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

29 Pages Posted: 25 Oct 2014

See all articles by Petri Bockerman

Petri Bockerman

Labour Institute for Economic Research; University of Turku - Turku School of Economics

Pekka Ilmakunnas

Aalto University School of Business

Jari Vainiomäki

Tampere University

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.

Keywords: compensating differentials, earnings, unobserved ability, productivity

JEL Classification: J28, J31

Suggested Citation

Bockerman, Petri and Ilmakunnas, Pekka and Vainiomäki, Jari, Using Twins to Resolve the Twin Problem of Having a Bad Job and a Low Wage. IZA Discussion Paper No. 8557, Available at SSRN: https://ssrn.com/abstract=2514750

Petri Bockerman (Contact Author)

Labour Institute for Economic Research ( email )

FIN-00530 Helsinki
Finland
+358 9 2535 7332 (Phone)
+358 9 2535 7332 (Fax)

HOME PAGE: http://www.petribockerman.fi/

University of Turku - Turku School of Economics ( email )

Rehtorinpellonkatu 3
TURKU, FI-20500
Finland

Pekka Ilmakunnas

Aalto University School of Business ( email )

PO Box 21240
FI-00076 Aalto, Helsinki
Finland
+358 40 5815390 (Phone)

Jari Vainiomäki

Tampere University

No Address Available

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