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Using Twins to Resolve the Twin Problem of Having a Bad Job and a Low Wage

Author

Listed:
  • Böckerman, Petri

    (Labour Institute for Economic Research)

  • Ilmakunnas, Pekka

    (Aalto University)

  • Vainiomäki, Jari

    (University of Tampere)

Abstract

We use data on twins matched to register-based information on earnings to examine the long-standing puzzle of non-existent compensating wage differentials. The use of twin data allows us to remove otherwise unobserved productivity differences that were the prominent reason for estimation bias in the earlier studies. Using twin differences we find evidence for positive compensation of adverse working conditions in the labor market.

Suggested Citation

  • Böckerman, Petri & Ilmakunnas, Pekka & Vainiomäki, Jari, 2014. "Using Twins to Resolve the Twin Problem of Having a Bad Job and a Low Wage," IZA Discussion Papers 8557, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8557
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    References listed on IDEAS

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    5. Gunnar Isacsson, 2007. "Twin Data vs. Longitudinal Data to Control for Unobserved Variables in Earnings Functions – Which Are the Differences?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(3), pages 339-362, June.
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    Cited by:

    1. Petri, Böckerman & Pekka, Ilmakunnas, 2020. "Työhyvinvointi kannattaa. Työolot, työtyytyväisyys ja tuottavuus [Working conditions, job satisfaction and productivity]," MPRA Paper 103484, University Library of Munich, Germany.
    2. Heywood, John S. & O'Mahony, Mary & Siebert, W. Stanley & Rincon-Aznar, Ana, 2018. "The Impact of Employment Protection on the Industrial Wage Structure," IZA Discussion Papers 11788, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    compensating differentials; earnings; unobserved ability; productivity;
    All these keywords.

    JEL classification:

    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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