serval:BIB_81023B022266
Do Wages Compensate for Workplace Disamenities?
Lalive
R.
author
article
2007
Applied Economics Quarterly
1611-6607
journal
53
3
273-298
Adam Smith's idea that the wage structure reflects differences in work conditions is a central tenet of modern competitive theory of the labor market. However, the empirical relevance of this theory of equalizing differences remains unclear. This paper suggests a novel test for compensating wage differentials based on job satisfaction and wages. If wages differentials solely reflect compensation for work conditions, workers will not prefer jobs with high wages to jobs with low wages. Moreover, this new test allows discussing whether industry and firm size wage differentials reflect rents or compensate for work conditions. Results indicate that wage differentials do not exclusively reflect compensation for work conditions.
industry wage differentials
compensating wage differentials
job satisfaction
eng
60_published
peer-reviewed
University of Lausanne
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