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Estimating Compensating Wage Differentials Using Voluntary Job Changes: Evidence from Germany

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Author Info
Ernesto Villanueva

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Abstract

The author develops a model predicting that in a labor market that attaches a wage premium to jobs with a disamenity (a compensating wage differential), the premium's upper bound will be defined by the average wage change of voluntary job movers whose consumption of the disamenity rises as a result of their move; its lower bound, by the wage change of those whose consumption of the disamenity falls. These predictions will not hold if, as predicted by a "segmented" labor market model, the labor market attaches a wage penalty to workplace disamenities. Using longitudinal data on job characteristics and wages in Germany in 1984-2001, the author estimates the market returns to four workplace disamenities: heavy workload, job insecurity, poor hours regulation, and a mismatch between skills possessed and skills required. The results broadly support the existence of compensating differentials in the German labor market.

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Publisher Info
Article provided by ILR Review, ILR School, Cornell University in its journal ILR Review.

Volume (Year): 60 (2007)
Issue (Month): 4 (July)
Pages: 544-561
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Handle: RePEc:ilr:articl:v:60:y:2007:i:4:p:544-561

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  1. Martinez Perez, Jorge Eduardo & Mendez Martinez, Ildefonso, 2008. "¿Qué podemos saber sobre el Valor Estadístico de la Vida en España utilizando datos laborales?," MPRA Paper 11165, University Library of Munich, Germany. [Downloadable!]
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This page was last updated on 2009-12-14.


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