Using Twins to Resolve the Twin Problem of Having a Bad Job and a Low Wage

  • Bad Job and a Low Wage
  • Petri Böckerman, Pekka Ilmakunnas, Jari Vainiomäki
  • Manchester School, December 2016, Wiley
  • DOI: 10.1111/manc.12178

Why are jobs with "bad" characteristics associated with low wages, rather than high wages?

What is it about?

High wages should be paid to compensate for bad working conditions. But it is possible that high wage (productivity) persons use part of their earnings capacity to buy better working conditions, in contradiction to this expectation. We compare wages and working conditions of identical twins to remove the effect of productivity.

Why is it important?

Our results show that there are positive compensating differences for some working conditions as predicted by economic theory, and that unobserved productivity prevents observing these in standard cross section data.

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http://dx.doi.org/10.1111/manc.12178

The following have contributed to this page: Professor Pekka Ilmakunnas, Professor Jari Vainiomäki, and Professor Petri Böckerman