Inter-Industry Wage Structures : New Evidence from the OECD

This paper presents an analysis of the evolution of industrial wages in a selection of OECD countries, using data drawn from the Structural Analysis Database and a sequence of techniques that apply cluster and discriminant analysis to time-series of wage change by industry. The principal finding is that a small number of well defined groups of industries usually exist, whose cross-group differences account for almost all inter-industry wage variation. While the specific structure of groups varies according to patterns of natural resources, comparative advantage and trade union organization within each country, the between-group variation across time usually reflects the movement of macroeconomic variables, some of them internal and other external, such as inflation and exchange rates. In other words, individual countries appear to be able to control their internal institutional structures, perhaps best understood as pattern bargains, wage contours, or industrial sectors distinguished by type and degree of exposure to international trade. But they do not exercise internal control over the evolution of wage differentials across these groups, except insofar as they can manipulate the macro conditions to which the groups are differentially sensitive