Recent research shows that a high wage-gap between managers and workers identifies better-performing firms, but the stock market does not seem to price this information. In paper, we show all investors neglect pay inequality. Using unique data set on German firms’ employee compensation, find mispricing of wage gap is driven by limits arbitrage. Specifically, some bid up low-wage-gap stocks for ...

The authors use a laboratory experiment to examine the impact of relative wages on labor supply. They test the hypothesis that, ceteris paribus, making a given wage high (low) relative to other wage levels will lead to an increase (decrease) in labor supply. They find that labor supply does respond significantly to relative pay, and in the expected direction. However, when a strong enough reaso...

Regression and neural network models of wage determination are constructed where the explanatory variables include detailed information about skills. People skills, strategic skills, and IT skills all carry strong and significant wage premia; problemsolving skills (surprisingly) and physical skills (less surprisingly) do not. In contrast to the impact of school curriculum on subsequent earnings...

Using comparable data sets for five African countries we estimate, and evaluate possible explanations for, the employer size wage effect across these. Our results indicate, just as has been generally found for other developing and developed nations, that apart from observable worker characteristics most potential theories cannot explain very much of the wage premium received in larger firms. Mo...

This paper proposes a semi-parametric estimation method known as ‘Box-Cox Unconditional Quantile Regression’ to explain the increasing trend of the U.S. wage inequality over the last two decades for men and women separately. Box-Cox Unconditional Quantile Regression is a generalization of the Linear Unconditional Quantile Regression model proposed by Firpo, Fortin and Lemieux (2009). The main c...

In explaining wage or income by personal attributes (e.g. educational attainment, age, and ethnicity) in a regression model, many researchers choose to use the log of wage or income as the dependent variable and then to estimate the unknown coefficients by some version of the least-squares method. We call this approach the conventional approach. Using the micro data of the 2005-2007 American Co...