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A Selectivity Model of Employer-Size Wage Differentials


  • Idson, Todd L
  • Feaster, Daniel J


This article investigates wage differentials for employees of different size firms utilizing an econometric methodology that allows the size of employer to be treated as endogenous in the context of discrete ordered employer-size data. As a result, the authors are able to estimate (1) employer-size wage gaps, which are corrected for selectivity bias, and (2) the magnitude and direction of the selection bias. Decompositions of the resulting wage differentials are computed, with comparisons of the conditional (on sorting across employer size) and unconditional wage gaps. Copyright 1990 by University of Chicago Press.

Suggested Citation

  • Idson, Todd L & Feaster, Daniel J, 1990. "A Selectivity Model of Employer-Size Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 99-122, January.
  • Handle: RePEc:ucp:jlabec:v:8:y:1990:i:1:p:99-122

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    References listed on IDEAS

    1. Duncan, Greg J & Holmlund, Bertil, 1983. "Was Adam Smith Right after All? Another Test of the Theory of Compensating Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 1(4), pages 366-379, October.
    2. Craig A. Olson, 1981. "An Analysis of Wage Differentials Received by Workers on Dangerous Jobs," Journal of Human Resources, University of Wisconsin Press, vol. 16(2), pages 167-185.
    3. Michael Hurd, 1980. "A Compensation Measure of the Cost of Unemployment to the Unemployed," The Quarterly Journal of Economics, Oxford University Press, vol. 95(2), pages 225-243.
    4. James D. Adams, 1985. "Permanent Differences in Unemployment and Permanent Wage Differentials," The Quarterly Journal of Economics, Oxford University Press, vol. 100(1), pages 29-56.
    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. Butler, Richard J & Worrall, John D, 1983. "Workers' Compensation: Benefit and Injury Claims Rates in the Seventies," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 580-589, November.
    7. Robert S. Smith, 1979. "Compensating Wage Differentials and Public Policy: A Review," ILR Review, Cornell University, ILR School, vol. 32(3), pages 339-352, April.
    8. Topel, Robert H, 1984. "Equilibrium Earnings, Turnover, and Unemployment: New Evidence," Journal of Labor Economics, University of Chicago Press, vol. 2(4), pages 500-522, October.
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