Unobserved Ability, Efficiency Wages, and Interindustry Wage Differentials

McKinley Blackburn () and David Neumark

No 3857, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Interindustry wage differentials in wage regressions estimated for individuals have been interpreted as evidence consistent with efficiency wage models. A principal competing explanation is that these differentials are generated by differences across workers in unobserved ability. This paper tests the unobserved ability hypothesis .by incorporating test scores into standard wage regressions as error-ridden indicators of unobserved ability. The results indicate that differences in unobserved ability explain relatively little of interindustry or interoccupation wage differentials.

Date: 1991-10
Note: LS
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Citations: View citations in EconPapers (2)

Published as Quarterly Journal of Economics. Volume 107, Issue 4, November 1992, pp. 1421-36

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Journal Article: Unobserved Ability, Efficiency Wages, and Interindustry Wage Differentials (1992)
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