Supply Side Wage Determinants: Overview of Empirical Literature

Issue: 2012/4

Jiří Balcar

RPIC-ViP s.r.o., Výstavní 2224/8, 709 00, Ostrava, Czech Republic. E-mail: balcar@rpic-vip.cz

The list of variables included in wage models has been extended substantially since 1974 when Mincer published his model containing years of schooling and quadratic function of potential experience. This paper provides an overview of the variables most often employed in wage equations, including results from their estimations. Education, experience, particular skills, psychological traits, beauty and health, social capital, characteristics potentially connected with discrimination, individual’s household characteristics and social, cultural and economic background the individual was exposed to during childhood and adolescence, all these are aggregated fields of interest which are discussed in detail. The paper is concluded by the outline of the probable development of research on wage determinants.

Pages: 
207-222
DOI: 10.2478/v10135-012-0010-x
JEL: J71, J31, J24, J13, J12
Keywords: Wage Determinants, social capital, skills, psychological traits, overview, household characteristics, health, experience, education, discrimination, beauty, background
References: 

 

Abowd, J. M., Kang, C. (2002). Simultaneous Determination of Wage Rates and Tenure. Retrieved June 1, 2012, from http://courses.cit.cornell.edu/jma7/Simultaneous%20Determination_Abowd_K...

Abraham, K. G., Farber, H. S. (1987). Job Duration, Seniority, and Earnings. The American Economic Review, 77 (3). Pp. 278-297.

Adair, L., Guilkey, D., Bisgrove, E., Gultiano, S. (2002). Effect of Childbearing on Filipino Women's Work Hours and Earnings. Journal of Population Economics, 15 (4). Pp. 625-645.

Aguilera, M. B., Massey, D. S. (2003). Social Capital and the Wages of Mexican Migrants: New Hypotheses and Tests. Social Forces, 82 (2). Pp. 671-701.

Allegretto, S. A., Artur, M. M. (2001). An Empirical Analysis of Homosexual/Heterosexual Male Earnings Differentials: Unmarriedand Unequal? Industrial and Labor Relations Review, 54 (3). Pp. 631-646.

Altonji, J. G., Shakotko, R. A. (1987). Do Wages Rise with Job Seniority? The Review of Economic Studies, 54 (3). Pp. 437-459.

Altonji, J. G., Williams, N. (2005). Do Wages Rise with Job Seniority? A reassessment. Industrial and Labor Relations Review, 58 (3). Pp. 370-397.

Angle, J., Wissmann, D. A. (1981). Gender, College Major, and Earnings. Sociology of Education, 54 (1). Pp. 25-33.

Auld, M. CH. (2005). Smoking, Drinking, and Income. The Journal of Human Resources, 40 (2). Pp. 505-518.

Averett, S., Korenman, S. (1996). The Economic Reality of the Beauty. The Journal of Human Resources, 31 (2). Pp. 304-330.

Bacolod, M., Blum, B. S. (2008). Two Sides of the Same Coin: U.S. “Residual” Inequality and the Gender Gap. Retrieved June 1, 2012, from

http://www.rotman.utoronto.ca/bblum/personal/2%20sides.pdf

Badgett, M. V. Lee (1995). The Wage Effects of Sexual Orientation Discrimination. Industrial and Labor Relations Review, 48 (4). Pp. 726-739.

Baldwin, R. E., Weisbrod, B. A. (1974). Disease and Labor Productivity. Economic Development and Cultural Change, 22 (3). Pp. 414-435.

Barbezat , D. A. (2002). History of Pay Equity Studies. New Direction for Institutional Research, No. 115. Pp. 9-40.

Barr, A. (2000). Social Capital and Technical Information Flows in the Ghanaian Manufacturing Sector. Oxford Economic Papers, 52. Pp. 539-559.

Barrick, M. R., Mount, M. K. (1991). The Big Five personality dimensions and job performance: A meta- analysis. Personnel Psychology, 44 (1). Pp. 1–26.

Bartel, A., Taubman, P. (1979). Health and Labor Market Success: The Role of Various Diseases. The Review of Economics and Statistics, 61 (1). Pp. 1-8.

Bartel, A., Taubman, P. (1986). Some Economic and Demographic Consequences of Mental Illness. Journal of Labor Economics, 4 (2). Pp. 243-256.

Bayer, P., Ross, S. L., Topa, G. (2008). Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes. Journal of Political Economy, 116 (6). Pp. 1150-1196.

Becker, G. S. (1962). Investment in Human Capital: A Theoretical Analysis. The Journal of Political Economy, Part 2: Investment in Human Beings, 70 (5). Pp. 9-49.

Bertrand, M. (2010). New Perspectives on Gender. Handbook of Labor Economics, 4b. Pp. 1545-1592.

Biddle, J. E, Hamermesh, D. S. (1994). Beauty and the Labor Market. American Economic Review, 84 (5). Pp. 1174-94.

Biddle, J. E, Hamermesh, D. S. (1998). Beauty, Productivity, and Discrimination: Lawyers' Looks and Lucre. Journal of Labor Economics, 16 (1). Pp. 172-201.

Bird, E. J., Schwarze, J., Wagner, G. G. (1994). Wage Effects of the Move Toward Free Markets in East Germany. Industrial and Labor Relations Review, 47 (3). Pp. 390-400.

Black, D. A., Makar, H. R., Sanders, S. G., Taylor, L. J. (2003). The Earnings Effects of Sexual Orientation. Industrial and Labor Relations Review, 56 (3). Pp. 449-469.

Black, S. E., Spitz-Oener, A. (2007). Explaining Women’s Success: Technological Change and the Skill Content of Women’s Work. IZA Working paper 2803.

Blau, F. D., Kahn, L. M. (2005). Do Cognitive Test Scores Explain Higher U.S Wage Inequality? The Review of Economics and Statistics, 87 (1). Pp. 184-193.

Borghans, L., Weel, B. ter, Weinberg, B. A. (2008). Interpersonal Styles and Labor Market Outcomes. Journal of Human Resources, 43 (4). Pp. 815-858.

Borghans, L., Weel, B. ter, Weinberg, B. A. (2006). People People: Social Capital and the Labor-Market Outcomes of Underrepresented Groups. Working paper 11985.

Buchinsky, M., Fougère, D., Kramarz, F., Tchernis, R. (2010). Interfirm Mobility, Wages and the Returns to Seniority and Experience in the United States. Review of Economic Studies, 77 (3). Pp. 972-1001.

Burgess, S. M., Propper, C. (1998). Early Health Related Behaviours and their Impact on Later Life Chances: Evidence from the US. Health Economics, 7 (5). Pp. 381-399.

Campos, N. F., Jolliffe, D. (2002). After, Before and During:Returns to Education in the Hungarian Transition. William Davidson Working Paper Number 475.

Carbonaro, W. (2006). Cross-National Differences in the Skills-Earnings Relationship: The Role of Labor Market Institutions. Social Forces, 84 (3). Pp. 1819-1842.

Carlson, V. L., Persky, J. J. (1999). Gender and Suburban Wages. Economic Geography, 75 (3). Pp. 237-253.

Carr, D., Friedman, M. A. (2005). Is Obesity Stigmatizing? Body Weight, Perceived Discrimination, and Psychological Well-Being in the United States. Journal of Health and Social Behavior, 46 (3). Pp. 244-259.

Cawley, J. (2004). The Impact of Obesity on Wages. The Journal of Human Resources, 39 (2). Pp. 451-474.

Chase, R. S. (1997).  Markets for Communist Human Capital: Returns to Education and Experience in the Czech Republic and Slovakia. Center Discussion paper No. 770 (Economic Growth Center, Yale University).

Chiswick, B. R. (1986). Labor Supply and Investment in Child Quality: A Study of Jewish and Non-Jewish Women. The Review of Economics and Statistics, 68 (4). Pp. 700-703.

Croppenstedt, A., Muller, CH. (2000). The Impact of Farmers’ Health and Nutritional Status on Their Productivity and Efficiency: Evidence from Ethiopia. Economic Development and Cultural Change, 48 (3). Pp. 475-502.

Delattre, E., Sabatier, M. (2007). Social capital and wages: an econometric evaluation of social networking's effects. Labour, 21 (2). Pp. 209-236.

Deolalikar, A. B. (1988). Nutrition and Labor Productivity in Agriculture: Estimates for Rural South India. The Review of Economics and Statistics, 70 (3). Pp. 406-413.

Fafchamps, M., Minten, B. (2002). Return to Social Network Capital among Traders. Oxford Economic Papers, 54. Pp. 173-206.

Fafchamps, M., Minten, B. (2001). Social Capital and Agricultural Trade. American Journal of Agricultural Economics, 83 (3). Pp. 680-685.

Farkas, G., England, P., Vicknair, K., Kilbourne, B. S. (1997). Cognitive Skill, Skill Demands of Jobs, and Earnings among Young European American, African American, and Mexican American Workers. Social Forces, 75 (3). Pp. 913-938.

Fernandez, R. M., Weinberg, N. (1997). Sifting and Sorting: Personal Contacts and Hiring in a Retail Bank. American Sociological Review, 62 (6). Pp. 883-902.

Finnie, R., Meng, R. (2002). Minorities, Cognitive Skills and Incomes of Canadians. Canadian Public Policy / Analyse de Politiques, 28 (2). Pp. 257-273.

Flanagan, R. J. (1998). Were Communists Good Human Capitalists? The Case of the Czech Republic. Labour Economics, 5 (3). Pp. 295-312.

Flap, H., Boxman, E. (2000). Getting started: The influence of social capital on the start of the occupational career. In Lin, N., Cook, K. S., Burt, R. S. (eds.), Social Capital: Theory and Research, New York: Aldine de Gruyter.

French, M. T., Zarkin, G. A. (1995). Is Moderate Alcohol Use Related to Wages? Evidence from Four Worksites. Journal of Health Economics, 14 (3). Pp. 319-344.

Gerhart, B. A. (1988). Gender Differences in Current and Starting Salaries: The Role of Performance, College Major, and Job Title. CAHRS Working Paper Series, paper 427.

Goldsmith, A. H., Veum, J. R., Darity, W. A. (1997). The Impact of Psychological and Human Capital on Wages. Economic Inquiry, 35 (4). Pp. 815-29.

Goldsmith, A. H., Veum, J. R., Darity, W. A. (1998). Race, cognitive skills, psychological capital and wages. The Review of Black Political Economy, 26 (2). Pp. 9-21.

Haskins, K. M., Ransford, H. E. (1999). The Relationship between Weight and Career Payoffs among Women. Sociological Forum, 14 (2). Pp. 295-318.

Hersch, J., Stratton, L. S. (1994). Housework, Wages, and the Division of Housework Time for Employed Spouses. The American Economic Review, 84 (2). Pp. 120-125.

Hersch, J., Stratton, L. S. (2000). Household Specialization and the Male Marriage Wage Premium. Industrial and Labor Relations Review, 54 (1). Pp. 78-94.

Hersch, J., Stratton, L. S. (2002). Housework and Wales. The Journal of Human Resources, 37 (1). Pp. 217-229.

Hum, D., Simpson, W. (1999). Wage Opportunities for Visible Minorities in Canada. Canadian Public Policy / Analyse de Politiques, 25 (3). Pp. 379-394.

Jackson, L. A., Hunter, J. E., Hodge, C. N. (1995). Physical Attractiveness and Intellectual Competence: A Meta-Analytic Review. Social Psychology Quarterly, 58 (2). Pp. 108-122.

James, E., Alsalam, N., Conaty, J. C., To D. (1989). College Quality and Future Earnings: Where Should You Send Your Child to College? The American Economic Review, 79 (2). Pp. 247-252.

Jones, D. C., Simon, K. I. (2005). Wage determination under plan and early transition: Bulgarian evidence using matched employer-employee data. Journal of Comparative Economics, 33 (2). Pp. 227-243.

Joy, L. (2003). Salaries of Recent Male and Female College Graduates: Educational and Labor Market Effects. Industrial and Labor Relations Review, 56 (4). Pp. 606-621.

Karsten, H. (2006). Ženy a muži. Genderové role, jejich původ a vývoj. Praha: Portál. ISBN 80-7367-145-X.

Krueger, A. B. (1991). How computers have changed the wage structure: Evidence from microdata 1984-89. NBER Working Papers Series, No. 3858.

Kuhn, P., Weinberger, C. (2005). Leadership Skills and Wages. Journal of Labor Economics, 23 (3). Pp. 395-436.

Leung, T. S.  (2007). The Persistent Penalty: Mothers, Children, and Wages. Retrieved June 1, 2012, from http://www.allacademic.com/meta/p182883_index.html.

Levine, P. B., Gustafson, T. A., Velenchik, A D. (1995). More Bad News for Smokers? The Effects of Cigarette Smoking on Labor Market Outcomes. National Bureau of Economic Research: NBER Working Paper Series, No. 5270.

Lye, J. N., Hirschberg, J. (2004). Alcohol consumption, smoking and wages. Applied Economics, 36 (16). Pp. 1807-1817.

McLean, R. A., Moon, M (1980). Health, obesity, and earnings. American Journal of Public Health, 70 (9). Pp. 1006-1009.

Millimet, D. L. (2000). The Impact of Children on Wages, Job Tenure, and the Division of Household Labour. The Economic Journal, 110 (462). Pp. C139-C157.

Mincer, J. A. (1974). Schooling, Experience, and Earnings. New York: Columbia University Press. ISBN 0-870-14265-8.

Mobius, M. M., Rosenblat, T. S. (2006). Why Beauty Matters. The American Economic Review, 96 (1). Pp. 222-235.

Monks, J. (2000). The returns to individual and college characteristics: Evidence from the National Longitudinal Survey of Youth. Economics of Education Review, 19 (3). Pp. 279-289.

Mullahy, J., Sindelar, J. L. (1993). Alcoholism, Work, and Income. Journal of Labor Economics, 11 (3). Pp. 494-520.

Murnane, R. J., Willett, J. B., Duhaldeborde, Y., Tyler, J. H. (2000). How Important Are the Cognitive Skills of Teenagers in Predicting Subsequent Earnings? Journal of Policy Analysis and Management, 19 (4). Pp. 547-568.

Murnane, R. J., Willett, J. B., Levy, F. (1995). The Growing Importance of Cognitive Skills in Wage Determination. The Review of Economics and Statistics, 77 (2). Pp. 251-266.

Neal, D. A., Johnson, W. R. (1996). The Role of Premarket Factors in Black-White Wage Differences. The Journal of Political Economy, 104 (5). Pp. 869-895.

Noorkõiv, R., Orazem, P. F., Puur, A., Vodopivec, M. (1998). Employment and Wage Dynamics in the Estonia Transition, 1989-1995. Economics of Transition, 6 (2). Pp. 481-503.

Orazem, P. F., Vodopivec, M. (1997). Value of human capital in transition to market: Evidence from Slovenia. European Economic Review, 41 (3-5). Pp. 893-903.

Parnes, H. S., Kohen, A. I. (1975). Occupational Information and Labor Market Status: The Case of Young Men. The Journal of Human Resources, 10 (1). Pp. 44-55.

Pendakur, K., Pendakur, R. (1998). The Colour of Money: Earnings Differentials among Ethnic Groups in Canada. The Canadian Journal of Economics / Revue canadienne d'Economique, 31 (3). Pp. 518-548.

Plug, E., Berkhout, P. (2004). Effects of Sexual Preferences on Earnings in the Netherlands. Journal of Population Economics, 17 (1). Pp. 117-131.

Powell, M. A., Parcel, T. L. (1997). Effects of Family Structure on the Earnings Attainment Process: Differences by Gender. Journal of Marriage and Family, 59 (2). Pp. 419-433.

Šafr J., Sedláčková, M. (2006). Sociální kapitál. Koncepty, teorie a metody měření. Sociologické studie/Sociological Studies 06:7. Praha: Sociologický ústav AV ČR.

Schultz, T. P. (2002). Wage Gains Associated with Height as a Form of Health Human Capital. The American Economic Review, 92 (2). Pp. 349-353.

Schultz, T. P. (2005) Productive Benefits of Health: Evidence from Low-Income Countries. Economic Growth Center, Yale University: Center Discussion paper, No. 903.

Stanovnik, T. (1997). The Returns to Education in Slovenia. Economics of Education Review, 16 (4). Pp. 443-449.

Topel, R. (1991). Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority. The Journal of Political Economy, 99 (1). Pp. 145-176.

Toutkoushian, R. K., Bellas, M. L., Moore, J. V. (2007). The Interaction Effects of Gender, Race, and Marital Status on Faculty Salaries. The Journal of Higher Education, 78 (5). Pp. 572-601.

Veblen, T. (1999). Teorie zahálčivé třídy. Praha: Sociologické nakladatelství. ISBN 80-85850-71-0.

Waldfogel, J. (1997). The Effect of Children on Women's Wages. American Sociological Review, 62 (2). Pp. 209-217.

Xue, L. (2008). Social Capital and Wages: Outcome of Recent Immigrants to Canada, Retrieved June 1, 2012, from

http://publications.gc.ca/collections/collection_2010/cic/Ci4-43-2010-en...

Zax, J. S., Reese, D. I. (2002). IQ, Academic Performance, Environment, and Earnings. The Review of Economics and Statistics, 84 (4). Pp. 600-616.