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Using twins to resolve the twin problem of having a bad job and a low wage

Author

Listed:
  • Petri Böckerman

    (Palkansaajien tutkimuslaitos)

  • Pekka Ilmakunnas
  • Jari Vainiomäki
Abstract
We use data on twins matched to register-based information on earnings to examine the long-standing puzzle of non-existent compensating wage differentials. The use of twin data allows us to remove otherwise unobserved productivity differences that were the prominent reason for estimation bias in the earlier studies. Using twin differences we find evidence for positive compensation of adverse working conditions in the labor market.

Suggested Citation

  • Petri Böckerman & Pekka Ilmakunnas & Jari Vainiomäki, 2015. "Using twins to resolve the twin problem of having a bad job and a low wage," Working Papers 294, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    • Handle: RePEc:pst:wpaper:294
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    References listed on IDEAS

    as
    1. Hyytinen, Ari & Ilmakunnas, Pekka & Toivanen, Otto, 2013. "The return-to-entrepreneurship puzzle," Labour Economics, Elsevier, vol. 20(C), pages 57-67.
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    4. Böckerman, Petri & Ilmakunnas, Pekka & Johansson, Edvard, 2011. "Job security and employee well-being: Evidence from matched survey and register data," Labour Economics, Elsevier, vol. 18(4), pages 547-554, August.
    5. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January.
    6. Gunnar Isacsson, 2007. "Twin Data vs. Longitudinal Data to Control for Unobserved Variables in Earnings Functions – Which Are the Differences?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(3), pages 339-362, June.
    7. Hwang, Hae-shin & Reed, W Robert & Hubbard, Carlton, 1992. "Compensating Wage Differentials and Unobserved Productivity," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 835-858, August.
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    11. repec:eee:labchp:v:1:y:1986:i:c:p:641-692 is not listed on IDEAS
    12. Peter Dorman & Paul Hagstrom, 1998. "Wage Compensation for Dangerous Work Revisited," ILR Review, Cornell University, ILR School, vol. 52(1), pages 116-135, October.
    13. Garen, John, 1988. "Compensating Wage Differentials and the Endogeneity of Job Riskiness," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 9-16, February.
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Dieter Verhaest & Stef Adriaenssens, 2022. "Compensating wage differentials in formal and informal jobs," Kyklos, Wiley Blackwell, vol. 75(1), pages 106-126, February.
    2. Petri, Böckerman & Pekka, Ilmakunnas, 2020. "Työhyvinvointi kannattaa. Työolot, työtyytyväisyys ja tuottavuus [Working conditions, job satisfaction and productivity]," MPRA Paper 103484, University Library of Munich, Germany.
    3. Heywood, John S. & O'Mahony, Mary & Siebert, W. Stanley & Rincon-Aznar, Ana, 2018. "The Impact of Employment Protection on the Industrial Wage Structure," IZA Discussion Papers 11788, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Compensating differentials; Earnings; Unobserved ability; Productivity;
    All these keywords.

    JEL classification:

    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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