owned firms have, on average, higher productivity in equilibrium due to entry costs, which means that low-productivity foreign firms cannot enter. Foreign firms have higher wage growth and, with some exceptions, pay higher average wages, but not when compared to similarly large domestic firms. The empirical implications of the model are tested on matched employer-employee data from Denmark. Consistent with the theory, we find considerable evidence of higher wages and wage growth in large and/or foreign-owned firms. These effects survive controlling for individual characteristics, but, as expected, are reduced significantly when controlling for unobservable firm heterogeneity. Furthermore, acquired skills in foreign-owned and large firms appear to be transferable to both subsequent wage work and self-employment.

An across-the-board Statutory Minimum Wage (SMW) is expected to come into effect in late 2010 or later in Hong Kong. We draw on theoretical arguments for and against a SMW policy, examining empirical evidence outside Hong Kong, to suggest an agenda for empirical research. The anti-poverty argument for a SMW implies that the SMW rate should significantly exceed the Comprehensive Social Security Assistance (CSSA) monthly payment rate of HK$ 4095. However, the anti-poverty argument is problematic because of the complexity of the poverty problem. The unemployment argument against a SMW has fewer consensuses today than it did three decades ago because of conflicting empirical results. The theory of monopsonistic labor market is the leading theoretical explanation of this situation. It is an empirical question if the labor market that hires low-wage workers in Hong Kong is monopsonistic or competitive. The source of monopsony power and the effects of an across-the-board SMW can differ among industries depending on the difference between the industry average wage rates and the SMW. Firms that hire low-wage workers can also adjust differently depending on their competitiveness in their product markets. Empirical investigation can help improve policy making with informed decision making.

From David Card, winner of the Nobel Prize in Economics, and Alan Krueger, a provocative challenge to conventional wisdom about the minimum wage David Card and Alan B. Krueger have already made national news with their pathbreaking research on the minimum wage. Here they present a powerful new challenge to the conventional view that higher minimum wages reduce jobs for low-wage workers. In a work that has important implications for public policy as well as for the direction of economic research, the authors put standard economic theory to the test, using data from a series of recent episodes, including the 1992 increase in New Jersey's minimum wage, the 1988 rise in California's minimum wage, and the 1990–91 increases in the federal minimum wage. In each case they present a battery of evidence showing that increases in the minimum wage lead to increases in pay, but no loss in jobs. A distinctive feature of Card and Krueger's research is the use of empirical methods borrowed from the natural sciences, including comparisons between the "treatment" and "control" groups formed when the minimum wage rises for some workers but not for others. In addition, the authors critically reexamine the previous literature on the minimum wage and find that it, too, lacks support for the claim that a higher minimum wage cuts jobs. Finally, the effects of the minimum wage on family earnings, poverty outcomes, and the stock market valuation of low-wage employers are documented. Overall, this book calls into question the standard model of the labor market that has dominated economists' thinking on the minimum wage. In addition, it will shift the terms of the debate on the minimum wage in Washington and in state legislatures throughout the country. With a new preface discussing new data, Myth and Measurement continues to shift the terms of the debate on the minimum wage.

With the compensation policies of firms. This literature is considered from the perspective of three major theories: human capital, learning, and incentives. Considerable empirical work has addressed each of these theories with some success. However, our understanding of the effect of compensation on behavior and of the motivations for firms in choosing certain policies has been constrained by two important problems. First, the absence of data on contracts and performance has limited the ability of researchers to ask even the most basic question, Do Incentives Matter? Second, the available theoretical work has not been sufficiently orientated towards distinguishing between plausible alternatives, so that many observed facts are consistent with any of the major theories