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Rent-sharing and the cyclicality of wage differentials

  • Philip Du Caju
  • François Rycx
  • Ilan Tojerow

This paper investigates inter-industry wage differentials (IWD) in Belgium, taking advantage of a unique matched employer-employee dataset covering the years 1999-2005. Findings show the existence of large wage differentials among workers with the same observed characteristics and working conditions, employed in different sectors. These differentials are persistent and no particular trend is observed. However, their dispersion appears to show a cyclical pattern over time. Further results indicate that the instrumented elasticity between wages and profits is found to be quite stable over time and varies between 0.034 and 0.043. This rent-sharing phenomenon accounts for a large fraction of IWDs.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series DULBEA Working Papers with number 08-23.RS.

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Date of creation: Nov 2008
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Publication status: Published by: ULB, DULBEA
Handle: RePEc:dul:wpaper:08-23rs
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