Inter-Industry Wage Differentials and Job Flows

M.U. Krause

Research output: Working paperDiscussion paperOther research output

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Abstract

The paper explores the relationship between job flows and wages in the U.S. manufacturing sector, where wage differentials for seemingly identical workers and job reallocation rates are shown to be negatively correlated across 3-digit industries.High wage industries have the lowest turnover of jobs, offering more secure employment opportunities.In a regression of wage differentials on industry characteristics, the role of job flows is robust to the inclusion of many variables that typically help explain the wage structure.However, average education in a worker's industry, firm size, and capital-per-employee jointly render the coefficient on industry job flows low and insignificant.To explain these findings, an inter-sectoral equilibrium model of the labor market with endogenous job destruction is developed.Employer-provided training in firm-specific skills provides the necessary mechanism that increases wages when duration and through exogenous differences in skill requirements.The role of average education can then be explained by a complementarity between training and observable ex-ante abilities of workers, so that average education in the regression proxies for the average amount of training that workers receive in an industry.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages32
Volume2002-3
Publication statusPublished - 2002

Publication series

NameCentER Discussion Paper
Volume2002-3

Fingerprint

Industry
Inter-industry wage differentials
Job flows
Workers
Wages
Education
Wage differentials
Coefficients
Inclusion
Turnover
Firm size
Manufacturing sector
Employees
Employers
Industry characteristics
Job reallocation
Job destruction
Complementarity
Wage structure
Labour market

Keywords

  • job destruction
  • training
  • wage differentials
  • job search
  • matching

Cite this

Krause, M. U. (2002). Inter-Industry Wage Differentials and Job Flows. (CentER Discussion Paper; Vol. 2002-3). Tilburg: Macroeconomics.
Krause, M.U. / Inter-Industry Wage Differentials and Job Flows. Tilburg : Macroeconomics, 2002. (CentER Discussion Paper).
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Krause, MU 2002 'Inter-Industry Wage Differentials and Job Flows' CentER Discussion Paper, vol. 2002-3, Macroeconomics, Tilburg.

Inter-Industry Wage Differentials and Job Flows. / Krause, M.U.

Tilburg : Macroeconomics, 2002. (CentER Discussion Paper; Vol. 2002-3).

Research output: Working paperDiscussion paperOther research output

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AB - The paper explores the relationship between job flows and wages in the U.S. manufacturing sector, where wage differentials for seemingly identical workers and job reallocation rates are shown to be negatively correlated across 3-digit industries.High wage industries have the lowest turnover of jobs, offering more secure employment opportunities.In a regression of wage differentials on industry characteristics, the role of job flows is robust to the inclusion of many variables that typically help explain the wage structure.However, average education in a worker's industry, firm size, and capital-per-employee jointly render the coefficient on industry job flows low and insignificant.To explain these findings, an inter-sectoral equilibrium model of the labor market with endogenous job destruction is developed.Employer-provided training in firm-specific skills provides the necessary mechanism that increases wages when duration and through exogenous differences in skill requirements.The role of average education can then be explained by a complementarity between training and observable ex-ante abilities of workers, so that average education in the regression proxies for the average amount of training that workers receive in an industry.

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Krause MU. Inter-Industry Wage Differentials and Job Flows. Tilburg: Macroeconomics. 2002. (CentER Discussion Paper).