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Are Occupations Paid What They are Worth? An Econometric Study of Occupational Wage Inequality and Productivity

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  • Stephan Kampelmann
  • François Rycx

Abstract

Labour economists typically assume that pay differences between occupations can be explained with variations in productivity. The empirical evidence on the validity of this assumption is surprisingly thin and subject to various potential biases. The authors use matched employer-employee panel data from Belgium for the years 1999–2006 to examine occupational productivity-wage gaps. They find that occupations play distinct roles for remuneration and productivity: while the estimations indicate a significant upward-sloping occupational wage-profile, the hypothesis of a flat productivity-profile cannot be rejected. The corresponding pattern of over- and underpayment stands up to a series of robustness tests. Copyright Springer Science+Business Media New York 2012

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  • Stephan Kampelmann & François Rycx, 2012. "Are Occupations Paid What They are Worth? An Econometric Study of Occupational Wage Inequality and Productivity," De Economist, Springer, vol. 160(3), pages 257-287, September.
    • Handle: RePEc:kap:decono:v:160:y:2012:i:3:p:257-287
    DOI: 10.1007/s10645-012-9190-0
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    Cited by:

    1. Hatem Mohammed Rouhoma Salah & Nasser Habtoor, 2015. "Libyan Managers’s Perspective on the Intention to Retain Older Employees in the Corporate Sectors in Libya," International Journal of Management Sciences, Research Academy of Social Sciences, vol. 6(6), pages 282-290.
    2. Andrea Garnero & Stephan Kampelmann & François Rycx, 2014. "The Heterogeneous Effects of Workforce Diversity on Productivity, Wages, and Profits," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(3), pages 430-477, July.
    3. Stephan Kampelmann & François Rycx & Yves Saks & Ilan Tojerow, 2018. "Does education raise productivity and wages equally? The moderating role of age and gender," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-37, December.
    4. Liis Roosaar & Jaan Masso & Urmas Varblane, 2017. "The Structural Change And Labour Productivity Of Firms: Do Changes In The Age And Wage Structure Of Employees Matter?," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 103, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    5. Kampelmann, Stephan & Mahy, Benoît & Rycx, François & Vermeylen, Guillaume, 2016. "Who Is Your Perfect Match? Educational Norms, Educational Mismatch and Firm Profitability," IZA Discussion Papers 10399, Institute of Labor Economics (IZA).
    6. François Rycx & Yves Saks & Ilan Tojerow, 2015. "Does Education Raise Productivity and Wages Equally? The Moderating Roles of Age, Gender and Industry," Working Paper Research 281, National Bank of Belgium.
    7. Maliranta, Mika, 2013. "Globalization, occupational restructuring and firm performance," ETLA Working Papers 5, The Research Institute of the Finnish Economy.
    8. Kyle Glenn, 2021. "Social Labor vs Human Capital: Competing Theories of Skills," Working Papers 2115, New School for Social Research, Department of Economics.
    9. Kevin Pineda-Hernández & François Rycx & Mélanie Volral, 2022. "Moving Up the Social Ladder? Wages of First- and Second-Generation Immigrants from Developing Countries," LIDAM Discussion Papers IRES 2022025, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    10. Romina Giuliano & Stephan Kampelmann & Benoît Mahy & François Rycx, 2017. "Short Notice, Big Difference? The Effect of Temporary Employment on Firm Competitiveness across Sectors," British Journal of Industrial Relations, London School of Economics, vol. 55(2), pages 421-449, June.
    11. Garnero, Andrea & Kampelmann, Stephan & Rycx, François, 2013. "Part-time Work, Wages and Productivity: Evidence from Belgian Matched Panel Data," IZA Discussion Papers 7789, Institute of Labor Economics (IZA).
    12. Paul Gift, 2020. "Moving the Needle in MMA: On the Marginal Revenue Product of UFC Fighters," Journal of Sports Economics, , vol. 21(2), pages 176-209, February.
    13. Stephan Kampelmann & François Rycx, 2016. "Wage discrimination against immigrants: measurement with firm-level productivity data," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-24, December.
    14. Andrea Garnero & Stephan Kampelmann & François Rycx, 2014. "Part-Time Work, Wages, and Productivity," ILR Review, Cornell University, ILR School, vol. 67(3), pages 926-954, July.

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    More about this item

    Keywords

    Labour productivity; Wages; Occupations; Production function; Matched employer-employee data; J24; J31; J44;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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