Compensating Differentials and the Male-Female Wage Gap: A Reply to Filer

Abstract

hypotheses about the types of conditions workers might reasonably be expected to find undesirable. Our reasoning is also partly based on Steinberg and her colleagues' extensive discussions with workers, managers, and union officials in the New York State system and their experience working with diverse compensation practices in several dozen public- and private-sector employment contexts. We also disagree with Filer on how to interpret results that appear implausible from the view of the compensating differentials hypothesis. Our results either imply that the compensating differentials hypothesis is faulty or that the worker prefers dirty jobs to clean ones and dangerous jobs to safe ones. We conclude that a series of such examples conflicting with face validity should lead one to question the compensating differentials model, but Filer would rather cling to the model by assuming that some distribution of tastes must have produced these results and by appealing to what he suspects his economist colleagues may or may not find surprising. Furthermore, Filer's view that wages must reflect the marginal worker's preferences precludes the possibility of falsifying the compensating differentials hypothesis. Of course, Filer himself recognizes some results are more plausible than others, as he indicates in note 2 of his reply to our article. He can't have it both ways. We find it especially odd that Filer discounts the judgments of job evaluators, since their judgments on what is an important or skillful job does form the basis upon which jobs are rewarded in a majority of large or