Chapter 10 - Wage structures across markets. In this chapter, we will address the following questions: Why do wages vary across markets? Are public sector workers overpaid? Why are wages lower in some provinces? Are wages higher in large firms? Which industries and occupations provide the highest wages? | Chapter Ten Wage Structures Across Markets Created by: Erica Morrill, Fanshawe College © 2002 McGraw-Hill Ryerson Ltd. Chapter Focus Why do wages vary across markets? Are public sector workers overpaid? Why are wages lower in some provinces? Are wages higher in large firms? Which industries and occupations provide the highest wages? Chapter 10- © 2002 McGraw-Hill Ryerson Ltd. Wage Structure Determinants Occupation Industry Region Large vs. Small firms Men vs. Women Race or ethnicity Immigrant status Union status Public vs. Private Sector Chapter 10- © 2002 McGraw-Hill Ryerson Ltd. Earnings Function Individual (log) wages depend on formal schooling labour market work experience unobserved ability or luck Coefficients on schooling and experience can be interpreted as rates of return Chapter 10- © 2002 McGraw-Hill Ryerson Ltd. 1999 Census Pure regional wage differential Occupational premiums Industry premiums Chapter 10- © 2002 McGraw-Hill Ryerson Ltd. Theoretical . | Chapter Ten Wage Structures Across Markets Created by: Erica Morrill, Fanshawe College © 2002 McGraw-Hill Ryerson Ltd. Chapter Focus Why do wages vary across markets? Are public sector workers overpaid? Why are wages lower in some provinces? Are wages higher in large firms? Which industries and occupations provide the highest wages? Chapter 10- © 2002 McGraw-Hill Ryerson Ltd. Wage Structure Determinants Occupation Industry Region Large vs. Small firms Men vs. Women Race or ethnicity Immigrant status Union status Public vs. Private Sector Chapter 10- © 2002 McGraw-Hill Ryerson Ltd. Earnings Function Individual (log) wages depend on formal schooling labour market work experience unobserved ability or luck Coefficients on schooling and experience can be interpreted as rates of return Chapter 10- © 2002 McGraw-Hill Ryerson Ltd. 1999 Census Pure regional wage differential Occupational premiums Industry premiums Chapter 10- © 2002 McGraw-Hill Ryerson Ltd. Theoretical Issues Compensating differentials Immobility across sectors Short run vs. Long run Unobserved heterogeneity Chapter 10- © 2002 McGraw-Hill Ryerson Ltd. Occupational Wage Structures The wage structure between various occupations or occupation groups 23 two-digit major groups 16 occupational classifications Chapter 10- © 2002 McGraw-Hill Ryerson Ltd. Figure Occupational Wage Differential Ss Ds Su Du Skilled Labour Unskilled labour Ws Wu Ns Nu Chapter 10- © 2002 McGraw-Hill Ryerson Ltd. Interoccupational Wage Differentials Compensation for nonpecuniary differences human capital investment endowed skills Short run adjustments demand factors Non Competitive Factors occupational licensing, regulation on entry, unions and legislation on wages Chapter 10- © 2002 McGraw-Hill Ryerson Ltd. Regional Wage Structures Reasons geographic preferences Compensating differences cost of living, remoteness, climate, nonprice externalities; pollution, congestion Short run factors induce .
