Structural effects on wages: Sociological and economic views

This chapter provides economics and sociology to propose a conceptual framework with which to explain the structural effects. It examines the variables and causal mechanisms whose effect on wages is best justified via their influence in raising economic profit at either the firm or industry level. The chapter explains why neoclassical economists believe that such effects do not and could not persist. It argues that workers are in a more favorable bargaining position when the demand for labor is less elastic. Much of the writing on economic segmentation has emphasized variables associated with high levels of economic profit that make higher wages possible. The capital intensity of production has also been argued to increase wages via its effects on productivity and thus economic profit. "Economic scale" has also been seen as a proxy for economic profit and hypothesized to positively affect wages.