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Inter-Industry Compensation Differentials

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  • Maury Gittleman

    ()
    (U.S. Bureau of Labor Statistics)

  • Brooks Pierce

    ()
    (U.S. Bureau of Labor Statistics)

Abstract

A vast literature has sought to assess the magnitude of inter-industry differences in pay and explain why they exist. The measurement of inter-industry pay differentials and the resulting use of this information to assess the empirical relevance of different labor market theories have been hampered, however, by the fact that measures of total compensation -- as opposed to just wages and salaries -- are not available in the datasets traditionally used. To our knowledge, we are the first to use compensation microdata in a study of inter-industry pay differentials. Because nonwage compensation can easily exceed 40 to 50 percent of wages, its inclusion has the potential to alter measured industry pay differences, either diminishing or amplifying them. We find that the inclusion of benefits increases industry dispersion, as measured by the standard deviation of inter-industry differentials, by 16 percent when no controls are included and by an even greater 30 percent when controls are included.

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Bibliographic Info

Paper provided by U.S. Bureau of Labor Statistics in its series Working Papers with number 453.

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Length: 19 pages
Date of creation: Apr 2012
Date of revision:
Handle: RePEc:bls:wpaper:ec120020

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Keywords: inter-industry wage structure; compensation;

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References

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  1. Abraham, Katharine G. & Spletzer, James R. & Harper, Michael (ed.), 2010. "Labor in the New Economy," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226001432, January.
  2. Katz, Lawrence & Gibbons, Robert & Lemieux, Thomas & Parent, Daniel, 2005. "Comparative Advantage, Learning, and Sectoral Wage Determination," Scholarly Articles 2766651, Harvard University Department of Economics.
  3. Maury Gittleman & Brooks Pierce, 2011. "Inter-Industry Wage Differentials, Job Content and Unobserved Ability," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 64(2), pages 356-374, January.
  4. William T. Dickens & Lawrence F. Katz, 1987. "Inter-Industry Wage Differences and Theories of Wage Determination," NBER Working Papers 2271, National Bureau of Economic Research, Inc.
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