Persistence of interindustry wage differentials: A reexamination using matched worker-firm panel data

We estimate interindustry wage differentials using new French longitudinal data that allow a tracking of workers and their firms over time; We find th at; when measured on a cross-sectional basis, they primarily reflect the in terindustry variations in unmeasured labor quality. However, interindustry wage differentials are only a minor component of interfirm wage differentia ls. The average differential in wages paid to the same workers by different firms is about 20%-30%. In a given industry, wage policies are more favora ble to workers in large, capital-intensive firms.