The relative importance of individual, job-related and organisational characteristics in explaining differences in earnings

Abstract: This paper focuses on a number of key research questions: (1) What is the relative importance of individual, job-related and organizational characteristics in explaining differences in earnings? (2) Do job characteristics such as hierarchical level and functional domain exercise a significant influence on pay differentials if we control for the traditional human capital factors? (3) Do organizational characteristics such as size and the sector in which the company is active exercise a significant influence on pay differentials if we control for the traditional human capital factors and job-related pay determinants? In order to assess the relative importance of these pay determinants, use is made of linear regression and analysis of variance. The analysis draws on data from the Salary Survey, which generated pay details for a total of more than 15,000 Belgian white-collar workers. Based on the analysis, we come to the conclusion that the five main determinants, in order of importance, are number of years' work experience; level of education; hierarchical level; sector of employment; and the nationality of the parent company. A further striking feature is that more than 50% of the total explained variance can be attributed to the three features which receive a great deal of attention in traditional human capital approaches to pay differentials: level of education, work experience and gender.status: publishe