, Jan Selén
and Ann-Charlotte Ståhlberg
Lena Granqvist: SOFI, Postal: Stockholm University, SE-106 91 Stockholm, Sweden
Jan Selén: Trade Union Institute for Economic Research, Postal: FIEF, Wallingatan 38, SE-111 24 Stockholm, Sweden
Ann-Charlotte Ståhlberg: SOFI, Postal: Stockholm University, SE-106 91 Stockholm, Sweden
Abstract: Most labour market analyses take money wages as the sole measure of compensation for labour, thus excluding fringe benefits. We examine an extended compensation measure by incorporating mandatory collective earnings-related insurance rights: the rights of individual old age pension, sickness benefit insurance and survivors’ pension. We estimate the return on investment in human capital and the gender earnings gap in a traditional earnings equation. The money wage and the extended wage are used as dependent variables in joint regressions, where a SUR framework enables proper joint cross-equation tests. The main finding is that the inclusion of earnings-related insurance rights does affect the return on education. When these non-wage benefits are included, the gender wage gap decreases by 21 per cent. However, the gender differences in returns to education are severely underestimated when money wage is used as a compensation measure.
21 pages, October 7, 2002
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