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Rent-sharing and the cyclicality of wage differentials

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  • Philip Du Caju
  • François Rycx
  • Ilan Tojerow

Abstract

This paper investigates inter-industry wage differentials (IWD) in Belgium, taking advantage of a unique matched employer-employee dataset covering the years 1999-2005. Findings show the existence of large wage differentials among workers with the same observed characteristics and working conditions, employed in different sectors. These differentials are persistent and no particular trend is observed. However, their dispersion appears to show a cyclical pattern over time. Further results indicate that the instrumented elasticity between wages and profits is found to be quite stable over time and varies between 0.034 and 0.043. This rent-sharing phenomenon accounts for a large fraction of IWDs.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series DULBEA Working Papers with number 08-23.RS.

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Date of creation: Nov 2008
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Publication status: Published by: ULB, DULBEA
Handle: RePEc:dul:wpaper:08-23rs

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Keywords: Industry wage differentials; Rent-sharing; Matched employer-employee data.;

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References

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Cited by:
  1. Hartmut Egger & Daniel Etzel, 2010. "The Impact of Trade on Employment, Welfare, and Income Distribution in Unionized General Oligopolistic Equilibrium," Working Papers 088, Bavarian Graduate Program in Economics (BGPE).
  2. Oscar Bernal Diaz & Kim Oosterlinck & Ariane Szafarz, 2008. "Observing bailout expectations during a total eclipse of the sun," Working Papers CEB 08-015.RS, ULB -- Universite Libre de Bruxelles.
  3. Charles Plaigin, 2009. "Exploratory study on the presence of cultural and institutional growth spillovers," DULBEA Working Papers 09-03.RS, ULB -- Universite Libre de Bruxelles.

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