Inter-Industry Wage Differentials in Greece: Rent-Sharing and Unobserved Heterogeneity Hypotheses

36 Pages Posted: 18 Aug 2022

See all articles by Evangelia Papapetrou

Evangelia Papapetrou

Bank of Greece; National and Kapodistrian University of Athens

Pinelopi Tsalaporta

National and Kapodistrian University of Athens

Date Written: November 1, 2016

Abstract

This paper examines the structure and determinants of inter-industry wage differentials in Greece, along with the role of the rent-sharing and unobserved heterogeneity hypotheses, employing restricted least squares and quantile regression techniques with cluster robust standard errors at the firm level. To this end, a unique dataset, the European Union Structure of Earnings Survey (SES), is utilized. Data refer to 2010 when the first elements of the economic adjustment programme to deal with the chronic deficiencies of the Greek economy and restore sustainable public finances, competitiveness and set the foundation for long-term growth were beginning to be implemented. Results point to high wage dispersion across industries at the mean of the conditional wage distribution, even after controlling for personal and workplace characteristics. However, evidence for the unobserved heterogeneity hypothesis is rather scant. Therefore, there is room for efficiency wage or rent-sharing theories in accounting for a large part of inter-industry wage differentials tentatively implying that firm heterogeneity in the ability-to-pay matters more than employee unobservable attributes in the wage determination process.

Keywords: Inter-industry wage differentials; Rent-sharing; Unobserved heterogeneity hypotheses; Greece

JEL Classification: J31; J16; J24; C21; M52

Suggested Citation

Papapetrou, Evangelia and Tsalaporta, Pinelopi, Inter-Industry Wage Differentials in Greece: Rent-Sharing and Unobserved Heterogeneity Hypotheses (November 1, 2016). Bank of Greece Working Paper No. 213, Available at SSRN: https://ssrn.com/abstract=4186695 or http://dx.doi.org/10.2139/ssrn.4186695

Evangelia Papapetrou (Contact Author)

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

National and Kapodistrian University of Athens ( email )

1 Sofokleous Str
Athens, 10559
Greece

Pinelopi Tsalaporta

National and Kapodistrian University of Athens

5 Stadiou Strt
Athens, 12131
Greece

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