Compensating Wage Differentials in Labor Markets
Empirical Challenges and Applications
Bibliographic Data
| ID | 4029031 |
|---|---|
| Authors | Kurt Lavetti (0000-0002-7126-0366, Kurt Lavetti is Associate Professor of Economics, The Ohio State University, Columbus, Ohio and a Research Associate at the National Bureau of Economic Research. ., corresponding author) |
| Year | 2023 |
| Volume | 37 |
| Issue | 3 |
| Pages | 189-212 |
| Publication date | 2023-08-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Journal of Economic Perspectives (JOURNAL) |
| Journal identifiers | ISSN: 0895-3309 • E-ISSN: 1944-7965 |
| Publisher | American Economic Association (PUBLISHER • US) |
| DOI | 10.1257/jep.37.3.189 |
| OpenAlex | W4385502202 |
| Language | EN |
| Citations received | 12 |
| References cited | 8 |
The model of compensating wage differentials is among the cornerstone models of equilibrium wage determination in labor economics. However, empirical estimates of compensating differentials have faced persistent credibility challenges. This article summarizes the Rosen model of compensating differentials and chronicles the advances, setbacks, and lessons learned from empirical studies. The progression from cross-sectional to panel models alleviated biases caused by unobserved human capital but yielded new insights into the importance of other biases, including those caused by labor market frictions and endogenous job mobility. I discuss recent approaches that use matched employer-employee data and quasi-random variation in job amenities to address some of these challenges. I then present two examples of applications of compensating differentials: the evaluation public health and safety policies that rely on the value of statistical life, and the measurement and interpretation of earnings inequality
Cornerstone · Credibility · Earnings · Econometrics · Economics · Efficiency wage · Estimation · Human capital · Inequality · Labor relations · Labour economics · Personnel economics · Structural estimation · Wage · Employment and Welfare Studies · Income, Poverty, and Inequality · Labor market dynamics and wage inequality
Beyond ethnic penalties in occupational attainment
Labor market monopsony and local clubs
The political logic of just transition policies
Compensating teachers serving rural schools
Teacher shortage
Work Meaning and the Flexibility Puzzle
Remote work, wages, and hours worked in the United States
Working from home, commuting, and gender
A life-cycle model of risk-taking on the job
Job Quality Unpacked
Caste Inequality in Occupational Exposure to Heat Waves in India
Poor-quality jobs and economic disadvantage in the United States’ spectator sports industry
| Unique citing works | 12 |
|---|---|
| Citations per year | 6 |
| Citation span | 2024 - 2026 (3) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 11 |