The Determinants of Blue CollarWage Rates: An Analysis of a DataSet Incorporating Observed Job Characteristics

Abstract

There is wide agreement that one of the major problems in the estimation of wage equations, and in testing theories of wages, is the quality of the data available. In particular, the data used in almost all studies involve indirect or unsatisfactory measures of a variety of relevant factors, including working conditions. In this paper we exploit an unusual data set that includes measures of characteristics of jobs generated by observation (rather than self report, or through inference from the Dictionary of Occupational Titles). With these data we estimate a wage equation in which compensating differentials play a significant role in wage determination and, once working conditions and other characteristics are effectively controlled, all but one measure of previous labour market experience had no effect on the wage rate.

The desire for impact

“…The firm can therefore offer a lower wage by not specifying effort, but instead giving the worker some autonomy. 19 This benefit of autonomy is consistent with the evidence discussed in the Introduction that workers are willing to accept a lower wage for greater autonomy (Benz & Frey, 2003;Frey & Benz, forthcoming;Frey et al, 2001;Smith et al, 1997). Desire by workers for impact may thus explain why firms leave employment contracts deliberately incomplete.…”

“…Frey, Kucher, and Stutzer (2001) find that high-ranked public employees earn more in Swiss cantons having more direct democracy, indicating a compensating wage differential for less discretion. Smith, Masi, and Lemay (1997) find evidence for the impact motive from market data: the greater a worker's autonomy in decision making, the lower his pay. 6 The following section defines the impact motive studied in this paper.…”

Income Inequality and Economic Growth in Rich Countries: A Reconsideration of the Evidence

“…4 On effort and work see Lazear (1998). On compensating differentials see Smith, Masi, and Came-Lemay (1997). 5 For interesting variants on the standard technological effect argument see Acemoglu (2001) and Aghion and Howitt (2001).…”