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Inter-Industry Compensation Differentials

Author

Listed:
  • Maury Gittleman

    () (U.S. Bureau of Labor Statistics)

  • Brooks Pierce

    () (U.S. Bureau of Labor Statistics)

Abstract

A vast literature has sought to assess the magnitude of inter-industry differences in pay and explain why they exist. 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, however, by the fact that measures of total compensation -- as opposed to just wages and salaries -- are not available in the datasets traditionally used. To our knowledge, we are the first to use compensation microdata in a study of inter-industry pay differentials. Because nonwage compensation can easily exceed 40 to 50 percent of wages, its inclusion has the potential to alter measured industry pay differences, either diminishing or amplifying them. We find that the inclusion of benefits increases industry dispersion, as measured by the standard deviation of inter-industry differentials, by 16 percent when no controls are included and by an even greater 30 percent when controls are included.

Suggested Citation

  • Maury Gittleman & Brooks Pierce, 2012. "Inter-Industry Compensation Differentials," Working Papers 453, U.S. Bureau of Labor Statistics.
  • Handle: RePEc:bls:wpaper:ec120020
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    References listed on IDEAS

    as
    1. William T. Dickens & Lawrence F. Katz, 1987. "Inter-Industry Wage Differences and Theories of Wage Determination," NBER Working Papers 2271, National Bureau of Economic Research, Inc.
    2. Abowd, John M. & Kramarz, Francis, 1999. "The analysis of labor markets using matched employer-employee data," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 40, pages 2629-2710 Elsevier.
    3. 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.
    4. 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.
    5. Brooks Pierce, 2001. "Compensation Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1493-1525.
    6. Abraham, Katharine G. & Spletzer, James R. & Harper, Michael (ed.), 2010. "Labor in the New Economy," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226001432.
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    Citations

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    Cited by:

    1. Morikawa, Masayuki, 2016. "A comparison of the wage structure between the public and private sectors in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 39(C), pages 73-90.

    More about this item

    Keywords

    inter-industry wage structure; compensation;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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