An Empirical Note on one Aspect of Labour Market Hysteresis

One of the principal rationales for unemployment hysteresis focuses on the characterization of the labour market as consisting of insiders who possess wage negotiating power and outsiders who do not. A measure of bargaining power of insiders is overtime and this variable was found to be a significant determinant of wage inflation by Simes and Richardson (1987). Whereas their analysis dealt with aggregate national wage and overtime data, the current paper investigates the possibility that relative overtime worked at the industry level may be a significant determinant of differential interindustry wages growth.