Wages of Occupations in Theory... and Practice

Stephan Kampelmann and Francois Rycx

Reflets et perspectives de la vie économique, 2011, vol. L, issue 4, 119-131

Abstract: Conventional models of earnings assume that the occupational pay structure reflects the distribution of marginal productivities. Although ubiquitious in the literature, the underlying hypothesis that wages equal marginal products rests on weak empirical footing: extant studies from the 1970s suggested that occupations at the top of the wage hierarchy are over- and occupations at the bottom underpaid with respect to their contributions to firm-level added value. This article surveys the theoretical literature on such productivtiy-wage gaps and presents recent econometric evidence that confirms a disconnection between the remuneration and the productivity of occupational groups.

Keywords: wage inequality; occupations; marginal productivity; labour market theory (search for similar items in EconPapers)
Date: 2011
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