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Inter-industry wage differentials in Greece: rent-sharing and unobserved heterogeneity hypotheses

Author

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  • Evangelia Papapetrou

    () (Bank of Greece)

  • Pinelopi Tsalaporta

    (Bank of Greece)

Abstract

This paper examines the structure and determinants of inter-industry wage differentials in Greece, along with the role of the rent-sharing and unobserved heterogeneity hypotheses, employing restricted least squares and quantile regression techniques with cluster robust standard errors at the firm level. To this end, a unique dataset, the European Union Structure of Earnings Survey (SES), is utilized. Data refer to 2010 when the first elements of the economic adjustment programme to deal with the chronic deficiencies of the Greek economy and restore sustainable public finances, competitiveness and set the foundation for long-term growth were beginning to be implemented. Results point to high wage dispersion across industries at the mean of the conditional wage distribution, even after controlling for personal and workplace characteristics. However, evidence for the unobserved heterogeneity hypothesis is rather scant. Therefore, there is room for efficiency wage or rent-sharing theories in accounting for a large part of inter-industry wage differentials tentatively implying that firm heterogeneity in the ability-to-pay matters more than employee unobservable attributes in the wage determination process.

Suggested Citation

  • Evangelia Papapetrou & Pinelopi Tsalaporta, 2016. "Inter-industry wage differentials in Greece: rent-sharing and unobserved heterogeneity hypotheses," Working Papers 213, Bank of Greece.
  • Handle: RePEc:bog:wpaper:213
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    References listed on IDEAS

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    More about this item

    Keywords

    Inter-industry wage differentials; Rent-sharing; Unobserved heterogeneity hypotheses; Greece;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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