Salary determination in professional labour markets

Sammanfattning: This thesis consists of three essays on salary determination in professional labour markets.Essay I analyses the early labour market careers of young business administrators and economists. The data used were collected by means of a survey conducted in 1992. The empirical work builds on traditional human capital theory and focuses on the importance of different kinds of education and experience as determinants of salaries. OLS estimates indicate that a low starting salary, and also firm-provided education, were associated with substantial wage growth in the years following entry into the labour market. Further, we find that the effects of experience differ depending on when the experience was gained and the kind of work performed. While 'relevant' experience gained in the 'post'-university era had a large impact, 'prior' and 'irrelevant' experience had no effect at all on salaries and the growth of earnings.Essay II focuses on gender differences in pay and analyses the reasons behind the 5 per cent starting and 12 per cent current salary disadvantage of women established in Essay I. The results indicate that only a small part of the salary gap is explained by gender-specific differences in characteristics and that seemingly identical characteristics yielded different returns depending on gender. Experience and unemployment had a large impact on the earnings profiles of men, but neither influenced the salaries of women. Education, on the other hand, seems to have influenced the earnings profiles of women, but had no corresponding effect in the case of men. These results convey an impression of a labour market divided by gender, in which men and women are set to play in different courts, according to different rules. An explanation including statistical discrimination, dual labour markets and screening may account for these results.Essay III is concerned with salary determination among graduate engineers in Sweden. The Swedish Association of Graduate Engineers claims that the ten largest companies - the Octagon - coordinate their wage-setting and act as a monopsonist in the labour market for engineers. A monopsonistic outcome may be driven by non-wage amenities tied to jobs in the Octagon sector, combined with heterogeneous workerpreferences regarding these job characteristics. Although no direct test of the monopsony hypothesis is provided, we find that the evidence is consistent with a monopsony explanation. Also, the results emphasize the importance of internal labour markets and highlight the significance of job mobility as a determinant of wage growth.