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PREFACE
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PREFACE For American workers the 1980s, and to a lesser extent the 1970s, were a difficult time. Real earnings fell for many. Labor productivity grew slowly. The proportion of workers in sectors with high and increasing productivity, such as manufacturing, declined. Once the world leaders in reducing work time, Americans came to work more hours in a year than Europeans (though not as many as the Japanese). Employee representation in trade unions declined precipitously , creating a union-free environment in most of the economy. While the United States still leads the developed world in productivity and real income per person (using purchasing power to put foreign currency on a dollar scale), and while the unemployment rate is lower in the United States than in Western Europe, the American way of organizing work and rewarding workers no longer guarantees hardworking citizens a piece of the American dream. The gap between higher paid and lower paid workers widened dramatically in the 1980s. Many young persons today see their economic position as falling short of that of their parents. Child poverty rates exceed those in most advanced countries. The homeless and the urban "underclass" seem to have become permanent fixtures in America. Are deteriorating earnings, rising inequality, falling unionization , and increased child poverty common to advanced countries, or are these problems unique to the United States? How does the American labor market stack up against those of our major trading partners and competitors in the world? How do other advanced countries organize their workplaces; train, motivate, and pay workers ; and support those at the bottom of the income distribution? What are the lessons from overseas for how we might improve our competitive position and the well-being of our workers? xi xii WORKING UNDER DIFFERENT RULES To answer these questions, the National Bureau of Economic Research undertook a four-year project to compare labor markets in Western Europe, Canada, Japan, and Australia with the American labor market. The research was organized around four topicschanges in wages and wage differentials, training within firms, employee representation, and social programs and labor market flexibility-and one country-to-country comparison, between Canada and the United States. Researchers visited firms, training centers, government agencies, and unions and analyzed computerized data files on tens of thousands of workers in other advanced countries to determine how the labor institutions of those countries function and how they affect wages, working life, and ultimately productivity and living standards. The leaders of each research group presented their major conclusions and some of the evidence underlying those conclusions at a conference in Washington, D.C., on May 7, 1993. This volume gives (revised) versions of the summary papers, along with an introduction and a concluding chapter on lessons for the United States. The detailed studies are being published by the University of Chicago Press for the National Bureau of Economic Research, in a new series entitled Comparative Labor Markets. I am grateful to the many researchers who worked on this project, and to the project leaders, who organized and directed the work. All of those involved in the project are grateful to the government officials, managers, academics, and labor leaders in the various countries, who spent time helping us understand the way their country's institutions and labor markets operate. The project also owes much to the Ford Foundation, which funded most of the research, and in particular to Franklin Thomas, president of the Foundation, for his interest in widening the perspective in which we view the problems facing American workers. Several other foundations in the United States and overseas also helped fund parts of specific projects. The Russell Sage Foundation supported the conference in Washington and the publication of this volume. RICHARD B. FREEMAN August 1993 Cambridge, Massachusetts ...