Inter-industry Wage Differences and Individual Heterogeneity

Alan A. Carruth, William Collier () and Andrew Peter Dickerson ()

Oxford Bulletin of Economics and Statistics, 2004, vol. 66, issue 5, pages 811-846

Abstract: Two well-established findings are apparent in the analyses of individual wage determination: cross-section wage equations can account for less than half of the variance in earnings and there are large and persistent inter-industry wage differentials. We explore these two empirical regularities using longitudinal data from the British Household Panel Survey (BHPS). We show that around 90% of the variation in earnings can be explained by observed and " unobserved" individual characteristics. However, small - but statistically significant - industry wage premia do remain, and there is also a role for a rich set of job and workplace controls. Copyright 2004 Blackwell Publishing Ltd.

Date: 2004
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