Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If You Use a Screen Reader

This content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.

Compensating Wage Differentials and Unobserved Productivity

Hae-shin Hwang, W. Robert Reed and Carlton Hubbard
Journal of Political Economy
Vol. 100, No. 4 (Aug., 1992), pp. 835-858
Stable URL: http://www.jstor.org/stable/2138690
Page Count: 24
  • Read Online (Free)
  • Download ($14.00)
  • Subscribe ($19.50)
  • Cite this Item
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Compensating Wage Differentials and Unobserved Productivity
Preview not available

Abstract

It is well known that the inability to observe workers' full labor market productivity can bias estimates of compensating wage differentials. This paper attempts to determine how serious this bias is likely to be. It adopts a stochastic framework of workers' tastes over job attributes and models their equilibrium wage-job attribute choices. Workers' productivity is assumed to consist of observed and unobserved components. Applying the standard estimation methodology, we find that the degree of bias can be surprisingly large. On the basis of our analysis, we conclude that contemporary labor market studies are likely to severely underestimate workers' willingness to pay for job attributes. This has implications for a number of applications of compensating wage differentials, including value of life studies.

Page Thumbnails

  • Thumbnail: Page 
835
    835
  • Thumbnail: Page 
836
    836
  • Thumbnail: Page 
837
    837
  • Thumbnail: Page 
[838]
    [838]
  • Thumbnail: Page 
839
    839
  • Thumbnail: Page 
840
    840
  • Thumbnail: Page 
841
    841
  • Thumbnail: Page 
842
    842
  • Thumbnail: Page 
843
    843
  • Thumbnail: Page 
[844]
    [844]
  • Thumbnail: Page 
845
    845
  • Thumbnail: Page 
846
    846
  • Thumbnail: Page 
847
    847
  • Thumbnail: Page 
848
    848
  • Thumbnail: Page 
849
    849
  • Thumbnail: Page 
850
    850
  • Thumbnail: Page 
851
    851
  • Thumbnail: Page 
852
    852
  • Thumbnail: Page 
853
    853
  • Thumbnail: Page 
854
    854
  • Thumbnail: Page 
855
    855
  • Thumbnail: Page 
856
    856
  • Thumbnail: Page 
857
    857
  • Thumbnail: Page 
858
    858