Models of Wage Determination and the Industry Wage Structure in Uruguay

Abstract

This paper examines the wage structure in Uruguayan manufacturing during the period 1968 to 1987. It analyzes the size and stability of intre-industry wage differentials, and compares these differentials across occupations, establishment sizes, and across countries. The paper also relates industry wage levels to industry characteristics. The analyses are used to test the competitive and the efficiency models of wage determination. The results confirm the predictions of the efficiency wage model, as wage differentials are substantial, they persist over time, they are strongly correlated between white- and blue-collar workers, and to a lesser extent, across establishment sizes. In addition, some industry characteristics are positively correlated to wages.