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An improved measure of inter-industry pay differentials

Author

Listed:
  • Gittleman, Maury

    (U.S. Bureau of Labor Statistics, Washington, DC, USA)

  • Pierce, Brooks Pierce

    (U.S. Bureau of Labor Statistics, Washington, DC, USA)

Abstract

The measurement of inter-industry pay differentials and the resulting use of this information to assess the empirical relevance of different labor market theories have been hampered by the fact that measures of total compensation – as opposed to just wages and salaries – are not available in the datasets traditionally used. We improve upon past measures of inter-industry pay differentials by being the first, to our knowledge, to incorporate microdata on nonwage compensation. Such compensation can easily exceed 40 to 50 percent of wages and thus its inclusion may either diminish or amplify measured industry pay differences. Using the Employer Costs for Employee Compensation (ECEC) data produced by the U.S. Bureau of Labor Statistics, we find that the inclusion of benefits increases industry dispersion by 16 percent when no controls are included and by an even greater 30 percent when controls are included.

Suggested Citation

  • Gittleman, Maury & Pierce, Brooks Pierce, 2013. "An improved measure of inter-industry pay differentials," Journal of Economic and Social Measurement, IOS Press, issue 3, pages 229-242.
    • Handle: RePEc:ris:iosjes:0002
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    References listed on IDEAS

    as
    1. Woodbury, Stephen A, 1983. "Substitution between Wage and Nonwage Benefits," American Economic Review, American Economic Association, vol. 73(1), pages 166-182, March.
    2. Philip Du Caju & Gábor Kátay & Ana Lamo & Daphne Nicolitsas & Steven Poelhekke, 2010. "Inter-Industry Wage Differentials In EU Countries: What Do Cross-Country Time Varying Data Add to the Picture?," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 478-486, 04-05.
    3. Maury Gittleman & Brooks Pierce, 2011. "Inter-Industry Wage Differentials Job Content and Unobserved Ability," ILR Review, Cornell University, ILR School, vol. 64(2), pages 356-374, January.
    4. Brooks Pierce, 2010. "Recent Trends in Compensation Inequality," NBER Chapters, in: Labor in the New Economy, pages 63-98, National Bureau of Economic Research, Inc.
    5. Mellow, Wesley & Sider, Hal, 1983. "Accuracy of Response in Labor Market Surveys: Evidence and Implications," Journal of Labor Economics, University of Chicago Press, vol. 1(4), pages 331-344, October.
    6. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
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    9. Philip Du Caju & Gábor Kátay & Ana Lamo & Daphne Nicolitsas & Steven Poelhekke, 2010. "Inter-industry wage differentials in EU countries : What do cross-country time-varying data add to the picture ?," Working Paper Research 189, National Bank of Belgium.
    10. Erica L. Groshen, 1988. "Why do wages vary among employers?," Economic Review, Federal Reserve Bank of Cleveland, vol. 24(Q I), pages 19-38.
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    Cited by:

    1. Grace Weishi Gu & Eswar Prasad, 2018. "New Evidence on Cyclical Variation in Labor Costs in the U.S," NBER Working Papers 24266, National Bureau of Economic Research, Inc.
    2. Grace Weishi Gu & Eswar Prasad & Thomas Moehrle, 2020. "New Evidence on Cyclical Variation in Average Labor Costs in the United States," The Review of Economics and Statistics, MIT Press, vol. 102(5), pages 966-979, December.

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    More about this item

    Keywords

    Inter-industry wage structure; compensation;

    JEL classification:

    • A00 - General Economics and Teaching - - General - - - General

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