Booth, Alison; Zoega, Gylfi
In recent contributions, Acemoglu and Pischke argue that wage compression induces firms to invest in general training. However, they consider only absolute wage compression. We extend their approach to consider relative wage compression and argue that wage compression as generally understood in the literature is of the latter type. We show that factors associated with an increase in the absolute difference between output and wages might have no effect on the ratio of output and wages (e.g., if...[Show more]
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