Ιnter-Industry Wage Differentials in EU Countries: What Do Cross-Country Time Varying Data Add to the Picture?
42 Pages Posted: 21 Jul 2022
Date Written: December 1, 2010
Abstract
This paper documents the existence and main patterns of inter-industry wage differentials across a large number of industries for 8 EU countries at two points in time and explores possible explanations for these. The analysis uses the European Structure of Earnings Survey (SES), an internationally harmonised matched employer-employee dataset, to estimate inter-industry wage differentials conditional on a set of employee, employer and job characteristics. After investigating the possibility that unobservable employee characteristics lie behind the conditional wage differentials, a hypothesis which cannot be accepted, the paper investigates the role of institutional, industry structure and performance characteristics in explaining inter-industry wage differentials. The results suggest that inter-industry wage differentials are consistent with rent sharing mechanisms and that rent sharing is more likely in industries with firm-level collective agreements and with higher collective agreement coverage.
Keywords: inter-industry wage differentials, rent sharing, unobserved ability
JEL Classification: J31, J41, J51
Suggested Citation: Suggested Citation