IDEAS home Printed from https://ideas.repec.org/p/chb/bcchwp/525.html
   My bibliography  Save this paper

Interindustry Wage Differences: An Empirical Review

Author

Listed:
  • Miguel Ricaurte

Abstract

Under competitive labor markets, workers should be paid according to their productivity, regardless ofother personal characteristics. This, however, is not the case and has been widely reported in the literature. This paper reviews empirical evidence and methods of estimation for sectoral wage differentials. Moreover, it showsestimates of such differentials for the United States using CPS data from 1968 to 2008. The presence of industry wage differentials is certain, although under certain econometric techniques, its magnitude is reduced in favor of unobserved worker and firm characteristics.

Suggested Citation

  • Miguel Ricaurte, 2009. "Interindustry Wage Differences: An Empirical Review," Working Papers Central Bank of Chile 525, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:525
    as

    Download full text from publisher

    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_525.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Miguel Ricaurte, 2010. "The Role of Labor Markets in Structural Change," Working Papers Central Bank of Chile 584, Central Bank of Chile.
    2. Mahmood Arai, 2003. "Wages, Profits, and Capital Intensity: Evidence from Matched Worker-Firm Data," Journal of Labor Economics, University of Chicago Press, vol. 21(3), pages 593-618, July.
    3. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
    4. Sébastien Jean & Giuseppe Nicoletti, 2015. "Product market regulation and wage premia in Europe and North America: An empirical investigation," International Economics, CEPII research center, issue 144, pages 1-28.
    5. Robert Gibbons & Lawrence Katz, 1992. "Does Unmeasured Ability Explain Inter-Industry Wage Differentials?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(3), pages 515-535.
    6. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
    7. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366, Elsevier.
    8. repec:eee:labchp:v:3:y:1999:i:pb:p:2629-2710 is not listed on IDEAS
    9. Daron Acemoglu & Veronica Guerrieri, 2008. "Capital Deepening and Nonbalanced Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 467-498, June.
    10. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214, Elsevier.
    11. Barry T. Hirsch, 2008. "Sluggish Institutions in a Dynamic World: Can Unions and Industrial Competition Coexist?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 153-176, Winter.
    12. Abowd, John M. & Kramarz, Francis, 1999. "The analysis of labor markets using matched employer-employee data," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 40, pages 2629-2710, Elsevier.
    13. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    14. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    15. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    16. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555, Elsevier.
    17. John J. Abowd & John Haltiwanger & Julia Lane, 2004. "Integrated Longitudinal Employer-Employee Data for the United States," American Economic Review, American Economic Association, vol. 94(2), pages 224-229, May.
    18. John M. Abowd & Francis Kramarz & Sébastien Roux, 2006. "Wages, Mobility and Firm Performance: Advantages and Insights from Using Matched Worker-Firm Data," Economic Journal, Royal Economic Society, vol. 116(512), pages 245-285, June.
    19. Woodcock, Simon D., 2008. "Wage differentials in the presence of unobserved worker, firm, and match heterogeneity," Labour Economics, Elsevier, vol. 15(4), pages 771-793, August.
    20. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66(4), pages 281-281.
    21. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, April.
    22. Charles Brown & James L. Medoff, 2003. "Firm Age and Wages," Journal of Labor Economics, University of Chicago Press, vol. 21(3), pages 677-698, July.
    23. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    24. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    25. repec:bla:econom:v:65:y:1998:i:260:p:507-34 is not listed on IDEAS
    26. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    27. László Mátyás & Patrick Sevestre (ed.), 2008. "The Econometrics of Panel Data," Advanced Studies in Theoretical and Applied Econometrics, Springer, number 978-3-540-75892-1, July-Dece.
    28. Goux, Dominique & Maurin, Eric, 1999. "Persistence of Interindustry Wage Differentials: A Reexamination Using Matched Worker-Firm Panel Data," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 492-533, July.
    29. Holmlund, Bertil & Zetterberg, Johnny, 1991. "Insider effects in wage determination : Evidence from five countries," European Economic Review, Elsevier, vol. 35(5), pages 1009-1034, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lavopa, Alejandro & Szirmai, Adam, 2012. "Industrialization, employment and poverty," MERIT Working Papers 2012-081, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Miguel Ricaurte, 2010. "The Role of Labor Markets in Structural Change," Working Papers Central Bank of Chile 584, Central Bank of Chile.
    3. Patrick Enu & Edmond Hagan & Eunice Ahouandjinou & Prudence Attah-Obeng, 2014. "Relationship between Education and Wage differentials in Ghana: A Case Study of Accra - a Suburb of greater Accra Region," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(1), pages 277-294, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Antoni, Manfred & Janser, Markus & Lehmer, Florian, 2015. "The hidden winners of renewable energy promotion: Insights into sector-specific wage differentials," Energy Policy, Elsevier, vol. 86(C), pages 595-613.
    2. Philip Du Caju & François Rycx & Ilan Tojerow, 2011. "Inter‐Industry Wage Differentials: How Much Does Rent Sharing Matter?," Manchester School, University of Manchester, vol. 79(4), pages 691-717, July.
    3. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    4. Robert Plasman & François Rycx & Ilan Tojerow, 2007. "Wage differentials in Belgium: the role of worker and employer characteristics," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 50(1), pages 11-40.
    5. Amir Borges Ferreira Neto & Ricardo Da Silva Fregugli, 2014. "How Much Does Talent Matter? Evidences From The Brazilian Formal Cultural Industry," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41st Brazilian Economics Meeting] 233, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    6. Beatriz Muriel Hernández, 2016. "An Analysis of Firm Characteristics as Earnings Determinants: The Urban Bolivia Case," Development Research Working Paper Series 04/2016, Institute for Advanced Development Studies.
    7. Torben Sørensen & Rune Vejlin, 2013. "The importance of worker, firm and match effects in the formation of wages," Empirical Economics, Springer, vol. 45(1), pages 435-464, August.
    8. Du Caju, Philip & Rycx, François & Tojerow, Ilan, 2008. "Rent-Sharing and the Cyclicality of Wage Differentials," IZA Discussion Papers 3844, Institute of Labor Economics (IZA).
    9. Gustavo Yamada, 2007. "Retornos a la educación superior en el mercado laboral: ¿vale la pena el esfuerzo?," Diagnóstico y propuesta, Consorcio de Investigación Económica y Social.
    10. Philip Du Caju & François Rycx & Ilan Tojerow, 2011. "Wage Structure Effects of International Trade: Evidence from a Small Open Economy," Working Papers CEB 11-011, ULB -- Universite Libre de Bruxelles.
    11. Polachek, Solomon W., 2008. "Earnings Over the Life Cycle: The Mincer Earnings Function and Its Applications," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(3), pages 165-272, April.
    12. Erling Barth & Alex Bryson & James C. Davis & Richard Freeman, 2016. "It's Where You Work: Increases in the Dispersion of Earnings across Establishments and Individuals in the United States," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages 67-97.
    13. W. D. McCausland & F. Summerfield & I. Theodossiou, 2020. "The Effect of Industry-Level Aggregate Demand on Earnings: Evidence from the US," Journal of Labor Research, Springer, vol. 41(1), pages 102-127, June.
    14. Miguel Ricaurte, 2010. "The Role of Labor Markets in Structural Change," Working Papers Central Bank of Chile 584, Central Bank of Chile.
    15. Jean-Marc Fournier & Isabell Koske, 2012. "The determinants of earnings inequality: evidence from quantile regressions," OECD Journal: Economic Studies, OECD Publishing, vol. 2012(1), pages 7-36.
    16. Michaela Fuchs & Anja Rossen & Antje Weyh & Gabriele Wydra‐Somaggio, 2021. "Where do women earn more than men? Explaining regional differences in the gender pay gap," Journal of Regional Science, Wiley Blackwell, vol. 61(5), pages 1065-1086, November.
    17. Veronique Genre & Karsten Kohn & Daphne Momferatou, 2011. "Understanding inter-industry wage structures in the euro area," Applied Economics, Taylor & Francis Journals, vol. 43(11), pages 1299-1313.
    18. Moser, Christian, 2016. "How Could Wage Inequality Within and Across Enterprises be Reduced?," MPRA Paper 95381, University Library of Munich, Germany.
    19. Fuchs, Michaela & Rossen, Anja & Weyh, Antje & Wydra-Somaggio, Gabriele, 2019. "Why do women earn more than men in some regions? : Explaining regional differences in the gender pay gap in Germany," IAB-Discussion Paper 201911, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    20. Görzig, Bernd & Gornig, Martin & Werwatz, Axel, 2006. "East Germany's wage gap: A non-parametric decomposition based on establishment characteristics," SFB 649 Discussion Papers 2006-044, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:chb:bcchwp:525. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alvaro Castillo (email available below). General contact details of provider: https://edirc.repec.org/data/bccgvcl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.