The doughboy premium: an empirical assessment of the relative wages of American veterans of World War I

This article examines 1940 US census data to assess the relative wages of World War I (WWI) veteran and nonveteran men. Our empirical analysis indicates a 3.6% wage premium for veterans, after controlling earnings-related characteristics. Although lower than comparable estimates for WWII veterans, our results suggest that American veterans of the Great War earned a higher wage premium than those of the Vietnam or Korean conflicts.     

IDENTITY MANAGEMENT: WORKER INDEPENDENCE AND DISCRIMINATION AGAINST GAY MEN

I build on a growing literature documenting wage differentials for gay men by showing that the wage differential gay men experience varies significantly across occupations with different levels of worker independence. The penalty is smallest in management and professional occupations, which involve a high level of worker independence. It is largest in service occupations, which include a lower level of independence. This distribution of earnings penalties is consistent with discrimination being the source of the gay wage penalty. The results support the conjecture that higher levels of independence allow gay men to more successfully manage the disclosure of sexual orientation and mediate the negative effects of discrimination. (JEL J3, J7, J15)     

WAGE PENALTIES AND SEXUAL ORIENTATION: AN UPDATE USING THE GENERAL SOCIAL SURVEY

This study uses data from the 1988 to 2006 General Social Survey (GSS) to examine the effects of sexual orientation on earnings. Previous research using the GSS has found that lesbians earn 18%–23% more than similarly qualified heterosexual women and that wage penalties for gay men are slightly larger than the premia for lesbians. Using behavioral definitions of sexual orientation based on the previous year and the previous 5 yr of sexual activity, we find the familiar wage premia/penalties for lesbian/gay workers in our ordinary least squares estimations, but we find that these wage differences are falling over time. Furthermore, in contrast to the earlier results, for our regressions over the entire sample period, correcting for differential selection into full-time work reduces the estimated penalties for unmarried gay men and eliminates the entire wage premium for all lesbians. There is now a sizeable, though imprecisely measured, penalty for some lesbians. ( JEL J1, J3, J7)     

A contribution to the public–private wage inequality debate

This paper studies the public–private wage inequality in Romania. Although public sector employment is perceived as safer and offering more benefits, we find that in Romania it also offers higher wages, after controlling for experience, education and gender. This result is at odds with the negative premium uncovered in other transition economies. The public–private wage premium is increasing across the wage distribution, leading to more inequality in the public sector. Decomposing the wage premium into the effect of personal characteristics, coefficients and residuals, we show that only about half of this premium can be attributed to personal characteristics, especially in the top half of the wage distribution. We also find that the number of other public sector employees in the family is a significant driver of public sector employment, facilitating access to jobs. However, the effects of self‐selection are negligible, the premium being still positive and significant after controlling for this.     

Public–private wage differentials in Turkey: public policy or market dynamics?

We evaluate public–private sector wage differentials by gender in Turkey between the years 2005 and 2013. Using micro data from Household Labor Force Surveys we find a positive premium for low wage earners and a penalty of working in the public sector at the higher end of the distribution. Although the penalty has not disappeared, the price effect has increased at both ends of the distribution. The increase at the lower tail is attributed to a higher price effect in the public sector, whereas at the higher tail it has been a result of a relatively uneven wage increase in the private sector along the distribution, rather than an explicit public wage policy.     

Did Vietnam veterans get sicker in the 1990s? The complicated effects of military service on self-reported health

The veterans disability compensation (VDC) program, which provides a monthly stipend to disabled veterans, is the third largest American disability insurance program. Since the late 1990s, VDC growth has been driven primarily by an increase in claims from Vietnam veterans, raising concerns about costs as well as health. We use the draft lottery to study the long-term effects of Vietnam-era military service on health and work in the 2000 Census. We find no evidence that military service affected overall employment rates or overall work-limiting disability rates (that is, health conditions that make work difficult). At the same time, military service sharply increased federal transfer income, especially for lower skilled white men, among whom there was also a large negative impact on employment and a marked increase in disability rates. The differential impact of Vietnam-era service on low-skilled men cannot be explained by more combat or war-theatre exposure for the least educated, because high school graduates were at least as likely to be exposed to combat or war theatre as the less-educated. This leaves the relative attractiveness of VDC for less-skilled men and the work disincentives embedded in the VDC system as a likely explanation for our findings.     

WAGE VOLATILITY AND CHANGING PATTERNS OF LABOR SUPPLY

Over the past few decades, the skilled–unskilled hours differential for U.S. men increased when the skill premium rose sharply, in contrast with dominant income effects. Based on PSID data, we show that over the 1967–2000 period, skilled men experienced a three times larger increase in wage volatility than unskilled men. With the rise in wage volatility, our general equilibrium incomplete markets model generates a 2.7 hours increase in the hours differential whereas it increased by 1.4 hours in the data. We find that hours adjustments are important for self‐insurance in the short run, whereas precautionary savings play a crucial role eventually.     

Military spending and the black market premium in developing countries

Researchers who have been concerned with the economic implications of military spending have mostly concentrated on its impact on economic growth, corruption, real exchange rate and inflation. In this paper we investigate the impact of military spending on black market premium, an area that has not been tackled so far. After adding a measure of military spending to a well established model of black market premium form the literature, we estimate the model by pooling annual data over the 1985 – 1998 period across 61 developing countries. Results from five panel specifications provide considerable evidence that higher military spending leads to higher black market premium.     

City Size and Wage Disparity in Segmented Labour Market in China

The relation between city size and wage inequality is well established for Western countries. This paper finds that city size–wage premium exists across Chinese cities to a lower extent than the Western world. Further, using a simplified model on the Chinese Household Income Project survey data, we find that the city size–wage premium varies with difference in skills among urban citizens. The variation amounts to 50% more for the high‐skill workers compared with their low‐skill counterparts. Moreover, owing to the presence of segmented labour market, the patterns of city size–wage premium and city size–wage inequality premium are notably different for the migrants, who receive a much lesser wage than the citizens and do not experience wage variation owing to their skill heterogeneity.     

Trade liberalization and the inter-industry wage premia: the missingf role of productivity

The literature concerning the effect of tariffs on the inter-industry wage premium has not addressed the role of total factor productivity (TFP) in determining both the wage premium and tariffs. This omission not only overlooks an important determinant of wage premium but also invalidates the use of the pre-reform tariff level as an instrument for the change in tariffs. Based on an analysis of Colombian data, I find that including TFP in the estimated model of the effects of tariffs on the wage premium leads to a 41% decrease in the effect of tariffs on the inter-industry wage premium relative to the model that omits TFP. More specifically, a 10 percentage point decrease in tariffs reduces the wage premium by 1.01%, whereas a 10% increase in TFP raise wage premium by 1.6%. This finding suggests the importance of using policies that boost productivity to offset the effect of tariffs on the wage premium.     

Are low-skill public sector workers really overpaid? A quasi-differenced panel data analysis

Public–private sectoral wage differentials have been studied extensively using quantile regression techniques. These typically find large public sector premiums at the bottom of the wage distribution. This may imply that low skill workers are ‘overpaid’, prompting concerns over efficiency. We note several other potential explanations for this result and explicitly test whether the premium varies with skill, using Australian data. We use a quasi-differenced Generalized Method of Moments (GMM) panel data model which has not been previously applied to this topic, internationally. Unlike other available methods, this technique identifies sectoral differences in returns to unobserved skill. It also facilitates a decomposition of the wage gap into components explained by differences in returns to all (observed and unobserved) skills and by differences in their stock. We find no evidence to suggest that the premium varies with skill. One interpretation is that the compressed wage profile of the public sector induces the best workers (on unobserved skills) to join the public sector in low wage occupations, vice versa in high wage occupations. We also estimate the average public sector premium to be 6% for women and statistically insignificant (4%) for men.     

The selection of migrants and returnees in Romania

This paper uses census and survey data to identify the wage earning ability and the selection of recent Romanian migrants and returnees on observable characteristics. We construct measures of selection across skill groups and estimate the average and the skill‐specific premium for migration and return for three typical destinations of Romanian migrants after 1990. Once we account for migration costs, we find evidence that the selection and sorting of migrants are driven by different returns to skills in countries of destination. Our identification strategy for the effects of work experience abroad permits a cautious causal interpretation of the premium to return migration. This premium increases with migrants' skills and drives the positive selection of returnees relative to non‐migrants. Based on the compatibility of the results with rationality in the migration decisions, we simulate a rational‐agent model of education, migration and return. Our results suggest that for a source country like Romania relatively high rates of temporary migration might have positive long‐run effects on average skills and wages.     

Alcohol use and wages of young men: whites vs nonwhites

According to the medical community a host of ills accompanies prolonged alcohol use including memory loss, motor dysfunction, and impaired judgement. While deduction suggests alcohol use would reduce wages, past empirical studies find differently. For example, Berger and Leigh (1988) find a 32% wage premium for drinkers. Our study differs in two ways. First, self-selection is corrected using observed variables and secondly, an adjustment for the income effect is incorporated. Our results suggest drinkers receive a wage penalty the size of which differs across races. Nonwhite drinkers (blacks and hispanics) face a 7.3% penalty while white drinkers receive a 3.2% penalty.     

Are children driving the gender wage gap?

We examine how much children and the responsibilities related to them contribute to the divergence of men's and women's wages, and consequently, to the formation of the gender wage gap. To derive the relative contribution of gender‐specific parent gaps to the overall gender wage gap, we provide a modification of the Oaxaca–Blinder decomposition and include simultaneous corrections for selection into employment and parenthood. The results show that the fatherhood wage premium contributes most significantly to the gender wage gap, especially in Poland. The motherhood penalty is also significant, while the role of the gender gap among childless individuals is small.     

The disappearing gay income penalty

Since 1995, labor economists have reported on the income disparities between individuals who engage in same-sex behavior and those that do not. Many of these papers report a significant wage penalty, while others find no effect, but few look at the trend over time. We find, using National Health and Examination Survey (NHANES) data from 1988 to 2007, that the income gap has reversed over time from a penalty to a premium.     

EARNINGS DIFFERENCES BETWEEN CHINESE AND INDIAN WAGE EARNERS, 1987–2004

This paper is one of the first comprehensive attempts to compare earnings in urban China and India over the recent period. While both economies have grown considerably, we illustrate significant cross-country differences in wage growth since the late 1980s. For this purpose, we make use of comparable datasets, estimate Mincer equations and perform Oaxaca–Blinder decompositions at the mean and at different points of the wage distribution. The initial wage differential in favor of Indian workers, observed in the middle and upper part of the distribution, partly disappears over time. While the 1980s Indian premium is mainly due to higher returns to education and experience, a combination of price and endowment effects explains why Chinese wages have caught up, especially since the mid-1990s. The price effect is only partly explained by the observed convergence in returns to education; the endowment effect is driven by faster increase in education levels in China and significantly accentuates the reversal of the wage gap in favor of this country for the first half of the wage distribution.     

Is utility additive? The case of alcohol

By using the quantile regressions of earnings equation, we find that the educational wage premium is higher in industries with rapid technological change than in industries with slower technological change at every decile in the distribution of wage residuals. The wage premium associated with the technological change is mostly explained by the returns to workers' unobserved heterogeneities, which are correlated with education, rather than the rents of high-tech industries.     

The Return to Caring Skills: Gender,Class, and Occupational Wages in the US

Feminist economics has contributed to the understanding of the economic importance of care work. Most studies find a wage penalty associated with caring occupations. This study extends the feminist research on care work beyond caring occupations by identifying specific caring skills and activities derived from the 2014 O*NET job-evaluation data. Four caring skills – (1) Assisting and Caring for Others, (2) Establishing and Maintaining Interpersonal Relationships, (3) Service Orientation, and (4) Social Perceptiveness – were used in ordinary least-squares and quantile wage regressions for 623 occupations in the United States. Findings indicate that the return to caring and assisting skills results in a wage penalty for low-wage workers but a wage premium for workers in high-wage and male occupations. By identifying the impact of gender and class on the economic return to particular caring skills, the study broadens the understanding of care work, especially in relation to US wage inequality.     

Employer size–wage effects: evidence from matched employer–employee survey data in the UK

This paper employs a random sample of matched employer–employee data from the UK to test seven possible explanations for the positive relationship between employer size and pay. Individual wage equations show a large employer size–wage premium. We then control for a range of establishment-level variables, based on seven hypotheses typically advanced to explain this premium. Each establishment-level factor reduces the wage premium, but a sizeable premium nonetheless remains. In adjudicating on these hypotheses, we find a strong association between the internal labour market and the employer size–wage premium. This finding supports the theory that the employer size–wage effect may be due to the higher costs of turnover or monitoring in larger firms. However, we find contrasting effects for public versus private sector establishments.