Preferences, comparative advantage, and compensating wage differentials for job routinization
In this paper I attempt to explain why labor economists typically have not been able to find much evidence on compensating wage differentials for job disamenities, except for risk of death. The key insight here is that, although workers need to be compensated when their preferences do not match the requirements for performing a job task, the occurrence of mismatch also decreases productivity, reducing the surplus to be divided between workers and firms, and decreasing wages. I focus on the match between workers¿ preferences for routine jobs and the variability in tasks associated with the job. Using data from the Wisconsin Longitudinal Study, I find that mismatched workers earn lower wages and that both male and female workers in routinized jobs earn, on average, 5.5% and 7% less than their counterparts in non-routinized jobs. However, once preferences and mismatch are accounted for, this difference decreases to 2% for men and 4% for women. These findings suggest that accounting for mismatch is important when analyzing compensating wage differentials.
|Date of creation:||Mar 2010|
|Date of revision:|
|Publication status:||Published by Ivie|
|Contact details of provider:|| Postal: |
Phone: +34 96 319 00 50
Fax: +34 96 319 00 55
Web page: http://www.ivie.es/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Weinberg, Bruce A. & Borghans, Lex & Weel, Bas ter, 2006.
"Interpersonal Styles and Labor Market Outcomes,"
MERIT Working Papers
045, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
- Borghans Lex & Weel Bas ter & Weinberg Bruce A., 2007. "Interpersonal Styles and Labor Market Outcomes," ROA Research Memorandum 001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
- Borghans, Lex & ter Weel, Bas & Weinberg, Bruce A., 2006. "Interpersonal Styles and Labor Market Outcomes," IZA Discussion Papers 2466, Institute for the Study of Labor (IZA).
- Lex Borghans & Bas ter Weel & Bruce A. Weinberg, 2007. "Interpersonal Styles and Labor Market Outcomes," NBER Working Papers 12846, National Bureau of Economic Research, Inc.
- Marco van der Leij & Sanjeev Goyal, 2006.
"Strong Ties in a Small World,"
Tinbergen Institute Discussion Papers
06-008/1, Tinbergen Institute.
- David Cuberes & William R. Dougan, 2010.
"How Endogenous Is Money? Evidence from a New Microeconomic Estimate,"
Working Papers. Serie AD
2010-08, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Cuberes, David & Dougan, William, 2009. "How Endogenous Is Money? Evidence from a New Microeconomic Estimate," MPRA Paper 17744, University Library of Munich, Germany.
- Goldin, Claudia & Kuziemko, Ilyana & Katz, Lawrence, 2006.
"The Homecoming of American College Women: The Reversal of the College Gender Gap,"
2962611, Harvard University Department of Economics.
- Claudia Goldin & Lawrence F. Katz & Ilyana Kuziemko, 2006. "The Homecoming of American College Women: The Reversal of the College Gender Gap," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 133-156, Fall.
- Claudia Goldin & Lawrence F. Katz & Ilyana Kuziemko, 2006. "The Homecoming of American College Women: The Reversal of the College Gender Gap," NBER Working Papers 12139, National Bureau of Economic Research, Inc.
- Jeffrey S. Zax & Daniel I. Rees, 2002. "IQ, Academic Performance, Environment, and Earnings," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 600-616, November.
- Hwang, Hae-shin & Reed, W Robert & Hubbard, Carlton, 1992. "Compensating Wage Differentials and Unobserved Productivity," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 835-58, August.
- Lucas, Robert E B, 1977. "Hedonic Wage Equations and Psychic Wages in the Returns to Schooling," American Economic Review, American Economic Association, vol. 67(4), pages 549-58, September.
- José J. Sempere Monerris & Rafael Moner Colonques & Amparo Urbano Salvador, 2010. "Trade liberalization in vertically related markets," Working Papers. Serie AD 2010-09, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Kevin Lang & Sumon Majumdar, 2003. "The Pricing of Job Characteristics When Markets Do Not Clear: Theory and Implications," NBER Working Papers 9911, National Bureau of Economic Research, Inc.
- McNabb, Robert, 1989. "Compensating Wage Differentials: Some Evidence for Britain," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 327-38, April.
- Daniel, Christophe & Sofer, Catherine, 1998. "Bargaining, Compensating Wage Differentials, and Dualism of the Labor Market: Theory and Evidence for France," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 546-75, July.
When requesting a correction, please mention this item's handle: RePEc:ivi:wpasad:2010-06. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Departamento de Edición)
If references are entirely missing, you can add them using this form.