Wages, Productivity, and Worker Characteristics: Evidence from Plant-Level Production Functions and Wage Equations

51 Pages Posted: 5 May 1998 Last revised: 16 May 2000

See all articles by Judith K. Hellerstein

Judith K. Hellerstein

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

David Neumark

University of California, Irvine - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Kenneth R. Troske

University of Kentucky - Department of Economics; University of Missouri at Columbia - Department of Economics; IZA Institute of Labor Economics

Date Written: June 1996

Abstract

We use a unique new data set that combines individual worker data with data on workers' employers to estimate plant-level production functions and wage equations, and thus to compare relative marginal products and relative wages for various groups of workers. The data and empirical framework lead to new evidence on numerous questions regarding the determination of wages, questions that hinge on the relationship between wages and marginal products of workers in different demographic groups. These include race and sex discrimination in wages, the causes of rising wages over the life cycle, and the returns to marriage. First, workers who have ever been married are more productive than never-married workers and are paid accordingly. Second, prime-aged workers (aged 35-54) are equally as productive as younger workers, and in some specifications are estimated to receive higher wages. However, older workers (aged 55+) are less productive than younger workers but are paid more. Third, the data indicate no difference between the relative wage and relative productivity of black workers. Finally, with the exception of managerial and professional occupations, women are paid about 25-35% less than men, but estimated productivity differentials for women are generally no larger than 15%, and significantly smaller than the pay differential.

Suggested Citation

Hellerstein, Judith K. and Neumark, David and Troske, Kenneth R., Wages, Productivity, and Worker Characteristics: Evidence from Plant-Level Production Functions and Wage Equations (June 1996). NBER Working Paper No. w5626. Available at SSRN: https://ssrn.com/abstract=3182

Judith K. Hellerstein

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3545 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

David Neumark (Contact Author)

University of California, Irvine - Department of Economics ( email )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States
949-824-8496 (Phone)
949-824-2182 (Fax)

HOME PAGE: http://www.socsci.uci.edu/~dneumark/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Kenneth R. Troske

University of Kentucky - Department of Economics ( email )

Lexington, KY 40506
United States

University of Missouri at Columbia - Department of Economics ( email )

118 Professional Building
Columbia, MO 65211
United States
573-882-4229 (Phone)
573-882-2697 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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