Interindustry Wage Differentials and Unobserved Ability: Siblings Evidence from Five Countries

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Björklund, A., Bratsberg, B. Eriksson, T., Jäntti, M. og O. Raaum




Industrial Relations

Vol. 46, No. 1: 171-202


We examine the role of unobserved ability in explaining interindustry wage differentials. By using data on brothers, we account for unmeasured abilities shared by siblings. The data came from four Nordic countries and the United States. In the Nordic countries, only a moderate proportion of the variability in industry wages can be attributed to unobserved ability, while unmeasured factors explain as much as half of the U.S. industry-wage variation. Accounting for such differences, we show that the U.S. interindustry wage dispersion is similar with that in the Nordic countries.


Oppdragsgiver: Nordisk samarbeidsnemnd for samfunnsforskning (NOS-S)
Oppdragsgivers prosjektnr.:
Frisch prosjekt: 1213 - Education, family background and labour market success: A Nordic study of siblings