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Wage structure has shown to be crucial for firms and workers. However, there existwage dispersion for identical workers in labor markets. The paper measures the effectof industry and firm size on wages in Sweden. The results show that both industry andfirm size have significant effects on wages. Regarding the explanation factors, thefinding is that human capital factors can explain a portion of the industry wagedifferentials, but have less impact on wage differentials across firm size. However,compensating differentials and union organization are not the determinants of theindustry wage differentials and firm size-wage effects. In addition, unobservedindividual characteristics can partly explain firm size effect on wages, but cannotexplain industry wage differentials based on our samples.

Substantial wage differentials are observed in all countries between workers employed in different sectors. How can we explain these wage differentials? Do they entirely derive from the sectoral diversity in personal productive characteristics and task descriptions or do employer features also play a role? Are inter-industry wage differentials smaller in countries with centralised and coordinated collective bargaining? Are they shaped by international trade and product market regulations? What is their impact on gender and other types of inequality? Do they affect economic performance? These are the main questions that we address in this review of the literature.JEL Code: J31.

Abstract We reconsider the potential for explaining inter‐industry wage differences by decomposing those differences into parts due to individual and employer heterogeneity, respectively. Using longitudinally linked employer‐employee data, we estimate the model for the United States and France. The part arising from individual heterogeneity can be theoretically and empirically related to the worker’s opportunity wage rate. The part arising from employer heterogeneity can similarly be related to product market quasi‐rents and relative bargaining power. We find that these two variables are highly correlated with both parts of the differential in France. Although the U.S. inter‐industry wage differentials are strongly correlated with those in France, the decomposition is more nuanced in the American data, where the opportunity wage rate and the product market conditions are related to both the personal and employer heterogeneity. JEL codes J31, J50, L10

In the last decades, international trade has increased between industrialised countries and between high- and low-wage countries. This important change has raised questions on how international trade affects the labour market. In this spirit, this paper aims to investigate the impact of international trade on wage dispersion in a small open economy. It is one of the few to: i) use detailed matched employer-employee data to compute industry wage premia and disaggregated industry level panel data to examine the impact of changes in international trade on changes in wage differentials, ii) simultaneously analyse both imports and exports, and iii) examine the impact of imports according to the country of origin. Looking at the export side, we find (on the basis of the system GMM estimator) a positive effect of exports on industry wage premia. The results also show that import penetration has a significant and negative impact on industry wage differentials whatever the country of origin. However, the country of origin appears to matter quite a lot. Indeed, the detrimental effect of imports on wages is found to be significantly bigger when the latter come from low-income countries than from high-income countries.

In the last decades, international trade has increased between industrialised countries and between high- and low-wage countries. This important change has raised questions on how international trade affects the labour market. In this spirit, this paper aims to investigate the impact of international trade on wage dispersion in a small open economy. It is one of the few to: i) use detailed matched employer-employee data to compute industry wage premia and disaggregated industry level panel data to examine the impact of changes in international trade on changes in wage differentials, ii) simultaneously analyse both imports and exports, and iii) examine the impact of imports according to the country of origin. Looking at the export side, we find (on the basis of the system GMM estimator) a positive effect of exports on industry wage premia. The results also show that import penetration has a significant and negative impact on industry wage differentials whatever the country of origin. However, the country of origin appears to matter quite a lot. Indeed, the detrimental effect of imports on wages is found to be significantly bigger when the latter come from low-income countries than from high-income countries., info:eu-repo/semantics/published

This paper documents the existence and main patterns of inter-industry wage differentials across a large number of industries for 8 EU countries (Belgium, Germany, Greece, Hungary, Ireland, Italy, Netherlands, and Spain) at two points in time (in general 1995 and 2002) and explores possible explanations for these patterns. The analysis uses the European Structure of Earnings Survey (SES), an internationally harmonised matched employer-employee dataset, to estimate inter-industry wage differentials conditional on a rich set of employee, employer and job characteristics. After investigating the possibility that unobservable employee characteristics lie behind the conditional wage differentials, a hypothesis which cannot be accepted, the paper investigates the role of institutional, industry structure and industry performance characteristics in explaining inter-industry wage differentials. The results suggest that inter-industry wage differentials are consistent with rent sharing mechanisms and that rent sharing is more likely in industries with firm-level collective agreements and with higher collective agreement coverage. JEL Classification: J31, J41, J51

How significantly inter-industry wage differentials contribute to rising income inequality is an essential policy issue for transitional economies. Using regression-based inequality decomposition, this paper finds that inter-industrial wage differentials contributed increasingly to income inequality in urban China through 1988, 1995, and 2002, mainly due to rapid income growth in monopolistic industries. Factors such as region, education, ownership, occupation, and holding a second job also contribute increasingly to income inequality, while being employed the whole year and age have decreasing contributions. If China seeks to reduce urban income inequality, removing entry barriers in the labor market and breaking monopoly power in the goods market are essential policy prescriptions., Fukino foundation

This paper documents the existence and main patterns of inter-industry wage differentials across a large number of industries for 8 EU countries (Belgium, Germany, Greece, Hungary, Ireland, Italy, Netherlands, and Spain) at two points in time (in general 1995 and 2002) and explores possible explanations for these patterns. The analysis uses the European Structure of Earnings Survey (SES), an internationally harmonised matched employer-employee dataset, to estimate inter-industry wage differentials conditional on a rich set of employee, employer and job characteristics. After investigating the possibility that unobservable employee characteristics lie behind the conditional wage differentials, a hypothesis which cannot be accepted, the paper investigates the role of institutional, industry structure and industry performance characteristics in explaining inter-industry wage differentials. The results suggest that inter-industry wage differentials are consistent with rent sharing mechanisms and that rent sharing is more likely in industries with firm-level collective agreements and with higher collective agreement coverage.

This paper focuses on the euro area wage structure and its potential determinants from a sectoral viewpoint. Merging information from the OECD Structural Analysis database with data from the EU Labour Force Survey, we construct a cross-country panel of 22 industries in 8 euro area countries for 1991-2002. Data inspection confirms the existence of a fairly stable inter-industry wage structure that is similar across countries. We then apply panel data techniques to identify factors explaining inter-industry wage differentials in the euro area. Both workforce characteristics (e.g., human capital variables) and firm-related characteristics (e.g., capital intensity, productivity) contribute significantly. However, considerable wage heterogeneity across sectors remains. Idiosyncratic sector and country specifics, reflecting different socio-cultural and institutional backgrounds, appear to bear a major role. While our empirical analysis only uses direct evidence from workforce and firm-related characteristics, we also try to relate the remaining heterogeneity to institutional characteristics, based on related literature.

This study compares the structure and determinants of inter-industry wage differentials in Eastern and Western European countries on the basis of the 2002 European Structure of Earnings Survey. Findings show substantial differences in earnings across sectors in all countries, even when controlling for a wide range of employee, job and employer characteristics. The hierarchy of sectors in terms of wages appears to be quite similar in Eastern and Western European countries. In contrast, the dispersion of inter-industry wage differentials is found to fluctuate considerably across countries and to be strongly correlated with collective bargaining characteristics., info:eu-repo/semantics/published

This study compares the structure and determinants of inter-industry wage differentials in Eastern and Western European countries (namely Belgium, Italy, the Netherlands, Norway, Portugal and Spain compared with Latvia, Lithuania, the Czech Republic, Poland and Slovakia). To do so, we use a unique harmonised, linked employer–employee data set, the 2002 European Structure of Earnings Survey. Findings show substantial differences in earnings across sectors in all countries, even when controlling for a wide range of employee, job and employer characteristics. The hierarchy of sectors in terms of wages appears to be quite similar in Eastern and Western European countries. Among high-wage sectors, we find the energy (coke, petroleum, gas, electricity and nuclear power), chemical, financial and computer industries. In contrast, it is in the traditional sectors (wood and cork industry, textile, clothing and leather industry, hotels and restaurants, and retailing) that wages are lowest. Further results suggest that the dispersion of inter-industry wage differentials fluctuates considerably across countries. It is relatively small in Norway and Belgium, large in the Netherlands, Italy, Spain, Poland and the Czech Republic, and very large in Portugal, Latvia, Lithuania and Slovakia. Our findings support the hypothesis of a negative relationship between the dispersion of inter-industry wage differentials and a country’s degree of corporatism.

This study compares the structure and determinants of inter-industry wage differentials in Eastern and Western European countries on the basis of the 2002 European Structure of Earnings Survey. Findings show substantial differences in earnings across sectors in all countries, even when controlling for a wide range of employee, job and employer characteristics. The hierarchy of sectors in terms of wages appears to be quite similar in Eastern and Western European countries. In contrast, the dispersion of inter-industry wage differentials is found to fluctuate considerably across countries and to be strongly correlated with collective bargaining characteristics.

This study compares the structure and determinants of inter-industry wage differentials in Eastern and Western European countries (namely Belgium, Italy, the Netherlands, Norway, Portugal and Spain compared with Latvia, Lithuania, the Czech Republic, Poland and Slovakia). To do so, we use a unique harmonised, linked employer–employee data set, the 2002 European Structure of Earnings Survey. Findings show substantial differences in earnings across sectors in all countries, even when controlling for a wide range of employee, job and employer characteristics. The hierarchy of sectors in terms of wages appears to be quite similar in Eastern and Western European countries. Among high-wage sectors, we find the energy (coke, petroleum, gas, electricity and nuclear power), chemical, financial and computer industries. In contrast, it is in the traditional sectors (wood and cork industry, textile, clothing and leather industry, hotels and restaurants, and retailing) that wages are lowest. Further results suggest that the dispersion of inter-industry wage differentials fluctuates considerably across countries. It is relatively small in Norway and Belgium, large in the Netherlands, Italy, Spain, Poland and the Czech Republic, and very large in Portugal, Latvia, Lithuania and Slovakia. Our findings support the hypothesis of a negative relationship between the dispersion of inter-industry wage differentials and a country’s degree of corporatism., info:eu-repo/semantics/published

This study analyses the interaction between inter-industry wage differentials and the gender wage gap in six European countries using a unique harmonised matched employer-employee data set, the 1995 European Structure of Earnings Survey. Findings show the existence of significant inter-industry wage differentials in all countries for both sexes. While their structure is quite similar for men and women and across countries, their dispersion is significantly larger in countries with decentralised bargaining. These differentials are significantly and positively correlated with industry profitability. The magnitude of this correlation, however, is lower in countries with centralised and coordinated collective bargaining. Further results show that in all countries more than 80% of the gender wage gaps within industries are statistically significant. Yet, industries having the highest and the lowest gender wage gaps vary substantially across European countries. Finally, results indicate that industry effects explain between 0 and 29% of the overall gender wage gap., info:eu-repo/semantics/published

This paper examines the role of unobserved ability in explaining inter-industry wage differentials, drawing on data on brothers. Such data allow us to account for unmeasured abilities due to common family and community factors shared by siblings. Important advantages of this approach are that we do not rely on assumptions of exogenous job mobility and that estimates reflect long-run wage differentials rather than short-run differences following switch of industry. The data sets come from four of the Nordic countries and the United States. We find that, in the Nordic countries, only a moderate proportion of the variability in industry wages is due to unobserved ability, while unmeasured factors explain as much as half of the industry wage variation observed in the United States. Accounting for such differences, we show that the U.S. inter-industry wage dispersion is similar to those of the Nordic countries.

Many workers believe that personal contacts are crucial for obtaining jobs in high-wage sectors. On the other hand, firms in high-wage sectors report using employee referrals because they help provide screening and monitoring of new employees. This paper develops a matching model that can explain the link between inter-industry wage differentials and use of employee referrals. Referrals lower monitoring costs because high-effort referees can exert peer pressure on co-workers, allowing firms to pay lower efficiency wages. On the other hand, informal search provides fewer job and applicant contacts than formal methods (e.g., newspaper ads). In equilibrium, the matching process generates segmentation in the labor market because of heterogeneity in the size of referral networks. Referrals match good high-paying jobs to well-connected workers, while formal methods match less attractive jobs to less-connected workers. Industry-level data show a positive correlation between industry wage premia and use of employee referrals. Moreover, evidence using the NLSY shows similar positive and significant OLS and fixed-effects estimates of the returns to employee referrals, but insignificant effects once sector of employment is controlled for. This evidence suggests referred workers earn higher wages not because of higher unobserved ability or better matches but rather because they are hired in high-wage sectors.

Many workers believe that personal contacts are crucial for obtaining jobs in high-wage sectors. On the other hand, firms in high-wage sectors report using employee referrals because they help provide screening and monitoring of new employees. This Paper develops a matching model that can explain the link between inter-industry wage differentials and the use of employee referrals. Referrals lower monitoring costs because high-effort referees can exert peer pressure on co-workers, allowing firms to pay lower efficiency wages. On the other hand, informal searches provide fewer job and applicant contacts than formal methods (e.g., newspaper ads). In equilibrium, the matching process generates segmentation in the labour market because of heterogeneity in the size of referral networks. Referrals match ‘good’ high-paying jobs to well-connected workers, while formal methods match less attractive jobs to less-connected workers. Industry-level data show a positive correlation between industry wage premia and use of employee referrals. Moreover, evidence using the NLSY shows similar positive and significant OLS and fixed-effects estimates of the ‘returns’ to employee referrals, but insignificant effects once the sector of employment is controlled for. This evidence suggests referred workers earn higher wages not because of higher unobserved ability or better matches but rather because they are hired in high-wage sectors.

We assess the stability of the wage structure in an economy experiencing substantial economic changes. We find that the structure of inter-industry wage differentials remained remarkably stable in Brazil in the face of major shocks.

In this paper, the role of the computer at the workplace will be examined in determining the wage structure in Germany. Following Krueger (1993) and using the German Socio-Economic Panel (GSOEP), cross-sectional wage regression results from 1997 and panel results from 1984-1997 are presented. It is shown that the wage premium attributed to using a computer at work using cross-sectional results for 1997 is around 7%. Further it is shown that computer usage is very heterogeneous depending on which industry one works in. In cross-section, hypothesis tests show that several industries and almost all firm size categories exhibit very different wage differentials depending on computer usage at the workplace. As DiNardo/Pischke (1997) stress the need for panel data to control for unmeasured individual effects, we use GSOEP 1984-1997 panel data, where a random effects and fixed effects estimator were run in the wage estimation. We confirm the results that Entorf/Kramarz (1997) had for France, that in Germany the coefficient for computer usage at the workplace did NOT remain stable and although just barely significant, was reduced to mere 1% with individual fixed effects. We conclude that there are no computer usage wage differentials worth speaking of, once one controls adequately for unobserved individual heterogeneity. Aufbauend auf humankapital-theoretischen Überlegungen wird auf Basis der Individual-Daten des Sozio-oekonomischen Panels (SOEP) die Rolle der Nutzung von Computern am Arbeitsplatz als Determinante der Lohnstruktur in Deutschland untersucht. Bei Verwendung von Querschnittdaten ergibt sich für das Jahr 1997 ein signifikantes Lohndifferential zugunsten der PC-Nutzung von 7%. Um unbeobachtete Heterogenität zu kontrollieren, nutzen wir Fixed-Effects und Random-Effects-Panel-Schätzer. Im Ergebnis bleibt der Koeffizient der PC-Nutzung zwar noch schwach signifikant, reduziert sich aber auf nur noch 1%. Daraus schließen wir, daß es in Deutschland kein nennenswertes Lohndifferential der PC-Nutzung gibt, wenn man adäquat für unbeobachtete Heterogenität kontrolliert.

In this paper, the role of the computer at the workplace will be examined in determining the wage structure in Germany. Following Krueger (1993) and using the German Socio- Economic Panel (GSOEP), cross-sectional wage regression results from 1997 and panel results from 1984-1997 are presented. It is shown that the wage premium attributed to using a computer at work using cross-sectional results for 1997 is around 7%. Further it is shown that computer usage is very heterogeneous depending on which industry one works in. In cross-section, hypothesis tests show that several industries and almost all firm size categories exhibit very different wage differentials depending on computer usage at the workplace. As DiNardo and Pischke (1997) stress the need for panel data to control for unmeasured individual effects, we use GSOEP 1984-1997 panel data, where a random effects and fixed effects estimator were run in the wage estimation. We confirm the results that Entorf and Kramarz (1997) had for France, that in Germany the coefficient for computer usage at the workplace did not remain stable and although just barely significant, was reduced to mere 1% with individual fixed effects. We conclude that there are no computer usage wage differentials worth speaking of, once one controls adequately for unobserved individual heterogeneity.

In this paper, the inter-industry wage structure in West Germany and USA is compared using the German Socio-Economic Panel (GSOEP), the German Mikrozensus (MZ), the American Panel Study of Income Dynamics (PSID) and the American Current Population Survey (CPS) from 1984 to 1996. Using a sample of prime age full-time employed males from the respective datasets, it is shown that the structure of wages has remained remarkably stable over this time period, and that the German structure resembles the American structure strongly. Cross-sectional and panel results are provided for both countries. Controlling for unobserved heterogeneity in the random effects panel estimations reduces the industry wage dispersion by about half. Thus, although the MZ and the CPS provide very large sample sizes, panel data sets (although typically smaller in sample size) are still very important in getting at the essence of the industry wage structure and the absolute level of industry wage dispersion. In calculating inter-industry wage differentials as deviations from a hypothetical employment-share weighted mean, we use the methodology as described in Haisken-DeNew and Schmidt (1997) of calculating exact differentials and their respective standard errors.

Instituto Superior de Economia e Gestão. A teoria dominante na explicação da formação dos salários era até aos anos de oitenta a teoria neoclássica, na forma da teoria do capital humano. No entanto, estudos empíricos dos anos oitenta revelaram a existência de diferenças salariais persistentes entre trabalhadores com características comparáveis, aparentemente não explicáveis pela teoria neoclássica. Surgiram, então, outras teorias, não walrasianas, no domínio da formação dos salários. A teoria do salário de eficiência, sendo uma das teorias da nova era, postula que uma empresa pode manter em equilíbrio um salário acima do da concorrência perfeita, apesar da existência de um excesso de oferta de mão de obra. Este trabalho testa a validade empírica da teoria do capital humano e da teoria do salário de eficiência na determinação do ganho em Portugal (Continente), nos anos de 1992 e 1995. Conclui-se que nenhuma das duas teorias em causa consegue explicar, sozinha, a formação salarial de uma forma satisfatória. As duas teorias, em vez de concorrentes, apresentam-se como complementares, fornecendo-nos uma a informação do lado da oferta da mão de obra e, a outra, os factores condicionantes do lado da procura. Estudaram-se, ainda, as diferenças salariais intersectoriais com base na metodologia proposta por Krueger e Summers(1988) e Haisken-DeNew e Schmidt(1997). Em Portugal existem significativas diferenças salariais intersectoriais, mesmo depois de controlado o efeito do capital humano e de outros factores, cuja disparidade situa o nosso pais no grupo de países com maior disparidade salarial intersectorial. The neo-classical framework, represented by the human capital theory, was until the eighties the dominant theory in explaining the wage formation. Never the less, empirical studies in the eighties reveal the existence of significant durable wage differentials between equally skilled workers running against the fundaments of the neo-classical theory. New theories of wage determination, outside of the neo-classical competitive framework, emerged. The efficiency wage theory, one of the new theories, demonstrates that the firm may raise wages, in equilibrium, above the levei given by the neo-classical theory, causing involuntary unemployment. This paper performs an empirical test of the human capital theory and the efficiency wage theory in explaining, for the years 1992 and 1995, the wage levei in Portugal. None of the two theories alone is able to explain the wage levei in a satisfactory fashion. We should see them further as complementing than as concurring with each other. One describes labour supply and, the other, the labour demand. The inter-industry wage differentials were calculated and analysed in the manner suggested by Krueger and Summers (1988) and Haisken-DeNew and Schmidt (1997). There are significant inter-industry wage differentials in Portugal, even after controlling for human capital variables and other aspects. The dispersion of these differentials seems so high that we can classify Portugal in the group of countries with the highest dispersion of the inter-industry wage differentials. N/A