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The industry premium: What we know and what the New Zealand data say

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  • Debasis Bandyopadhyay

Abstract

Earning regressions often reveal time-invariant industry premiums. Competitive theories explain them by referring to unobservable characteristics or compensating differentials. Non-competitive theories do the same by using efficiency wage, insider-outsider and rent sharing hypotheses. Those theories appear inadequate for explaining what one observes from the New Zealand data: employees receive industry premiums; but so do their self-employed counterparts; among those with no formal education industry premiums from employment are smaller than those from self-employment; but as the cohort's education level increases the premium differential increases and becomes positive. To explain those observations I propose a new hypothesis that measures an industry's total factor productivity and the corresponding industry premium.

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  • Debasis Bandyopadhyay, 2001. "The industry premium: What we know and what the New Zealand data say," New Zealand Economic Papers, Taylor & Francis Journals, vol. 35(1), pages 53-75.
    • Handle: RePEc:taf:nzecpp:v:35:y:2001:i:1:p:53-75
    DOI: 10.1080/00779950109544332
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    Cited by:

    1. Debasis Bandyopadhyay, 2004. "Why haven't economic reforms increased productivity growth in New Zealand?," New Zealand Economic Papers, Taylor & Francis Journals, vol. 38(2), pages 219-240.

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