A Relational Theory of Wage Inequality (original) (raw)

Earnings inequality is a fundamental aspect of social stratification, yet most sociological research adopts the human capital model of wage determination derived from economics. In doing so, sociologists cede theoretical primacy to the labor supply and demand mechanisms of neoclassical economics. In contrast, we develop a model of earnings inequality that treats actors' claimsmaking as the central mechanism creating earnings inequalities. In this model earnings are most proximately a result of negotiation between actors embedded in a set of relations to one another within organizations, a process we refer to as relational claims-making. Institutional and competitive aspects of organizational environments, as well as social distinctions within organizations themselves, provide resources and constraints on the persuasiveness and plausibility of wage claims by actors. Thus, market mechanisms are not causally proximate to the production of wage inequality, but rather are an aspect of organizational environments with the potential to influence the plausibility of particular claims. We specify several theoretical propositions to distinguish a relational approach from a standard human capital model, develop empirical predictions for our model under the assumption that organizational wage data are available, and discuss methodological strategies to examine these predictions. Relational Inequality 3 A Relational Theory of Wage Inequality Social stratification is about who gets what resources and why. Its centrality to sociology can be traced to classic sociological texts, and sociologists' interest has only deepened over time. Labor economists too recognize inequality in wages and jobs as important distributional outcomes to explain. Given their different theoretical orientations toward action, we might expect economists and sociologists to have fundamental differences in explaining the wage generation process. In general sociological theories, explanations, and metaphors are typically premised on a conception of actors as embedded in social relations, institutions, and social space through which they compete and negotiate over social and economic resources (Abbott 2005; Fligstein 2001; Bourdiue and Wacquant 1992). In contrast, economists focus on the market supply and demand mechanisms through which an individual's marginal productivity and skill determine his or her economic value on a labor market (Ashenfelter and Card 1999). The basic distinction in understanding economic processes, of which stratification is one part, stems from economists' atomistic actor versus sociologists' socially embedded actor (Krippner 2001; Lie 1991; Granovetter 1985). Despite clear theoretical divergences, sociologists studying stratification outcomes such as wage inequality have tended to privilege labor supply and demand mechanisms in their empirical frameworks. This article takes as its central task the development of a more sociological approach to wage inequality. 1 We focus on wage determination since it is both most central to the supply-1 We are treating wages and earnings as interchangeable concepts. The standard practice of measuring hourly wage is itself problematic, but we will leave that discussion for empirical applications. The key issue is that for workers who are paid a salary and work long hours, a common practice in the United States, hourly wage systematically underestimates real inequality.