INTERINDUSTRY WAGE DIFFERENTIALS AND EFFICIENCY WAGES - SOME CANADIANEVIDENCE

Using the 1986 Labour Market Activity Survey as our major source of da ta, we estimate interindustry wage differentials in Canada at the one- and two-digit levels of industry aggregation for various types of wor kers. The major findings are that substantial interindustry wage diffe rentials exist and are relatively stable over time; that the pattern o f interindustry wage differentials is very similar for different kinds of workers; and that these differentials cannot be explained easily b y compensating factors. The differentials seem to be consistent with t he rent-sharing explanations of the labour market, such as those based on the notion of efficiency wages.