Interindustry Wage Differentials and Unobserved Ability: Siblings Evidence from Five Countries

32 Pages Posted: 20 Dec 2006

See all articles by Anders Bjorklund

Anders Bjorklund

Stockholm University; IZA Institute of Labor Economics

Bernt Bratsberg

Kansas State University - Department of Economics; University of Oslo - Ragnar Frisch Centre for Economic Research

Tor Eriksson

Aarhus University - Department of Economics and Business Economics

Markus Jantti

Stockholm University

Oddbjorn Raaum

University of Oslo - Ragnar Frisch Centre for Economic Research

Abstract

We examine the role of unobserved ability in explaining interindustry wage differentials. By using data on brothers, we account for unmeasured abilities shared by siblings. The data came from four Nordic countries and the United States. In the Nordic countries, only a moderate proportion of the variability in industry wages can be attributed to unobserved ability, while unmeasured factors explain as much as half of the U.S. industry-wage variation. Accounting for such differences, we show that the U.S. interindustry wage dispersion is similar with that in the Nordic countries.

Suggested Citation

Bjorklund, Anders and Bratsberg, Bernt and Eriksson, Tor and Jantti, Markus and Raaum, Oddbjørn, Interindustry Wage Differentials and Unobserved Ability: Siblings Evidence from Five Countries. Industrial Relations: A Journal of Economy and Society, Vol. 46, No. 1, pp. 171-202, January 2007, Available at SSRN: https://ssrn.com/abstract=952870 or http://dx.doi.org/10.1111/j.1468-232X.2007.00461.x

Anders Bjorklund (Contact Author)

Stockholm University ( email )

Swedish Institute for Social Research (SOFI)
S-106 91 Stockholm
Sweden
+46 8 163452 (Phone)
+46 8 154670 (Fax)

IZA Institute of Labor Economics

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

Bernt Bratsberg

Kansas State University - Department of Economics ( email )

Manhattan, KS 66502-4001
United States

University of Oslo - Ragnar Frisch Centre for Economic Research

Gaustadalleen 21
N-0349 Oslo
Norway

Tor Eriksson

Aarhus University - Department of Economics and Business Economics ( email )

Fuglesangs Allé 4
Aarhus, 8210
Denmark
45 87164978 (Phone)

Markus Jantti

Stockholm University ( email )

Swedish Institute for Social Research
Stockholm, SE-10691
Sweden
+468162645 (Phone)

HOME PAGE: http://www.abo.fi/~mjantti/

Oddbjørn Raaum

University of Oslo - Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0317 Oslo
Norway

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