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Using Twins to Resolve the Twin Problem of Having a Bad Job and a Low Wage

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  • Petri Böckerman
  • Pekka Ilmakunnas
  • Jari Vainiomäki

Abstract

We use twin data linked to register†based information on earnings to examine the long†standing puzzle of nonexistent compensating wage differentials. The use of twin data with a panel dimension allows us to alleviate the impact of otherwise unobserved productivity differences that have been the prominent reason for estimation bias in prior studies. Using a twin design, we find some evidence for positive compensation of adverse working conditions in the labor market.

Suggested Citation

  • Petri Böckerman & Pekka Ilmakunnas & Jari Vainiomäki, 2018. "Using Twins to Resolve the Twin Problem of Having a Bad Job and a Low Wage," Manchester School, University of Manchester, vol. 86(2), pages 155-177, March.
  • Handle: RePEc:bla:manchs:v:86:y:2018:i:2:p:155-177
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    File URL: https://doi.org/10.1111/manc.12178
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    1. Hyytinen, Ari & Ilmakunnas, Pekka & Toivanen, Otto, 2013. "The return-to-entrepreneurship puzzle," Labour Economics, Elsevier, vol. 20(C), pages 57-67.
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    6. Gunnar Isacsson, 2007. "Twin Data vs. Longitudinal Data to Control for Unobserved Variables in Earnings Functions - Which Are the Differences?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(3), pages 339-362, June.
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    More about this item

    JEL classification:

    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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