We expect that, identical labor should command identical wages. However, by seeing inter-industry profile of wages, we find huge discrepancies, which are beyond obvious differences in skills and qualifications. By looking at data on wages and industry characteristics across 147 industries, the study investigated some of the determinants of differential wages across industries. Regression analysis and ANOVA revealed that value added per employee, and establishment size are significant determinants of average wages. Industry growth was found to be negatively related to average wages for industries where value added per employee was very high.
Get full access to this article
View all access options for this article.
References
1.
AllenS. G. (1995). Updated Notes on the Interindustry Wage Structure, 1890–1990. Industrial and Labor Relations Review, 48, pp. 305–321.
2.
AraiM. (2003). Wages, Profits, and Capital Intensity: Evidence from Matched Worker-firm Data. Journal of Labor Economics, 21, pp. 593–618.
3.
DevereuxP. J. (2005). Effects of Industry Growth and Decline on Gender and Education Wage Gaps in the 1980s. Industrial and Labor Relations Review, 58(4): pp. 552–570.
4.
EhrenbergR. G.SmithR. S. (2003). Modern Labor Economics: Theory and Public Policy.Boston: Addison Wesley.
5.
Kellogg (2005). Introduction to SPSS. Kellogg Research Computing, Kellogg School of Management.
6.
LinC. A.OrazemP. F. (2004). A Reexamination of the Time Path of Wage Differentials in Taiwan. Review of Development Economics, 8, pp. 295–308.
7.
MehtaS. R. (1998). The Law of One Price and a Theory of the Firm: A Ricardian Perspective on Interindustry Wages. RAND Journal of Economics, 29, pp. 137–156.
8.
RoyA. D. (1951). Some thoughts on the distribution of earnings. Oxford Economic Papers, 3(June): pp. 135–146 (cited by Devereux, 2005).
9.
UNIDO (2003). International Year Book of Industrial Statistics.Edward Elgar.
