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How Are Wages Determined?

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Much of the variation in wages among employees cannot be explained by the usual variables of individual worker characteristics, demographics, and industry classification. Based on evidence from three labor markets in the Fourth Federal Reserve District, the author finds that employer differentials account for a large share of the variation in wages, with important implications for economics and management.

Much of the variation in wages among employees cannot be explained by the usual variables of individual worker characteristics, demographics, and industry classification. Based on evidence from three labor markets in the Fourth Federal Reserve District, the author finds that employer differentials account for a large share of the variation in wages, with important implications for economics and management.


Suggested citation: Hoskins, W. Lee, 1990. "How Are Wages Determined?" Federal Reserve Bank of Cleveland, Economic Commentary, 02.15.1990.

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