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Reinterpreting Industry Premiums: Match-Specific Productivity

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  • Kim, Dae Il
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    Abstract

    This article builds a simple model of worker sorting and match-specific productivity to explain interindustry wage differentials. High-skilled workers sort themselves into the industries offering more jobs that are better matched to them and those industries pay higher wages (on average). In job transition following an exogenous job separation, the likelihood of industry switching is higher among marginal workers--low- (high-)skilled workers in high- (low-)wage industry. Empirical findings from a sample of exogenous job separations created from the Displaced Worker Surveys are generally consistent with the implications of the model. Copyright 1998 by University of Chicago Press.

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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Labor Economics.

    Volume (Year): 16 (1998)
    Issue (Month): 3 (July)
    Pages: 479-504

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    Handle: RePEc:ucp:jlabec:v:16:y:1998:i:3:p:479-504

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    Web page: http://www.journals.uchicago.edu/JOLE/

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    Cited by:
    1. Mary Lovely & Douglas Nelson, 2002. "Intra-industry trade as an indicator of labor market adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(2), pages 179-206, June.
    2. Michelle Haynes & Richard Upward & Peter Wright, 2002. "Estimating the wage costs of inter- and intra- sectoral adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(2), pages 229-253, June.
    3. Katz, Lawrence & Gibbons, Robert & Lemieux, Thomas & Parent, Daniel, 2005. "Comparative Advantage, Learning, and Sectoral Wage Determination," Scholarly Articles 2766651, Harvard University Department of Economics.
    4. Barry T. Hirsch & Edward J. Schumacher, 2004. "Match Bias in Wage Gap Estimates Due to Earnings Imputation," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 689-722, July.
    5. Barry T. Hirsch & Edward J. Schumacher, 2000. "“Earnings Imputation and Bias in Wage Gap Estimates,”," Working Papers 0003, East Carolina University, Department of Economics.
    6. Max Gruetter & Rafael Lalive, . "The Importance of Firms in Wage Determination," IEW - Working Papers 207, Institute for Empirical Research in Economics - University of Zurich.
    7. Björklund, Anders & Bratsberg, Bernt & Eriksson, Tor & Jäntti, Markus & Raaum, Oddbjørn, 2004. "Inter-Industry Wage Differentials and Unobserved Ability: Siblings Evidence from Five Countries," IZA Discussion Papers 1080, Institute for the Study of Labor (IZA).
    8. Yih-chyi Chuang & Chun-yuan Lee, 2004. "Industry-specific human capital and the wage profile: Evidence from Taiwan," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 140(1), pages 110-124, March.
    9. Derek Neal & Sherwin Rosen, 1998. "Theories of the Distribution of Labor Earnings," NBER Working Papers 6378, National Bureau of Economic Research, Inc.

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