IDEAS home Printed from https://ideas.repec.org/a/taf/nzecpp/v35y2001i1p53-75.html
   My bibliography  Save this article

The industry premium: What we know and what the New Zealand data say

Author

Listed:
  • Debasis Bandyopadhyay

Abstract

Earning regressions often reveal time-invariant industry premiums. Competitive theories explain them by referring to unobservable characteristics or compensating differentials. Non-competitive theories do the same by using efficiency wage, insider-outsider and rent sharing hypotheses. Those theories appear inadequate for explaining what one observes from the New Zealand data: employees receive industry premiums; but so do their self-employed counterparts; among those with no formal education industry premiums from employment are smaller than those from self-employment; but as the cohort's education level increases the premium differential increases and becomes positive. To explain those observations I propose a new hypothesis that measures an industry's total factor productivity and the corresponding industry premium.

Suggested Citation

  • Debasis Bandyopadhyay, 2001. "The industry premium: What we know and what the New Zealand data say," New Zealand Economic Papers, Taylor & Francis Journals, vol. 35(1), pages 53-75.
    • Handle: RePEc:taf:nzecpp:v:35:y:2001:i:1:p:53-75
    DOI: 10.1080/00779950109544332
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/00779950109544332
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00779950109544332?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sholeh A. Maani, 1996. "Private and Social Rates of Return to Secondary and Higher Education in New Zealand: Evidence from the 1991 Census," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 29(1), pages 82-100, January.
    2. Robert Gibbons & Lawrence Katz, 1992. "Does Unmeasured Ability Explain Inter-Industry Wage Differentials?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(3), pages 515-535.
    3. McKinley Blackburn & David Neumark, 1992. "Unobserved Ability, Efficiency Wages, and Interindustry Wage Differentials," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(4), pages 1421-1436.
    4. Mark B. Stewart, 1982. "On Least Squares Estimation When the Dependent Variable is Grouped," Working Papers 539, Princeton University, Department of Economics, Industrial Relations Section..
    5. Belman, Dale & Heywood, John S, 1990. "Market Structure and Worker Quality," Journal of Industrial Economics, Wiley Blackwell, vol. 39(2), pages 155-168, December.
    6. 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.
    7. Erica L. Groshen, 1991. "Sources of Intra-Industry Wage Dispersion: How Much Do Employers Matter?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(3), pages 869-884.
    8. Mark B. Stewart, 1983. "On Least Squares Estimation when the Dependent Variable is Grouped," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(4), pages 737-753.
    9. Lindbeck, Assar & Snower, Dennis J., 1991. "Interactions between the efficiency wage and insider-outsider theories," Economics Letters, Elsevier, vol. 37(2), pages 193-196, October.
    10. repec:bla:scandj:v:96:y:1994:i:1:p:31-50 is not listed on IDEAS
    11. Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 653-677, October.
    12. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-748, August.
    13. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(4), pages 543-569.
    14. Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000. "Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis," Econometrica, Econometric Society, vol. 68(5), pages 1029-1054, September.
    15. Lang, Kevin, 1998. "The Effect of Trade Liberalization on Wages and Employment: The Case of New Zealand," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 792-814, October.
    16. Hwang, Hae-shin & Reed, W Robert & Hubbard, Carlton, 1992. "Compensating Wage Differentials and Unobserved Productivity," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 835-858, August.
    17. Lucas, Robert Jr. & Prescott, Edward C., 1974. "Equilibrium search and unemployment," Journal of Economic Theory, Elsevier, vol. 7(2), pages 188-209, February.
    18. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Debasis Bandyopadhyay, 2004. "Why haven't economic reforms increased productivity growth in New Zealand?," New Zealand Economic Papers, Taylor & Francis Journals, vol. 38(2), pages 219-240.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andreas P. Georgiadis, 2006. "Is there a Wage-Supervision Trade-Off? Efficiency Wages Evidence From the 1990 British Workplace Industrial Relations Survey," The Centre for Market and Public Organisation 06/152, The Centre for Market and Public Organisation, University of Bristol, UK.
    2. Gokhale, Jagadeesh & Groshen, Erica L & Neumark, David, 1995. "Do Hostile Takeovers Reduce Extramarginal Wage Payments?," The Review of Economics and Statistics, MIT Press, vol. 77(3), pages 470-485, August.
    3. Matthew Cole & Robert Elliott & Joanne Lindley, 2009. "Dirty money: Is there a wage premium for working in a pollution intensive industry?," Journal of Risk and Uncertainty, Springer, vol. 39(2), pages 161-180, October.
    4. Ralph Stinebrickner & Todd Stinebrickner & Paul Sullivan, 2019. "Job Tasks, Time Allocation, and Wages," Journal of Labor Economics, University of Chicago Press, vol. 37(2), pages 399-433.
    5. Bhaskar, V. & To, Ted, 2003. "Oligopsony and the distribution of wages," European Economic Review, Elsevier, vol. 47(2), pages 371-399, April.
    6. Andrew Pendleton & Alex Bryson & Howard Gospel, 2017. "Ownership and Pay in Britain," British Journal of Industrial Relations, London School of Economics, vol. 55(4), pages 688-715, December.
    7. Gruetter, Max & Lalive, Rafael, 2009. "The importance of firms in wage determination," Labour Economics, Elsevier, vol. 16(2), pages 149-160, April.
    8. Panos, Georgios & Theodossiou, Ioannis, 2009. "Union Mediation and Adaptation to Reciprocal Loyalty Arrangements," MPRA Paper 15471, University Library of Munich, Germany.
    9. Robert Gibbons & Lawrence F. Katz & Thomas Lemieux & Daniel Parent, 2005. "Comparative Advantage, Learning, and Sectoral Wage Determination," Journal of Labor Economics, University of Chicago Press, vol. 23(4), pages 681-724, October.
    10. Mañé Vernet, Ferran & Miravet, Daniel, 2010. "An investigation on the pay-off to generic competences for core employees in Catalan manufacturing firms," Working Papers 2072/179595, Universitat Rovira i Virgili, Department of Economics.
    11. Georgios A. Panos & Ioannis Theodossiou, 2013. "Reciprocal Loyalty and Union Mediation," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(3), pages 645-676, July.
    12. Esteban Aucejo & Jonathan James, 2021. "The Path to College Education: The Role of Math and Verbal Skills," Journal of Political Economy, University of Chicago Press, vol. 129(10), pages 2905-2946.
    13. Panos, Georgios A. & Theodossiou, Ioannis, 2010. "Unionism and Peer-Referencing," SIRE Discussion Papers 2010-122, Scottish Institute for Research in Economics (SIRE).
    14. Neumann, George & Olitsky, Neal & Robbins, Steve, 2009. "Job congruence, academic achievement, and earnings," Labour Economics, Elsevier, vol. 16(5), pages 503-509, October.
    15. Colm Harmon & Kevin Denny & Vincent O'Sullivan, 2003. "Education, earnings and skills : a multi-country comparison," Open Access publications 10197/649, School of Economics, University College Dublin.
    16. Derek Neal & Sherwin Rosen, 1998. "Theories of the Distribution of Labor Earnings," NBER Working Papers 6378, National Bureau of Economic Research, Inc.
    17. Stefan Bender & Till von Wachter, 2006. "In the Right Place at the Wrong Time: The Role of Firms and Luck in Young Workers' Careers," American Economic Review, American Economic Association, vol. 96(5), pages 1679-1705, December.
    18. Gueorgui Kambourov & Iourii Manovskii, 2001. "Rising Occupational and Industry Mobility in the United States:1968-1993," PIER Working Paper Archive 04-012, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 05 Jul 2004.
    19. Bell, David N.F. & Hart, Robert A., 2010. "Retire Later or Work Harder?," IZA Discussion Papers 4720, Institute of Labor Economics (IZA).
    20. Gueorgui Kambourov & Iourii Manovskii, 2000. "Occupational Mobility and Wage Inequality, Second Version," PIER Working Paper Archive 04-026, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 15 Jun 2004.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:nzecpp:v:35:y:2001:i:1:p:53-75. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: http://www.tandfonline.com/RNZP20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.