Do Wages Compensate for Workplace Disamenities?

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Do Wages Compensate for Workplace Disamenities?

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Rafael Lalive

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Rafael Lalive

Abstract

Adam Smith's idea that the wage structure reflects differences in work conditions is a central pillar of the competitive theory of the labor market. However, the empirical relevance of this theory of equalizing differences remains unclear. This paper suggests a novel test for compensating wage differentials based on job satisfaction and wages. If wages differentials solely reflect compensation for work conditions, workers will not prefer jobs with high wages to jobs with low wages. Moreover, this new test allows discussing whether industry and firm size wage differentials reflect rents or compensate for work conditions. Results indicate that wage differentials do not exclusively reflect compensation for work conditions.

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Publisher Info
Article provided by Duncker & Humblot, Berlin in its journal Applied Economics Quarterly.

Volume (Year): 53 (2007)
Issue (Month): 3 ()
Pages: 273-298
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Handle: RePEc:aeq:aeqaeq:v53_y2007_i3_q3_p273-298

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Find related papers by JEL classification:
J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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Andrew E. Clark & Claudia Senik, 2004. "The (unexpected) structure of "rents" on the French and British labour markets," DELTA Working Papers 2004-06, DELTA (Ecole normale supérieure). [Downloadable!]
Other versions:
- Clark, Andrew E. & Senik, Claudia, 2004. "The (Unexpected) Structure of "Rents" on the French and British Labour Markets," IZA Discussion Papers 1438, Institute for the Study of Labor (IZA). [Downloadable!]
- Clark, Andrew E. & Senik, Claudia, 2006. "The (unexpected) structure of "rents" on the French and British labour markets," The Journal of Socio-Economics, Elsevier, vol. 35(2), pages 180-196, April. [Downloadable!] (restricted)
Bruno Frey & Alois Stutzer, 2005. "Happiness Research: State and Prospects," Review of Social Economy, Taylor and Francis Journals, vol. 63(2), pages 207-228, June. [Downloadable!] (restricted)
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Petri Böckerman & Pekka Ilmakunnas, 2005. "Do Job Disamenities Raise Wages or Ruin Job Satisfaction?," Labor and Demography 0501001, EconWPA. [Downloadable!]
Vicente Royuela & Jordi Suriñach, 2009. "Quality in work and aggregate productivity," IREA Working Papers 200901, University of Barcelona, Research Institute of Applied Economics, revised Jan 2009. [Downloadable!]
Alois Stutzer & Bruno S. Frey, . "Stress That Doesn't Pay: The Commuting Paradox," IEW - Working Papers iewwp151, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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- Stutzer, Alois & Bruno S. Frey, 2004. "Stress That Doesn't Pay: The Commuting Paradox," IZA Discussion Papers 1278, Institute for the Study of Labor (IZA). [Downloadable!]
- Alois Stutzer & Bruno S. Frey, 2008. "Stress that Doesn't Pay: The Commuting Paradox," Scandinavian Journal of Economics, Blackwell Publishing, vol. 110(2), pages 339-366, 06. [Downloadable!] (restricted)
Bruno Frey & Matthias Benz, 2003. "Being Independent is a Great Thing: Subjective Evaluations of Self-Employment and Hierarchy," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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- Bruno S. Frey & Matthias Benz, . "Being Independent is a Great Thing: Subjective Evaluations of Self-Employment and Hierarchy," IEW - Working Papers iewwp135, Institute for Empirical Research in Economics - IEW. [Downloadable!]
- Matthias Benz & Bruno S. Frey, 2008. "Being Independent is a Great Thing: Subjective Evaluations of Self-Employment and Hierarchy," Economica, London School of Economics and Political Science, vol. 75(298), pages 362-383, 05. [Downloadable!] (restricted)

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