Employer Size, Wages and Unobserved Skills: Evidence from Moonlighters in the UK
Institute for the Study of Labor (IZA); Saint Petersburg State University - Graduate School of Management
The Manchester School, Vol. 77, Issue 6, pp. 651-674, December 2009
In this paper we examine the labour quality explanation of the employer size–wage gap: larger firms pay higher wages because they employ more skilled workers. Most previous studies control for unobserved skills of workers by applying the fixed-effects estimator to longitudinal data, thus assuming time-invariant unobserved individual heterogeneity. We release this assumption by using a sample of moonlighters; hence, identification is achieved by differencing across two jobs held simultaneously rather than sequentially. Using the UK Quarterly Labour Force Survey, we find that controlling for unobserved skills in the sample of moonlighters does not reduce the estimate of the wage gap.
Number of Pages in PDF File: 24Accepted Paper Series
Date posted: October 13, 2009
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