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Mandatory Earnings-Related Insurance Rights, Human Capital and the Gender Earnings Gap in Sweden

  • Granqvist, Lena


  • Selén, Jan

    (Trade Union Institute for Economic Research)

  • Ståhlberg, Ann-Charlotte



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    Most labour market analyses take money wages as the sole measure of compensation for labour, thus excluding fringe benefits. We examine an extended compensation measure by incorporating mandatory collective earnings-related insurance rights: the rights of individual old age pension, sickness benefit insurance and survivors’ pension. We estimate the return on investment in human capital and the gender earnings gap in a traditional earnings equation. The money wage and the extended wage are used as dependent variables in joint regressions, where a SUR framework enables proper joint cross-equation tests. The main finding is that the inclusion of earnings-related insurance rights does affect the return on education. When these non-wage benefits are included, the gender wage gap decreases by 21 per cent. However, the gender differences in returns to education are severely underestimated when money wage is used as a compensation measure.

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    Paper provided by Trade Union Institute for Economic Research in its series Working Paper Series with number 179.

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    Length: 21 pages
    Date of creation: 07 Oct 2002
    Date of revision:
    Handle: RePEc:hhs:fiefwp:0179
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    1. Jantti, Markus, 1994. "A More Efficient Estimate of the Effects of Macroeconomic Activity on the Distribution of Income," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 372-78, May.
    2. B. F. Kiker & Sherrie L. W. Rhine, 1987. "Fringe Benefits and the Earnings Equation: A Test of the Consistency Hypothesis," Journal of Human Resources, University of Wisconsin Press, vol. 22(1), pages 126-137.
    3. Averett, Susan L & Hotchkiss, Julie L, 1995. "The Probability of Receiving Benefits at Different Hours of Work," American Economic Review, American Economic Association, vol. 85(2), pages 276-80, May.
    4. Janet Currie, 1993. "Gender Gaps in Benefits Coverage," NBER Working Papers 4265, National Bureau of Economic Research, Inc.
    5. Rita Asplund,, . "Essays on Human Capital and Earnings in Finland," ETLA A, The Research Institute of the Finnish Economy, number 18, March-Apr.
    6. Even, William E & Macpherson, David A, 1990. "The Gender Gap in Pensions and Wages," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 259-65, May.
    7. Breusch, T S & Pagan, A R, 1980. "The Lagrange Multiplier Test and Its Applications to Model Specification in Econometrics," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 239-53, January.
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