Sociologists rarely study the determinants of real wage growth, even though it affects core sociological concerns such as social stratification and income inequality. Using data from 14 countries over a 38-year period, this study assesses the multifaceted determinants of real wage growth in the manufacturing sectors of advanced capitalist societies. On this topic, neoclassical economics suggests that wages should track labor productivity, but sociological theories of class conflict suggest that both firms and workers use ‘power resources’ to shape distributional outcomes in their favor. Drawing on these ideas and others, the author argues that real wage growth is loosely related to productivity growth but strongly related to the power resources of workers. This argument is tested with panel regression techniques. The results provide strong support for a power resource theory of wage determination. The study ends by considering possible reasons for the weak effect of labor productivity on real wages.
AcemogluD (2003) Labor- and capital-augmenting technical change. Journal of the European Economic Association1(1): 1–37.
2.
ArmingeonKWeisstannerDEnglerS. (2011) Comparative Political Data Set 1960–2009. Bern: Institute of Political Science, University of Bern. Available at: http://www.cpds-data.org/
3.
AutorDKatzLFKruegerA (1998) Computing inequality: Have computers changed the labor market?Quarterly Journal of Economics113(4): 1169–1214.
4.
BlanchflowerDGOswaldAJ (1996) The Wage Curve. Cambridge, MA: The MIT Press.
5.
BlockFBurnsGA (1986) Productivity as a social problem: The uses and misuses of social indicators. American Sociological Review51(6): 767–780.
CastlesFGMairP (1984) Left–right political scales: Some ‘expert’ judgments. European Journal of Political Research12(1): 73–88.
8.
ClarkJB (1902) The Distribution of Wealth: A Theory of Wages, Interest and Profit. London: Macmillan.
9.
CobbCWDouglasPH (1928) A theory of production. American Economic Review18(1): 139–165.
10.
CrouchC (1993) Industrial Relations and European State Traditions. Oxford: Oxford University Press.
11.
De BoefSKeeleL (2008) Taking time seriously. American Journal of Political Science52(1): 184–200.
12.
ElginCKuzubasTU (2013) Wage-productivity gap in OECD economies. Economics7(21): 1–21.
13.
EricksonCLMitchellDJB (2007) Monopsony as a metaphor for the emerging post-union labour market. International Labour Review146(3–4): 163–187.
14.
Esping-AndersenG (1985) Power and distributional regimes. Politics & Society14(2): 223–256.
15.
FernandezRM (2001) Skill-biased technological change and wage inequality: Evidence from a plant retooling. American Journal of Sociology107(2): 273–320.
16.
FosterJBMcChesneyRWJonnaRJ (2011) Monopoly and competition in twenty-first century capitalism. Monthly Review62(11): 1–39.
17.
FriedmanM (1968) The role of monetary policy. American Economic Review58(1): 1–17.
18.
FröbelFHeinrichsJKreyeO (1980) The New International Division of Labor: Structural Unemployment in Industrialized Countries and Industrialization in Developing Countries. Cambridge: Cambridge University Press.
19.
HalabyCN (2004) Panel models in sociological research: Theory into practice. Annual Review of Sociology30: 507–544.
20.
HallRE (1979) A theory of the natural unemployment rate and the duration of employment. Journal of Monetary Economics5(2): 153–169.
21.
HedströmP (1986) The evolution of the bargaining society: Politico-economic dependencies in Sweden. European Sociological Review2(1): 20–29.
22.
HicksAKenworthyL (1998) Cooperation and political economic performance in affluent democratic capitalism. American Journal of Sociology103(6): 1631–1672.
23.
JacobsD (1988) Corporate economic power and the state: A longitudinal assessment of two explanations. American Journal of Sociology93(4): 852–881.
24.
JahnD (2016) Changing of the guard: Trends in corporatist arrangements in 42 highly industrialized societies from 1960 to 2010. Socio-Economic Review14(1): 47–71.
25.
KaldorN (1961) Capital accumulation and economic growth. In: LutzFHagueDC (eds) The Theory of Capital. London: Macmillan, pp.177–222.
26.
KaleckiM (1943) Political aspects of full employment. Political Quarterly14(4): 322–330.
27.
KeeleLKellyNJ (2006) Dynamic models for dynamic theories: The ins and outs of lagged dependent variables. Political Analysis14(2): 186–205.
28.
KollmeyerC (2009) Explaining deindustrialization: How affluence, productivity growth, and globalization diminish manufacturing employment. American Journal of Sociology114(6): 1644–1674.
29.
KollmeyerC (2012) Consumer markets and national income inequality: A study of 18 advanced capitalist countries. International Journal of Comparative Sociology53(5–6): 400–418.
30.
KollmeyerC (2014) Income inequality in advanced capitalism: How protective institutions can promote egalitarian societies. Comparative Sociology13(4): 419–444.
31.
KollmeyerC (2015) Globalization and income inequality: How public sector spending moderates this relationship in affluent countries. International Journal of Comparative Sociology56(1): 3–28.
32.
KorpiW (1983) The Democratic Class Struggle. Boston, MA: Routledge & Kegan Paul.
33.
KorpiW (2002) The great trough in unemployment: A long-term view of unemployment, inflation, strikes, and the profit/wage ratio. Politics & Society30(3): 365–426.
34.
KorpiW (2006) Power resources and employer-centered approaches in explanations of welfare states and varieties of capitalism. World Politics58(2): 167–206.
35.
KristalT (2010) Good times, bad times: Postwar labor’s share of national income in capitalist democracies. American Sociological Review75(5): 729–763.
36.
KristalT (2013) The capitalist machine: Computerization, workers’ power, and the decline in labor’s share within US industries. American Sociological Review78(3): 361–389.
37.
KrugmanP (2008) Trade and wages, reconsidered. Brookings Papers on Economic Activity39(1): 103–137.
38.
LazonickWO’SullivanM (2000) Maximising shareholder value: A new ideology for corporate governance. Economy and Society29(1): 13–35.
39.
MarxK (1967 [1867]) Capital: A Critique of Political Economy, vol. 1. New York: International Publishers.
40.
MessinaJStrozziCTurunenJ (2009) Real wages over the business cycle: OECD evidence from the time and frequency domains. Journal of Economic Dynamics & Control33(6): 1183–1200.
41.
MorrisMWesternB (1999) Inequality in earnings at the close of the twentieth century. Annual Review of Sociology25: 623–657.
Organization for Economic Co-operation and Development (OECD) (2015a) Consumer price index – All items. In: OECD Main Economic Indicators (database). Available at: http://stats.oecd.org/Index.aspx?DataSetCode=MEI_PRICES (accessed 26 October 2015).
PiersonP (1996) The new politics of the welfare state. World Politics48(2): 143–179.
49.
PlümperTTroegerVEManowP (2005) Panel data analysis in comparative politics: Linking method to theory. European Journal of Political Research44(2): 327–354.
50.
PrasadM (2006) The Politics of Free Markets: The Rise of Neoliberal Economic Policies in Britain, France, Germany, and the United States. Chicago, IL: The University of Chicago Press.
51.
RobinsonJ (1933) The Economics of Imperfect Competition. London: Macmillan.
52.
RosenfeldJ (2014) What Unions No Longer Do. Cambridge, MA: Harvard University Press.
53.
SakamotoAKimCH (2014) Bringing productivity back in: Rising inequality and economic rents in the U.S. manufacturing sector, 1971–2001. Sociological Quarterly55(2): 282–314.
54.
SchorJB (1985) Changes in the cyclical pattern of real wages: Evidence from nine countries, 1955–1980. The Economic Journal95(378): 452–468.
55.
SørensenA (2000) Toward a sounder basis for class analysis. American Journal of Sociology105(6): 1523–1558.
56.
StreeckWKenworthyL (2005) Theories and practices of neocorporatism. In: JanoskiTAlfordRHicksA. (eds) The Handbook of Political Sociology. Cambridge: Cambridge University Press, pp. 441–460.
57.
VercherandJ (2014) Labour: A Heterodox Approach. Basingstoke: Palgrave Macmillan.
58.
VisserJ (2011) Database on Institutional Characteristics of Trade Unions, Wage Setting, State Intervention and Social Pacts in 34 Countries between 1960 and 2007: Version 3. Amsterdam: Institute for Advanced Labour Studies.
59.
WallersteinM (1990) Centralized bargaining and wage restraint. American Journal of Political Science34(4): 982–1004.
60.
WesternB (1998) Institutions and the labor market. In: BrintonMNeeV (eds) The New Institutionalism in Sociology. Stanford, CA: Stanford University Press, pp. 224–244.
61.
WesternBHealyK (1999) Explaining the OECD wage slowdown: Recession or labour decline?European Sociological Review15(3): 233–249.
62.
WhitfordJ (2005) The New Old Economy: Networks, Institutions, and the Organizational Transformation of American Manufacturing. Oxford: Oxford University Press.
63.
WoodA (1994) North-South Trade, Employment and Inequality: Changing Fortunes in a Skill-Driven World. Oxford: Clarendon Press.
64.
WooldridgeJ (2012) Introductory Econometrics: A Modern Approach, 5th edn.Mason, OH: South-Western Cengage Learning.
65.
WrightEO (2000) Working-class power, capitalist-class interests, and class compromise. American Journal of Sociology105(4): 957–1002.
