Industry wage differentials, unobserved ability, and rent-sharing: evidence from matched employer-employee, 1992-2005
Robert Plasman (),
Francois Rycx () and
Ilan Tojerow ()
No 06-14.RS, DULBEA Working Papers from ULB -- Universite Libre de Bruxelles
This paper investigates inter-industry wage differentials in Belgium, taking advantage of access to a unique matched employer-employee data set covering the period 1995-2002. Findings show the existence of large and persistent wage differentials among workers with the same observed characteristics and working conditions, employed in different sectors. The hypothesis that workers with better unmeasured abilities are over-represented in high-wage sectors may not be rejected on the basis of Martins’ (2004) methodology. However, the contribution of this explanation to the observed industry wage differentials appears to be limited. Further results show that ceteris paribus, workers earn significantly higher wages when employed in more profitable firms. Our instrumented wage-profit elasticity stands at 0.063 and Lester’s range of pay is about 41 per cent of the mean wage. This rent-sharing phenomenon accounts for a large fraction of the industry wage differentials. We find indeed that the magnitude, dispersion and significance of industry wage differentials decreases sharply when controlling for profits.
Keywords: Collective bargaining; wage structure. (search for similar items in EconPapers)
JEL-codes: J31 J51 J52 (search for similar items in EconPapers)
Pages: 94 p.
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed
Published by: ULB, DULBEA
Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/8807/1/it-0014.pdf it-0014 (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:dul:wpaper:06-14rs
Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... .ulb.ac.be:2013/8807
Access Statistics for this paper
More papers in DULBEA Working Papers from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().