Latent Variable Approach to Examining the Effects of HR Policies on the Inter- and Intra-Establishment Wage and Employment Structure: A Study of Two Precision Manufacturing Industries

摘要

Among more recent studies, Lazear and Shaw (2008) have found that inter-firm differences in pay levels have both continued to grow over time, and are clearly correlated with measures of within-firm wage variation, signaling the importance of differences among firms' internal pay strategies. The research program of 'Insider Econometrics' (Ichniowski and Shaw, 2009), is dedicated to answering questions including - What accounts for the differences in strategies. How do firms/establishments using policies in very different ways differ. How do these differences among firms/establishments account for differences in performance. Are groups of workers affected equally or differently . What types of skills are targeted. The more limited focus of the current study asks - How does the wage and employment structure of establishments using policies in very different ways differ. Are groups of workers affected equally or differently. What types of skills are targeted. The study addresses these questions using a variety of detailed measures of the wage structure of establishments that include measures designed to co-vary with establishments' usage of particular types of HR wage policies aimed at increasing qualitative flexibility. The study uses latent variable techniques to identify a latent construct underlying the inter-correlation between these content-laden measures of the wage structure, the establishment wage differential, the detailed occupational wages previously shown to be most highly correlated with these other measures of the wage structure, and the employment intensities of those occupations previously shown to be 'discriminators' between high and low wage establishments. The analyses are aimed at uncovering the causal factors underlying the pattern by which the wages and employment of particular types of occupations are correlated with the establishment wage differential.