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Interindustry Wage Differentials and Unobserved Ability: Siblings Evidence from Five Countries
Author(s) -
BJÖRKLUND ANDERS,
BRATSBERG BERNT,
ERIKSSON TOR,
JÄNTTI MARKUS,
RAAUM ODDBJÖRN
Publication year - 2007
Publication title -
industrial relations: a journal of economy and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.61
H-Index - 57
eISSN - 1468-232X
pISSN - 0019-8676
DOI - 10.1111/j.1468-232x.2007.00461.x
Subject(s) - economics , wage , demographic economics , labour economics , wage dispersion , variation (astronomy) , econometrics , efficiency wage , physics , astrophysics
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.