Permanent versus Transitory Wage Differentials and the Inequality-Hours Hypothesis
AbstractThis paper disentangles the effect of inequality in permanent and transitory wages on hours worked by, first, estimating the two components for Swedish industries and, second, using the resulting estimates as explanatory variables in an hours-worked equation. Consistent with Bell and Freeman’s (2001) inequality-hours hypothesis, permanent wage differentials are found to have a positive effect on individuals’ hours of work while transitory wage differentials have no effect. However, the analysis also shows that, in estimated hours-worked equations, inequality in observed wages is potentially a good approximation for inequality in permanent wages.
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Bibliographic InfoPaper provided by Uppsala University, Department of Economics in its series Working Paper Series, Center for Labor Studies with number 2013:12.
Length: 11 pages
Date of creation: 15 Oct 2013
Date of revision:
Contact details of provider:
Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
More information through EDIRC
labor supply; wage dispersion; wage dynamics;
Other versions of this item:
- Gustavsson, Magnus, 2013. "Permanent versus transitory wage differentials and the inequality-hours hypothesis," Economics Letters, Elsevier, vol. 121(3), pages 537-541.
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-14 (All new papers)
- NEP-EUR-2013-11-14 (Microeconomic European Issues)
- NEP-LAB-2013-11-14 (Labour Economics)
- NEP-LMA-2013-11-14 (Labor Markets - Supply, Demand, & Wages)
- NEP-LTV-2013-11-14 (Unemployment, Inequality & Poverty)
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.:
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Working Paper Series
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