Andrew.Clark@ens.fr. DELTA is a joint research unit of the CNRS, the EHESS and the ENS. LOOKING FOR LABOUR MARKET RENTS WITH SUBJECTIVE DATA

A long-running debate in labour economics concerns the interpretation of industry and occupational wage differentials. One view is that these reflect compensating differentials for mostly unmeasured aspects of jobs: utilities are equalised between industries and occupations, but wages are not. Alternatively, there may be labour market rents: workers in some industries and occupations have better jobs (as in higher utility) than do others. This paper proposes a trick by which it is not necessary to measure job disamenities in order to test for the presence of labour market rents. Wage and job satisfaction equations containing 2-digit occupational dummies are estimated. In the second step, the estimated occupation coefficients from the two regressions are correlated. If wage differentials are rents, then “high-paying ” occupations should also be “high satisfaction”. If wage differences are purely compensating differentials then no relationship should be found. An analogous approach is taken for industry dummies. Using nine waves of British panel data, it is shown that there is a persistent positive and significant correlation between the estimated occupational dummies, but no relation between the industry dummies, both in level and panel regressions. Analysis of spell data shows that high-rent occupations are reached through promotion, rather than worker-induced mobility, suggesting the existence of tournaments within firms