Job Dispersion and Compensating Wage Differentials
AbstractThe empirical literature on compensating wage differentials has a mixed history. While there have been some successes, much of this literature finds weak support for the theory of equalizing differences. We argue that it is dispersion in total job values or "job dispersion" that leads to biased compensating wage differential estimates. We begin by demonstrating how job dispersion can lead to biased hedonic estimates. Then we take a partial equilibrium on-the-job search model with utility from non-wage job characteristics, structurally estimate it and then simulate a dataset. Using our simulated dataset, we conduct a detailed analysis of the sources of bias in hedonic wage estimates. While worker heterogeneity and job dynamics are important sources of job dispersion, a significant proportion of the variation in jobs can only be explained by the inherent randomness of job offers.
Download InfoIf 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.
Bibliographic InfoPaper provided by U.S. Bureau of Labor Statistics in its series Working Papers with number 469.
Length: 40 pages
Date of creation: Oct 2013
Date of revision:
Contact details of provider:
Postal: 2 Massachusetts Avenue, N.E. Room 2860, Washington, D. C. 20212
Phone: (202) 606-5900
Fax: (202) 606-7890
Web page: http://www.bls.gov
More information through EDIRC
compensating wage differential; theory of equalizing differences; revealed preference; on-the-job search;
Find related papers by JEL classification:
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-14 (All new papers)
- NEP-LAB-2013-11-14 (Labour Economics)
- NEP-LMA-2013-11-14 (Labor Markets - Supply, Demand, & Wages)
- NEP-UPT-2013-11-14 (Utility Models & Prospect Theory)
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.:
- Seungjin Han & Shintaro Yamaguchi, 2013.
"Compensating Wage Differentials in Stable Job Matching Equilibrium,"
Global COE Hi-Stat Discussion Paper Series
gd12-285, Institute of Economic Research, Hitotsubashi University.
- Han, Seungjin & Yamaguchi, Shintaro, 2012. "Compensating Wage Differentials in Stable Job Matching Equilibrium," Microeconomics.ca working papers seungjin_han-2012-4, Vancouver School of Economics, revised 27 Feb 2013.
- Seungjin Han & Shintaro Yamaguchi, 2012. "Compensating Wage Differentials in Stable Job Matching Equilibrium," Department of Economics Working Papers 2012-01, McMaster University, revised Feb 2013.
- Smith, A A, Jr, 1993. "Estimating Nonlinear Time-Series Models Using Simulated Vector Autoregressions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(S), pages S63-84, Suppl. De.
- Shintaro Yamaguchi, 2006.
"Job Search, Bargaining, and Wage Dynamics,"
2006 Meeting Papers
54, Society for Economic Dynamics.
- Shintaro Yamaguchi, 2007. "Job Search, Bargaining, and Wage Dynamics," Department of Economics Working Papers 2007-03, McMaster University.
- Shintaro Yamaguchi, 2006. "Job Search, Bargaining, and Wage Dynamics," ISER Discussion Paper 0658, Institute of Social and Economic Research, Osaka University.
- Shintaro Yamaguchi, 2009. "Job Search, Bargaining, and Wage Dynamics," Global COE Hi-Stat Discussion Paper Series gd08-026, Institute of Economic Research, Hitotsubashi University.
- 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.
- Eckstein, Zvi & van den Berg, Gerard J., 2007.
"Empirical labor search: A survey,"
Journal of Econometrics,
Elsevier, vol. 136(2), pages 531-564, February.
- Flinn, Christopher J, 2002.
"Labour Market Structure and Inequality: A Comparison of Italy and the U.S,"
Review of Economic Studies,
Wiley Blackwell, vol. 69(3), pages 611-45, July.
- Christopher J. Flinn, 2002. "Labour Market Structure and Inequality: A Comparison of Italy and the U.S," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 611-645.
- Groshen, Erica L, 1991. "Sources of Intra-industry Wage Dispersion: How Much Do Employers Matter?," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 869-84, August.
- Goffe, William L. & Ferrier, Gary D. & Rogers, John, 1994. "Global optimization of statistical functions with simulated annealing," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 65-99.
- Smith, Adam, 1776. "An Inquiry into the Nature and Causes of the Wealth of Nations," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1776.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gregory Kurtzon).
If references are entirely missing, you can add them using this form.