Significant Wage Premium Research Articles

Impact of high-speed rail on wage premiums for migrant workers in China

The extensive high-speed rail (HSR) network in China has significantly enhanced regional population mobility, yet its impact on the well-being of migrant workers remains underexplored. Utilizing data from the China Migrant Dynamic Survey (CMDS) from 2014 to 2018, this study investigates the influence of HSR on wage premiums for migrant workers and identifies the factors driving these premiums using the non-parametric nearest neighbor matching method. The findings reveal that HSR confers a significant wage premium of 13.1% for migrant workers in cities with HSR infrastructure compared to cities without it. This wage premium effect is particularly pronounced in less developed western China and in cities with larger populations and a higher proportion of tertiary sector economy. The study finds a 10.54% increase in wage premiums for intra-province migrant workers due to HSR, while the effect remains negligible for inter-province migrant workers. Moreover, the wage premium effect is stronger for higher-skilled labor and for migrant workers aged 16 to 45. It is particularly significant for professionals, administrative staff, and workers in the service industry. The HSR wage premium effect is multifaceted, exhibiting both level and growth effects, with the latter intensifying over time after HSR introduction. Overall, the findings suggest that HSR deployment positively influences migrant worker wages by enhancing travel convenience, improving market access, fostering knowledge spillovers, and facilitating industry transfers. However, these impacts vary by location, skill level, and industry.

Artificial intelligence and the demand for skills in Russia

The problem of digital transformation of the labor market is widely discussed in the current scientific literature. In the context of the rapid spread of modern information technologies, in particular artificial intelligence (AI), many companies inevitably face difficulties in hiring highly qualified personnel. At the same time, research still lacks a clear understanding of the pace of AI adoption in different occupations, as well as what knowledge, skills, and abilities are actually in demand by employers. This study analyzes the demand for worker skills and the salaries offered by employers within firms, industries, and occupations. By focusing on AI skills, this paper adapts and extends the application of mainstream empirical methodology to the understudied context of the Russian labor market. The study uses data from firms and online job advertisements for the period from 2007 to 2020, and conducts econometric analysis to estimate the demand for skills. The results of the study show a rapid growth in the demand for AI skills in Russia, which is associated with significant wage premiums for these skills. However, when combined with other skills, the effect of AI skills can be negated. For example, the results suggest that basic and advanced computer skills are negatively complementary in terms of demand, which may lead to lower wages. Moreover, in the context of the Russian labor market, the demand for nontechnical skills in AI-related jobs is not associated with offering higher wages

The Differentiation of Quality in Higher Education and Graduates’ Wages in Russia

More than one-third of Russia’s labour force has a university diploma. With rapid massification, higher education quality turns into one of the key determinants of graduates’ earnings, at least at labour market entry. This paper focuses on two measures of educational quality (level of university selectivity and honors degree) and analyzes their association with graduates’ success in the Russian labour market. Using nationwide administrative data, this paper explores early-career labour market outcomes of Russian graduates with bachelor’s and specialist’s degree. The results suggest the existence of a significant wage premium associated with graduating from more selective universities. The observed positive effect consists of three components: individual abilities, social environment (i.e., networking possibilities and peer-effects), and quality of training. Having an honors diploma is also significantly positively related to early career outcomes, contrary to common belief.

Has Internet Usage Really Narrowed the Gender Wage Gap?: Evidence from Chinese General Social Survey Data

Based on the data from a sample of 4832 from the Chinese General Social Survey in 2018, this study examines the impact of Internet usage on the wage equation for males and females by using the robust least squares regression method, the threshold regression method, and the quantile regression method and decomposes the gender wage gap on this basis by using the RIF regression decomposition method. The findings show that, firstly, in either linear or nonlinear effects, Internet usage has a significant wage premium effect on the male wage equation, and this premium effect increases as male wage income rises, but Internet usage consistently does not have a significant effect on the female wage equation. Secondly, 26.73% of the overall gender wage gap is due to Internet usage, and the presence of gender discrimination in the cyberspace is a significant contributor to this result. Thirdly, Internet usage causes the gender wage gaps at different wage levels to be further widened to different degrees. Specifically, Internet usage has the strongest effect on the gender wage gap at lower wage levels, the second strongest effect on the gender wage gap at higher wage levels, and the weakest effect on the gender wage gap at middle wage levels. The different levels of gender discrimination experienced by females in the cyberspace are an important cause of the differential widening effect of Internet usage on gender wage gaps at different wage levels. Therefore, this study proposes policy recommendations in terms of regulating gender discrimination and introducing relevant female protection policies.

Going subnational: Wage differentials across levels of government in Brazil, Mexico, and Uruguay

Workers at subnational governments play a prominent role in the delivery of public services in most countries. Yet, information about their remuneration is scarce. Using data for Brazil, Mexico and Uruguay, we document that national government employees earn on average higher wages than observationally similar subnational employees; consequently, public–private sector wage gaps vary significantly by level of government. Then we use individual fixed-effects to estimate the wage premium to public sector employment (the wage gap net of selection effects) for Brazil and Mexico. We find that (i) both national and subnational public employees receive a significant wage premium with respect to private sector employment; and (ii) the difference between the national and subnational wage premiums is small in Brazil and null in Mexico.

Wage Gaps in Energy Industry: The Role of Sector

Although wage gaps brought about by differences between sectors has been widely discussed, its specificality in the energy industry has received little attention. Due to the nature of the Chinese energy sector as a monopoly and to the influence of the Soviet Union, the wages of public sector employees in the energy industry in China are much less influenced by market mechanisms and are much higher than those in the private sector. This paper is the first article to explore the impact of the public sector on wage gaps in the energy industry using the China Urban Household Survey for 2004, 2008, and 2013. The cross-sectional regression results show a significant and continuous wage premium exists between sectors, although the size of the premium declined slightly over time. The Blinder-Oaxaca decomposition finds unexplainable part and discrimination dominates the wage gaps. The quantile regression results show that education and work experience have significant effects on low- and middle-wage groups. The heterogeneity analysis considers two sub-industries and finds that the wage gaps between the two sectors are much higher in the extractive segment of the energy industry than in the production and supply sector of the industry. The results of the study reveal that market-oriented reforms in China are not yet complete, because the obvious premium on wages in the public sector means they are not determined by market mechanisms. Finally, the paper provides policy recommendations from three perspectives: further market-oriented reform, elimination of discrimination, and education and vocational training.

Wage premium for soft skills in IT sector

PurposeThis study aims to investigate the relationship between the demand on “soft” skills and suggested salaries for IT specializations in Russia.Design/methodology/approachBased on the database of vacancies, econometric modeling and cluster analysis of job occupations are implemented.FindingsThe results show positive association between demand for “soft” skills and wage if the model is controlled for the working experience and narrow professional occupations. Findings provide evidence that there is significant wage premium for “soft” skills in cases when job positions either imply no experience or require specialists with at least three years of tenure.Originality/valueThis research provides new evidence on the relationship between “soft” skills and wage using job postings data from Russia. This paper identifies the presence of wage premium for “soft” skills among IT specialists if controlling for sub-specializations, year, region and working experience. The robustness checks indicate no significant changes in the obtained results.

The effect of gender and parenting daughters on judgments of morally controversial companies.

Earlier findings suggest that men with daughters make judgments and decisions somewhat in line with those made by women. In this paper, we attempt to extend those findings, by testing how gender and parenting daughters affect judgments of the appropriateness of investing in and working for morally controversial companies ("sin stocks"). To do so, in Study 1 (N = 634) we investigate whether women judge the prospect of investing in sin stocks more harshly than men do, and test the hypothesis that men with daughters judge such investments less favorably than other men. In Study 2 (N = 782), we investigate the willingness to work in morally controversial companies at a significant wage premium. Results show that-for men-parenting daughters yields harsher evaluations of sin stocks, but no evidence that it lowers the propensity to work in such companies. This contrasts to the effect of gender: women reliably judge both investment and employment in morally controversial companies more harshly than men do. We suggest that an aversion towards morally controversial companies might be a partial determinant of the gender gap in wages.

Collective bargaining levels, employment and wage inequality in Spain

After the increase in inequalities following the Great Recession, studies on wage bargaining systems have increasingly focused on wage inequality. This research examines wage inequality associated with collective bargaining levels in Spain, based on matched employer–employee microdata and quantile regression methods. These methods are applied across the wage distribution, following the method proposed by Firpo et al. (2011), to estimate wage premiums associated with agreement levels and to decompose the wage differentials observed at different points of the wage distribution. From the evidence obtained it can be concluded that, although the higher wages found in firm-level agreements are explained by the better observed characteristics of firms and workers covered by these collective agreements, there remains a positive wage premium. Although this premium is seen throughout the wage distribution, it favours mostly workers in the middle and upper-middle end. This slightly increases wage inequality in comparison with sectoral agreements. In contrast, workers without collective bargaining coverage generally suffer a wage penalty. This penalty is only observed on the left of the wage distribution. It becomes a significant wage premium in the upper end of the distribution, which implies a significant increase in wage inequality. In short, the evidence of this research suggests that reducing the coverage of collective bargaining could be associated with a significant increase in wage inequality. A better policy option for countries with a predominant sectoral model, such as Spain, would be to move towards an organized decentralization model. This would cause significant gains in employment as suggested by OECD (2019) and only a slight increase in wage inequality.

Career Mobility and Hiring Bias: Frontiers of Labor Market Research

Career Mobility and Hiring Bias: Frontiers of Labor Market Research

Regulated occupations in Italy: Extent and labour market effects

This work provides a descriptive assessment of regulated occupations in Italy and examines the impact of regulation on the labour market over the past fifteen years. First, we construct, on the basis of the applicable legal provisions, a set of novel indicators measuring whether and to what extent each occupation is regulated. We then provide a long-run descriptive assessment of the extent of regulated occupations, showing that the share of workers involved has steadily increased over time reaching about one fourth in 2018 (more than one half among workers with a college degree). Finally, we show that these occupations are characterised by lower mobility and by a significant wage premium (particularly for the most highly regulated ones).

新式教育、人力资本与工资溢价——基于上海商业储蓄银行职员档案的实证研究

自工业革命以来，人力资本在经济发展和社会变革中发挥了越来越重要的作用。但由于难于区分教育的技能效应和信号效应，人力资本与工资溢价之间的关系仍然存在不确定性，而近代时期的新旧教育长期并存，为我们深入讨论劳动力市场的异质性问题提供了历史基础。文章基于20世纪30年代上海商业储蓄银行职员档案的微观数据，考察了新式教育对银行职员工资的影响及其机制。研究表明：（1）相对于传统教育，新式教育有着明显的工资溢价，较高程度的学校教育具有较高的工资回报；（2）新式教育的工资溢价主要来自于劳动者工作技能的提高，而不是信号效应；（3）由于具有较高人力资本的职员具有更强的工作能力和适应新工作的能力，因此晋升速度和部门调动（在行内的工作经验）是实现其工资溢价的重要机制。文章不仅为近代社会的教育回报提供了实证案例，而且通过历史案例推进了工资回报与劳动力异质性关系的研究深入，也为理解人力资本在近代中国的经济转型和发展中的作用提供了一个微观视角。

Are public sector workers in developing countries overpaid? Evidence from a new global dataset

This paper examines the public sector wage premium using nationally representative household surveys from 91 countries. The public sector generally pays a wage premium compared to all private sector salaried employees, but the size of the premium is sensitive to the choice of the private sector comparator and varies considerably by worker characteristics. For most countries, the average premium disappears when the public sector is compared to only formal sector private employees, especially when controlling for occupation. The public sector wage premium is higher for women and low-skilled workers. In contrast, high-skilled public sector employees are most often paid the same as their private sector counterparts or may even pay a penalty for working in the public sector. Consistent with this, the public sector premium is greater for employees with less education, those working in lower paid occupations, and those whose earnings fall in the lower part of the conditional earnings distribution. Across countries, the wage premium is only weakly associated with countries? level of development. These findings nuance the existing consensus that public sector workers tend to enjoy a significant wage premium over their private sector counterparts, and that this premium is especially large in low-income countries.

Urban scale and wage premium: evidence from China

Using the data of the China General Social Survey (CGSS) in 2010, the sixth national census in 2010 and the fifth national census in 2000, this paper examines the urban scale’s impact on workers’ wages by employing instrumental variables method. The study shows that China's large cities with 1–5 million population and megalopolis over 5 million population have significant urban scale wage premium. The living cost difference and agglomeration economy are the main causes of the megalopolis and large cities’ wage premium respectively. The high and low skilled workers both benefit from the expansion of urban scale. Policy implications of research findings are that moderate scale cities should be the main direction of Chinese urbanization; big cities should not only absorb high skilled labor, but also be inclusive for low skilled labor; migrant workers' urbanization is conducive to the prosperity of the city.

Access to imported intermediates and intra‐firm wage inequality

AbstractWe use Chinese firm‐level data from the World Bank Investment Climate Survey to examine the link between importing intermediates and intra‐firm wage inequality. Our results show that intermediate input importers not only have a significant wage premium but also have a greater intra‐firm wage dispersion than non‐importing firms. This pattern is robust when we control for productivity and use trade costs as the instruments. We further investigate the mechanism of how importing intermediates might contribute to both inter‐firm and intra‐firm wage inequality. Our evidence is consistent with three important channels. First, imported intermediate inputs complement skilled labour. Second, intermediates importers are more likely to use performance pay. Third, imported inputs complement innovation and employee training.

Access to Imported Intermediates and Intra-Firm Wage Inequality

We use Chinese firm-level data from the World Bank Investment Climate Survey to examine the link between importing intermediates and intra-firm wage inequality. Our results show that intermediate input importers not only have a significant wage premium but also have a greater intra-firm wage dispersion than non-importing firms. This pattern is robust when we control for productivity and use trade costs as the instruments. We further investigate the mechanism of how importing intermediates might contribute to both inter-firm and intra-firm wage inequality. Our evidence is consistent with three important channels. First, imported intermediate inputs complement skilled labour. Second, intermediates importers are more likely to use performance pay. Third, imported inputs complement innovation and employee training.

The contribution of multinationals to wage inequality: foreign ownership and the gender pay gap

While an abundance of studies exists documenting the significant wage premium of multinationals (MNE) and the effects of foreign direct investments on wage inequality, much less is still known about how foreign ownership of firms affects the gender wage gap. Based on employer-employee level data from Estonia—a country with the largest gender wage gap in the EU—this study highlights a regularity that foreign owned firms on average display a substantially larger gender wage gap than domestic owned firms. Among different occupation groups, this result is especially evident among managers. Furthermore, this difference is also evident if we focus on acquisitions of domestic firms by foreign MNEs and estimate its effects based on propensity score matching. The resulting increase in the gender wage gap is due to men capturing a higher wage premium from working at foreign owned firms than women, although both tend to gain in terms of wages from being employed at foreign owned firms. We find evidence (albeit limited) suggesting that one of the explanations of the difference between foreign and domestic owned firms in the gender wage gap could be that foreign owned firms require more continuous commitment from their employees compared to other firms.

The Overpaid and Underpaid: A Comparison of Labor Costs in Nonprofit and For-Profit Service Organizations

The comparison between nonprofit and for-profit organizations has been a lingering question for scholars and practitioners. This research explores employee wage differentials across sectors using a national sample of child care workforce. After controlling for a range of individual, occupational, organizational, and community factors, this research reports a significant wage premium for nonprofit child care teachers. In addition, this study finds evidence for both the labor donation and property rights hypotheses, but the property rights theory demonstrates comparatively stronger explanatory power. Although individuals with stronger intrinsic motivation are more willing to donate labor for charitable outputs, inefficient management in nonprofits actually sets wage levels over the market level. Overall, the study highlights nonprofits’ comparative advantage in employee motivation but disadvantage in efficient management. The findings have implications for public and nonprofit management.

Who gets the wage premium from export: Top managers or employees?

This study seeks to identify the effect of export on the wages of top managers and employees. Using a manually collected dataset based on Chinese listed firms, we determine that export significantly enhances the average wages of firms. However, only top managers benefit from the wage premium, whereas employees do not. Consistent results based on instrumental variable and difference-in-difference matching approaches are obtained. We further show that employees with high educational level obtain significant wage premiums and top managers with overseas work experience earn higher compensations. This paper provides clear implications for firm management practices and regulators in emerging economies.

The Contribution of Multinationals to Wage Inequality: Foreign Ownership and the Gender Pay Gap

While an abundance of studies exists documenting the significant wage premium of multinationals (MNE) and the effects of foreign direct investments (FDI) on wage inequality, much less is still known about how foreign ownership affects the gender wage gap of employees in firms. Based on employer-employee level data from Estonia – a country with the largest gender wage gap in the EU – this study highlights the regularity that foreign owned firms display on average a substantially larger gender wage gap than domestically owned firms. Among different occupation groups, this result is especially evident among managers. Furthermore, this difference is also evident if we focus on acquisitions of domestic firms by MNEs and estimate its effects based on propensity score matching. The resulting increase in gender wage gap is due to men capturing a higher wage premium from working at foreign owned firms than women, although both tend to gain in terms of wages from being employed at MNEs. We find evidence (albeit limited) suggesting that one of the explanations of the difference in the gender wage gap between foreign-owned and domestically-owned firms could potentially be that MNEs require more of a continuous commitment from their employees compared to other firms.