000			01561nam a22001457a 4500
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100			_aLavetti, Kurt _944193
245			_aCompensating wage differentials in labor markets: Empirical challenges and applications
260			_aThe Journal of Economic Perspectives
300			_a37(3), Summer, 2023: p.189-212
520			_aThe model of compensating wage differentials is among the cornerstone models of equilibrium wage determination in labor economics. However, empirical estimates of compensating differentials have faced persistent credibility challenges. This article summarizes the Rosen model of compensating differentials and chronicles the advances, setbacks, and lessons learned from empirical studies. The progression from cross-sectional to panel models alleviated biases caused by unobserved human capital but yielded new insights into the importance of other biases, including those caused by labor market frictions and endogenous job mobility. I discuss recent approaches that use matched employer-employee data and quasi-random variation in job amenities to address some of these challenges. I then present two examples of applications of compensating differentials: the evaluation public health and safety policies that rely on the value of statistical life, and the measurement and interpretation of earnings inequality.- Reproduced https://www.aeaweb.org/articles?id=10.1257/jep.37.3.189
773			_aThe Journal of Economic Perspectives
906			_aLABOUR MARKET
942			_cAR