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Preferences, Comparative Advantage, and Compensating Wage Differentials for Job Routinization

  • Climent Quintana-Domeque

    (Princeton University)

I attempt to explain why compensating differentials for job disamenities are difficult to observe. 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 report lower job satisfaction and earn lower wages. Both male and female workers in routinized jobs earn, on average, 12% less than their counterparts in non-routinized jobs. Once preferences and mismatch are accounted for, this difference decreases to 8% for men and 5% for women. Accounting for mismatch is important when analyzing compensating differentials.

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File URL: http://arks.princeton.edu/ark:/88435/dsp01x920fw86t
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Paper provided by Princeton University, Department of Economics, Industrial Relations Section. in its series Working Papers with number 1063.

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Date of creation: May 2008
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Handle: RePEc:pri:indrel:dsp01x920fw86t
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  1. 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.
  2. McNabb, Robert, 1989. "Compensating Wage Differentials: Some Evidence for Britain," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 327-38, April.
  3. Marco van der Leij & Sanjeev Goyal, 2006. "Strong Ties in a Small World," Tinbergen Institute Discussion Papers 06-008/1, Tinbergen Institute.
  4. 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).
  5. 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.
  6. 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).
  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. Cuberes, David & Dougan, William, 2009. "How Endogenous Is Money? Evidence from a New Microeconomic Estimate," MPRA Paper 17744, University Library of Munich, Germany.
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