exacerbated the potential for declining manufacturing to contribute to increasing inequality: namely, the size of the manufacturingwage premium and the initial level of income inequality.
One possibility is that U.S. workers forced to switch from the manufacturing to the service sector experience a large loss in income simply because they lose their manufacturingwage premium. This large loss of income among formerly well-paid manufacturing workers could then lead to an overall increase in inequality. We consistently estimate manufacturingwage premia for a set of
This paper develops and tests two efficiency wage models of corruption in the civil service. Under fair wage models, civil service wages are an important determinant of corruption. Under shirking models, the level of wages is of secondary importance, as potential bribes dwarf wage income. The empirical evidence points to a negative relationship between corruption and wages across developing countries. Tests as to the validity of the two different efficiency wage models are inconclusive.