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Title: Unobserved Ability, Efficiency Wages, and Interindustry Wage Differentials
Resulting in 1 citation.
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Blackburn, McKinley L. Neumark, David B. |
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Unobserved Ability, Efficiency Wages, and Interindustry Wage Differentials Quarterly Journal of Economics 107,4 (November 1992): 1421-1436. Also: http://qje.oxfordjournals.org/content/107/4/1421.full.pdf+html Cohort(s): NLSY79, Young Men Publisher: MIT Press Keyword(s): Test Scores/Test theory/IRT; Wage Differentials An important area of research on the empirical validity of efficiency wage theory has focused on the role of industry effects in explaining variation in wages across workers. In this paper we test the unobserved ability explanation of interindustry and interoccupation wage differentials by explicitly incorporating measures of unobserved ability into wage regressions. The procedure we use may be an improvement over past attempts to account for unobserved ability using standard first difference estimators, since it is less likely to suffer from biases due to measurement error or selectivity. The major limitation of our approach is that we cannot control for variation in ability that is not reflected in the test scores that we use as indicators of ability. Our empirical results imply that interindustry and interoccupation wage differentials are, for the most part, not attributable to variation in unobserved labor quality or ability. Our estimates indicate that just over one tenth of the variation in interindustry wage differentials, and less than one fourth of the variation in interoccupation wage differentials, reflect differences in unobserved ability. |
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Bibliography Citation
Blackburn, McKinley L. and David B. Neumark. "Unobserved Ability, Efficiency Wages, and Interindustry Wage Differentials." Quarterly Journal of Economics 107,4 (November 1992): 1421-1436.
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