Preferences, comparative advantage, and compensating wage differentials for job routinization

Climent Quintana Domeque
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Climent Quintana Domeque: Universidad de Alicante
Authors registered in the RePEc Author Service: Climent Quintana-Domeque

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: In this paper I attempt to explain why labor economists typically have not been able to find much evidence on compensating wage differentials for job disamenities, except for risk of death. The key insight here is that, although workers need to be compensated when their preferences do not match the requirements for performing a job task, the occurrence of mismatch also decreases productivity, reducing the surplus to be divided between workers and firms, and decreasing wages. I focus on the match between workers¿ preferences for routine jobs and the variability in tasks associated with the job. Using data from the Wisconsin Longitudinal Study, I find that mismatched workers earn lower wages and that both male and female workers in routinized jobs earn, on average, 5.5% and 7% less than their counterparts in non-routinized jobs. However, once preferences and mismatch are accounted for, this difference decreases to 2% for men and 4% for women. These findings suggest that accounting for mismatch is important when analyzing compensating wage differentials.

Keywords: Compensating wage differentials; preferences; comparative advantage; mismatch; routine (search for similar items in EconPapers)
JEL-codes: J3 J31 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2010-03
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (2)

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http://www.ivie.es/downloads/docs/wpasad/wpasad-2010-06.pdf Fisrt version / Primera version, 2010 (application/pdf)

Related works:
Journal Article: Preferences, Comparative Advantage, and Compensating Wage Differentials for Job Routinization (2011)
Working Paper: Preferences, Comparative Advantage, and Compensating Wage Differentials for Job Routinization (2008)
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