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

Author

Listed:
  • Granqvist, Lena

    (SOFI)

  • Selén, Jan

    (Trade Union Institute for Economic Research)

  • Ståhlberg, Ann-Charlotte

    () (SOFI)

Abstract

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.

Suggested Citation

  • Granqvist, Lena & Selén, Jan & Ståhlberg, Ann-Charlotte, 2002. "Mandatory Earnings-Related Insurance Rights, Human Capital and the Gender Earnings Gap in Sweden," Working Paper Series 179, Trade Union Institute for Economic Research.
  • Handle: RePEc:hhs:fiefwp:0179
    as

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    File URL: http://swopec.hhs.se/fiefwp/papers/WP179.pdf
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    References listed on IDEAS

    as
    1. Asplund, Rita, . "Essays on Human Capital and Earnings in Finland," ETLA A, The Research Institute of the Finnish Economy, number 18.
    2. Janet Currie, 1993. "Gender Gaps in Benefits Coverage," NBER Working Papers 4265, National Bureau of Economic Research, Inc.
    3. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 239-253.
    4. 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 259-265, May.
    5. 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 372-378, May.
    6. 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 276-280, May.
    7. 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Non-wage benefits; Gender gap; Human capital; Occupational welfare;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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