Unobserved Worker Quality and Inter-Industry Wage Differentials*

This study quantitatively assesses two alternative explanations for inter-industry wage differentials: worker heterogeneity in the form of unobserved quality and firm heterogeneity in the form of a firm's willingness to pay (WTP) for workers' productive attributes. Building on hedonic models of differentiated product demand, we develop an empirical hedonic model of labor demand and apply a two-stage nonparametric procedure to recover worker and firm heterogeneities. In the first stage we recover unmeasured worker quality by estimating market-specific hedonic wage functions nonparametrically. In the second stage we infer each firm's WTP parameters for worker attributes by using first-order conditions from the demand model. We apply our approach to quantify inter-industry wage differentials on the basis of individual data from the NLSY79 and find that worker quality accounts for approximately two thirds of the inter-industry wage differentials.     

Internal Wage Structures and Organizational Performance

This paper considers whether a hierarchical or compressed wage structure is positively associated with relatively high levels of organizational performance. To date, there has been little empirical research in this area (especially in the UK). Thus we present an operational measure of a compressed/hierarchical wage structure, using UK manufacturing micro–data in five industrial sectors, and examine its relationship with labour productivity. We find that the wage compression argument holds in one sector but not for the majority of sectors and that taking into account other, intra–industry characteristics, namely size and ownership differences, further weakens the relationship.     

Public–Private Sector Wage Gap in Australia: Variation along the Distribution

Previous research on public–private wage differentials in Australia has focused on the mean of the conditional wage distribution. Using six waves of the Household, Income and Labour Dynamics in Australia survey, this study employs quantile regressions to examine whether the sectoral wage effect varies along the wage distribution. For females, public sector wage premiums are relatively stable for almost the entire distribution. For males, they decrease monotonically and are negative for the top half of the distribution. The decomposition results show that the observed differences in individuals and job characteristics explain a substantial proportion of the sectoral wage gap.     

Compensating Wage Differentials versus Efficiency Wages: An Empirical Study of Job Autonomy and Wages

Efficiency wage theory as incorporated in the shirking model predicts that firms may substitute wage premiums for costly monitoring. This means that wage premiums should be expected for loosely monitored workers. By regarding extensive monitoring as a lack of job autonomy, efficiency wage theory predicts a positive relation between autonomy and wages. The theory of compensating wage differentials, however, predicts a negative relation between autonomy and wages. When workers prefer autonomous jobs, employers have to offer higher wages for less autonomous jobs in order to recruit labor.
Swedish micro data are analyzed in order to examine the predictions of these theories. A proxy for the monitoring problem of the firm measures workers' possibilities of effort variation. Since this proxy is autonomy, it enables us to test the two rival hypotheses on the relation between job autonomy and wages. We find a positive relation in the private sector as predicted by the efficiency wage hypotheses and a negative relation in the case of the public sector, which accords with the theory of compensating wage differentials.     

Job Satisfaction in Britain

Little recent empirical work in economics or industrial relations has examined job satisfaction, despite its demonstrated correlation with labour market behaviour such as quits, absenteeism and productivity. This paper uses information from a study of 5000 British employees to investigate the relationship between three measures of job satisfaction and a wide range of individual and job characteristics. Notably, men, workers in their thirties, the well-educated, those working longer hours and workers in larger establishments have lower levels of job satisfaction. The estimated job satisfaction equations are used to calculate a measure of the shadow wage and to provide some evidence that is consistent with the existence of non-compensating differentials in the industry and occupational wage structure.     

The Rise of Experimentalism in German Collective Bargaining

This paper addresses the debate on union strategies by analysing industrial relations change in three of Germany's most internationalized sectors: chemicals, metalworking and construction. It characterizes two logics of change in German industrial relations: a battlefield logic and an experimentalist logic. It demonstrates historical trends towards centralization of wage bargaining in each sector before looking at recent pressures for decentralization and flexibility. In chemi‐cals, the social partners control decentralization. In metalworking increasing flexibility is characterized by a mismatch between the national‐level union and the district‐level employers. Finally, the construction union seeks to replace the centralized bargaining system with a state minimum wage.     

A Reexamination of Public-Sector Wage Differentials in the United States: Evidence from the NLSY with Geocode

While many researchers have sought to estimate federal-private wage differentials in the United States, most of them ignore the issues of unobserved heterogeneity and selectivity among sectors. This article seeks to fill the gap in previous literature by using a more appropriate data set and several compelling techniques. The main results suggest substantial bias in ordinary least squares (OLS) estimates of federal-private wage differentials due to individual heterogeneity and self-selection. The direction of bias under selectivity correction (upward for men and downward for women) is consistent with results from both test-score approach estimates and the fixed-effects estimates.     

Not for the Profit,But for the Training? Gender Differences in Training in the For-Profit and Non-Profit Sectors

In this article, we use Canadian-linked employer–employee data to examine gender differences in receiving firm-sponsored training. We find that women in the for-profit sector are less likely to receive classroom training and receive fewer classroom training courses. However, we find the opposite in the non-profit sector, where women are more likely to receive both classroom and on-the-job training, and also receive more classroom training courses. We show that women's worse training opportunities in the for-profit sector mainly operate within workplaces. We find no evidence that gender gaps in training in the for-profit sector are driven by lower probabilities of accepting training offers, child or family commitments, weaker labour market attachment or worker self-selection. We also find that gender differences in expected changes in wages and training opportunities between the two sectors can explain a large portion of women's higher probability of employment in the non-profit sector. Finally, decomposition results suggest that part of the gender wage gap in the for-profit sector, which is twice as large as in the non-profit sector, can be explained by gender differences in training.     

Immigration, Ethnic Wage Differentials and Output Pay in Canada

Recent work suggests that ethnic minority wage differentials in Canada are smaller among those receiving performance pay and that the returns to performance pay are larger for ethnic minorities. This article adds to these findings. First, it demonstrates critical gender differences. The earlier findings are generated almost exclusively by males, as we show that the minority wage differential is small or zero for women in both the time rate sector and the performance pay sector. Second, accounting for immigration and language tends to move the ethnic wage differential in favour of minorities. Minority women on output pay are shown to earn more than non-minority women. While the differential often remains negative for minority men on time rates, it becomes insignificant in our most narrow comparison.     

Public- and Private-Sector Occupational Pay Structures

Data from a representative sample of wage and salary workers are used to estimate wage equations that provide for direct estimates of the differences between public and private occupational pay structures. The results show that at the state and local levels of government in particular, the public/private wage differential tends to decline as occupational skill requirements increase. Public employees who work on jobs unique to the public sector are paid a wage premium. There is little support for the idea that degree of union coverage in the private sector affects public wages for an occupation.     

Public Wage Differentials and the Public Administration "Industry"

The public sector consists of two broad sub samples, administrators and no administrators. The two groups have very different occupational compositions and contrasting patterns of compensation. Inconsistent treatment of these sub samples has led to past government differentials, which are not comparable. While administrators remain overpaid relative to their private sector counterparts, no administrators are underpaid relative to their counterparts. Moreover, public wage differentials way substantially in sign and magnitude from industry to industry. Such results demonstrate that no simple, homogeneous government differential exists.     

Income Inequality: An Inter-Industry Analysis

This paper offers new evidence that inter-industry inequality has increased since the early seventies. An examination of de industrialization, segmented labor market, and international competition explanations of this increase shows that the growth of inequality is accounted for mainly by growing wage differentials among industries, notably between primacy and secondary sectors. Employment shifts out of middle-wage industries and employment and wage effects of international trade do not explain the inequality increase.     

Evidence on the Causes of the Rising Dispersion of Relative Wages

In this paper, a neoclassical model of interindustry wage dispersion is derived and used to examine explicitly the fundamental role of microeconomic variables in determining relative wage movements. The empirical results demonstrate that the variance of labor quality and capital intensities across sectors are the primary determinants of the movement of the dispersion of relative wages within the manufacturing sector in the postwar period. Although the relative wage structure exhibits some response to unemployment, it is not sensitive to changes in inflation. The macro variables were also of limited quantitative importance in explaining changes in the relative wage structure.     

Firm‐Level Collective Bargaining and Wages in Greece: A Quantile Decomposition Analysis

This article analyzes the effect of firm‐level contracting on the wage structure in the Greek private sector. Using a matched employer–employee dataset for 2006, unconditional quantile regressions and relevant decomposition methods, we identify a wage premium associated with firm‐level contracting, which follows a hump‐shaped profile across the wage distribution. Further, the wage differential between workers under firm‐level and broader‐level collective agreements can be primarily attributed to the differences in the regime‐specific wage setting structure, for those below the median of the unconditional wage distribution, and to differences in worker and firm‐specific characteristics for those in the upper tail.     

How Does Market Making Affect Industrial Relations? Evidence from Eight German Hospitals

The introduction of market mechanisms matters for industrial relations. In the German hospital sector, national liberalization policies have put immense pressure on local management and worker representatives and led to the growth of a low‐wage sector. In case studies of eight hospitals, we find some locales where market making has led to union revitalization and mobilization, but this effect varies. Using an eight‐way comparison, we infer a configuration of three aspects of the local political economy — labour markets, politics and co‐determination rules — that together provide a well‐fitting explanation for both variation and change.     

The Gender Pay Gap for Private‐Sector Employees in Canada and Britain

The gender earnings differentials for private‐sector employees in Britain and Canada are similar, substantial and significant. Using linked employer–employee data, we show that women are more likely to be employed in low‐wage workplaces than men in both counties. After accounting for the workplace, women continue to earn less than comparable men. Although men and women face a more equal pay structure within their workplace than they do across workplaces, a substantial portion of the gender pay gap in both countries remains unexplained by the individual characteristics or workplace effects considered in this study.     

Hazardous Occupations Within the Job Hierarchy

Firms using hazardous technologies face strong incentives to reduce job skill and training requirements so as to minimize the level of compensating wage differentials they must pay. This note examines the outcome of this process in terms of the location of hazardous occupations within the overall structure of jobs. Using four independent sources of data for the period 1974 to 1982, hazardous Occupations are found to offer significantly less worker autonomy, less on-the-job training, poorer promotion possibilities, greater risk of temporary and permanent layoff, and lower wage levels than safe occupations.     

中国制造业集中及其国际化比较

本文采用第三次全国工业普查521个制造行业近60万个企业的系统数据，深入考察了中国制造业的市场集中状况，行业特征及其国际比较，分析结果表明，中国绝大多数制造业行业的集中度都非常低，产业组织结构高度分散，因此，如何按照分类指导、区域对待的原则，实行分类调控和引导，以有效提高制造业特别是规模效益显著行业的集中度，将是当前产业组织政策亟待解决的一个重要课题。     

The Impact of Wage Bargaining Regime on Firm‐Level Competitiveness and Wage Inequality: The Case of Ireland

This paper uses a linked employer‐employee dataset to analyze the impact of institutional wage bargaining regimes on average labor costs and within‐firm wage dispersion in private sector companies in Ireland. The results show that while centralized bargaining reduced labor costs within both the indigenous and foreign‐owned sectors, the relative advantage was greater among foreign‐owned firms. The analysis suggests that there are potentially large competitiveness gains to multinational companies that locate in countries implementing a centralized bargaining system. Furthermore, the results provide additional support to the view that collective bargaining reduces within‐firm wage inequality.