Advanced Search
MyIDEAS: Login

The pervasive absence of compensating differentials

Contents:

Author Info

  • StÈphane Bonhomme

    (CEMFI, Madrid, Spain)

  • GrÈgory Jolivet

    (Department of Economics, University of Bristol, UK)

Abstract

We study the relation between individual preferences for job amenities (e.g., type of work, job security) and compensating wage differentials in cross-section. To this end, we estimate a partial equilibrium job search model on panel data from eight European countries. There are five non-wage job characteristics and two sources of job-to-job mobility: on-the-job search and reallocation shocks. We also allow for two types of unobserved heterogeneity. We find strong preferences for amenities, especially job security, yet, these preferences do not translate into significant wage differentials in cross-section. Counterfactual experiments show that one would need extremely low levels of search frictions for compensating differentials to arise. Lastly, a similar exercise on the distribution of job change outcomes reveals the role of constrained job-to-job mobility in the absence of compensating wage differentials. Copyright © 2009 John Wiley & Sons, Ltd.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://hdl.handle.net/10.1002/jae.1074
File Function: Link to full text; subscription required
Download Restriction: no

File URL: http://qed.econ.queensu.ca:80/jae/2009-v24.5/
File Function: Supporting data files and programs
Download Restriction: no

Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 24 (2009)
Issue (Month): 5 ()
Pages: 763-795

as in new window
Handle: RePEc:jae:japmet:v:24:y:2009:i:5:p:763-795

Contact details of provider:
Web page: http://www.interscience.wiley.com/jpages/0883-7252/

Order Information:
Email:
Web: http://www3.interscience.wiley.com/jcatalog/subscribe.jsp?issn=0883-7252

Related research

Keywords:

Other versions of this item:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Bent Jesper Christensen & Rasmus Lentz & Dale T. Mortensen & George R. Neumann & Axel Werwatz, 2005. "On-the-Job Search and the Wage Distribution," Journal of Labor Economics, University of Chicago Press, vol. 23(1), pages 31-58, January.
  2. Matthew S. Dey & Christopher J. Flinn, 2005. "An Equilibrium Model of Health Insurance Provision and Wage Determination," Econometrica, Econometric Society, vol. 73(2), pages 571-627, 03.
  3. Jos van Ommeren & Gerard J. van den Berg & Cees Gorter, 2000. "Estimating the Marginal Willingness to Pay for Commuting," Journal of Regional Science, Wiley Blackwell, vol. 40(3), pages 541-563.
  4. Hwang, Hae-shin & Reed, W Robert & Hubbard, Carlton, 1992. "Compensating Wage Differentials and Unobserved Productivity," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 835-58, August.
  5. Kostiuk, Peter F, 1990. "Compensating Differentials for Shift Work," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1054-75, October.
  6. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Econometrica, Econometric Society, vol. 70(6), pages 2295-2350, November.
  7. Arcidiacono, Peter & Jones, John B., 2000. "Finite Mixture Distribution, Sequential Likelihood, and the EM Algorithm," Working Papers 00-16, Duke University, Department of Economics.
  8. Ken Burdett & Melvyn Coles, 2003. "Equilibrium Wage-Tenure Contracts," Econometrica, Econometric Society, vol. 71(5), pages 1377-1404, 09.
  9. Brown, Charles, 1980. "Equalizing Differences in the Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 94(1), pages 113-34, February.
  10. Hwang, Hae-shin & Mortensen, Dale T & Reed, W Robert, 1998. "Hedonic Wages and Labor Market Search," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 815-47, October.
  11. Flinn, C. & Heckman, J., 1982. "New methods for analyzing structural models of labor force dynamics," Journal of Econometrics, Elsevier, vol. 18(1), pages 115-168, January.
  12. Timothy J. Gronberg & W. Robert Reed, 1994. "Estimating Workers' Marginal Willingness to Pay for Job Attributes Using Duration Data," Journal of Human Resources, University of Wisconsin Press, vol. 29(3), pages 911-931.
  13. Ridder, Geert & van den Berg, Gerard J, 2003. "Measuring Labour Market Frictions: A Cross-Country Comparison," CEPR Discussion Papers 3978, C.E.P.R. Discussion Papers.
  14. Goddeeris, John H, 1988. "Compensating Differentials and Self-selection: An Application to Lawyers," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 411-28, April.
  15. Harald Dale-Olsen, 2006. "Estimating Workers' Marginal Willingness to Pay for Safety using Linked Employer-Employee Data," Economica, London School of Economics and Political Science, vol. 73(289), pages 99-127, 02.
  16. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  17. Dey, Matthew & Flinn, Christopher, 2008. "Household search and health insurance coverage," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 43-63, July.
  18. Daniel, Christophe & Sofer, Catherine, 1998. "Bargaining, Compensating Wage Differentials, and Dualism of the Labor Market: Theory and Evidence for France," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 546-75, July.
  19. Jolivet, Gregory & Postel-Vinay, Fabien & Robin, Jean-Marc, 2006. "The empirical content of the job search model: Labor mobility and wage distributions in Europe and the US," European Economic Review, Elsevier, vol. 50(4), pages 877-907, May.
  20. Kevin Lang & Sumon Majumdar, 2004. "The Pricing Of Job Characteristics When Markets Do Not Clear: Theory And Policy Implications," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(4), pages 1111-1128, November.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. John F. Helliwell & Haifang Huang, 2008. "Well-being and Trust in the Workplace," NBER Working Papers 14589, National Bureau of Economic Research, Inc.
  2. Christina Felfe, 2009. "The Willingness to Pay for Job Amenities: Evidence from Mothers' Return to Work," SOEPpapers on Multidisciplinary Panel Data Research 247, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Christina Felfe, 2008. "Return to Work - Mothers' Willingness to Pay for Job Amenities," University of St. Gallen Department of Economics working paper series 2008 2008-25, Department of Economics, University of St. Gallen.
  4. Hospido, Laura, 2010. "Job Changes and Individual-Job Specific Wage Dynamics," IZA Discussion Papers 5088, Institute for the Study of Labor (IZA).
  5. Giovanni L. Violante & Per Krusell & Andreas Hornstein, 2006. "Frictional wage dispersion in search models: a quantitative assessment," Working Paper 06-07, Federal Reserve Bank of Richmond.
  6. Paul Sullivan & Ted To, 2011. "Search and Non-Wage Job Characteristics," Working Papers 449, U.S. Bureau of Labor Statistics.
  7. Diego Dueñas Fernández & Carlos Iglesias Fernández & Raquel Llorente Heras, 2010. "Job quality, job satisfaction and services in Spain," Working Papers 06/10, Instituto Universitario de Análisis Económico y Social.
  8. Luke Haywood, 2014. "Too Rich to Do the Dirty Work?: Wealth Effects on the Demand for Good Jobs," Discussion Papers of DIW Berlin 1355, DIW Berlin, German Institute for Economic Research.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:jae:japmet:v:24:y:2009:i:5:p:763-795. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.