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Human capital and industry wage structure in Guatemala

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  • Sakellariou, Chris N.

Abstract

The presence and persistence of substantial wage differentials between industries has been documented. Differences between industries could result from (1) the normal functioning of competitive labor markets (compensating differential levels of human capital), (2) institutional factors, such as the presence of a union, and (3) efficiency wages paid on some industries (employers finding they can increase profits by paying workers above-market wages). Using the testable model of endogenous growth, the author analyzes microdata from the Guatemala Household Survey to estimate the external effects of education. First, he estimates a wage equation and filters out the internal effects of education. Then, to isolate external effects, he regresses the resulting wage premiums in industry on average human capital as well as on industry-specific characteristics. Stronger conclusions cannot be drawn, but the analysis does not reject the hypothesis that external effects are present.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1445.

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Date of creation: 30 Apr 1995
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Handle: RePEc:wbk:wbrwps:1445

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Related research

Keywords: Banks&Banking Reform; Water and Industry; Public Health Promotion; Health Monitoring&Evaluation; Labor Policies; Health Monitoring&Evaluation; Banks&Banking Reform; Economic Theory&Research; Environmental Economics&Policies; Water and Industry;

References

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  1. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Working Papers 1906, National Bureau of Economic Research, Inc.
  2. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  3. Surendra Gera & Gilles Grenier, 1994. "Interindustry Wage Differentials and Efficiency Wages: Some Canadian Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 27(1), pages 81-100, February.
  4. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March.
  5. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
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Cited by:
  1. Funkhouser, Edward, 1998. "The importance of firm wage differentials in explaining hourly earnings variation in the large-scale sector of Guatemala," Journal of Development Economics, Elsevier, vol. 55(1), pages 115-131, February.
  2. Ludger J. Loening, 2002. "The Impact of Education on Economic Growth in Guatemala: A Time- Series Analysis Applying an Error-Correction Methodology," Econometrics 0211002, EconWPA.
  3. Jorge Saba Arbache, 1998. "How do Economic Reforms affect the Structure of Wages? The Case of Brazilian Manufacturing, 1984-1996," Studies in Economics 9817, Department of Economics, University of Kent.

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