The sources of interindustry wage differentials

Publication type

Conference Paper

Series

Globalisation and Economic Policy Postgraduate Conference

Author

Publication date

March 26, 2009

Abstract:

We analyse the nature of interindustry wage differentials using Portuguese data. Estimates from models controlling for observed worker and firm characteristics reveal significant and persistent raw interindustry differentials, which questions the competitive model of the labour market. However, estimates controlling for unobserved worker heterogeneity suggest that the raw differentials are due to the concentration of high wage workers in certain industries and not to genuine differences 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 differentials are shown to increase the time to separation from firms, and are therefore compatible with the competitive model.

#517845

---

Related Publications

• The sources of interindustry wage differentials

  1. Priscila Ferreira

  ISER Working Paper Series
  March 31, 2009

• The sources of interindustry wage differentials

  1. Priscila Ferreira

  Conference Paper
  March 12, 2009

• The sources of interindustry wage differentials

  1. Priscila Ferreira

  Conference Paper
  November 12, 2008

• The sources of interindustry wage differentials

  1. Priscila Ferreira

  Conference Paper
  July 4, 2008