Template-type: ReDIF-Paper 1.0
Author-Name: Ferreira, Priscila
Title: The sources of interindustry wage differentials
Abstract: We analyse the nature of interindustry wage differentials using Portuguese data. Es-
timates from models controlling for observed worker and firm characteristics reveal sig-
nificant and persistent raw interindustry di¤erentials, which questions the competitive
model of the labour market. However, estimates controlling for unobserved worker het-
erogeneity suggest that the raw di¤erentials are due to the concentration of high wage
workers in certain industries and not to genuine di¤erences in compensation across industries. However, a complete decomposition shows that (i) firm effects on average explain 70% of the industry wage premia, and (ii) genuine and sizeable interindustry wage differentials exist. These di¤erentials are shown to increase the time to separation from firms, and are therefore compatible with the competitive model.

Creation-Date: 20090331
Number: 2009-13
Publication-Status: published
File-URL: https://www.iser.essex.ac.uk/wp-content/uploads/files/working-papers/iser/2009-13.pdf
File-Format: Application/pdf
Handle: RePEc:ese:iserwp:2009-13