Essays in labour economics

My thesis focuses on the determinants of wage differentials. I analyse some of the immediate causes for wage differentials including different types of experience and coworker characteristics. In order to understand poverty and intergenerational wage inequality for marginalized groups we need to look at academic achievement in early schooling, I also investigate how reading achievement of non-affluent groups may be improved. The first chapter focuses on the effect of industry experience on wages. I estimate a simultaneous equation model using a large panel of Italian workers for the years 1986-2004. I find that wage returns to industry experience are much higher than wage returns to job seniority, and that returns to general labour market experience dominate the effects of both industry experience and job tenure. The second chapter investigates the effect of coworker characteristics on wages. I measure coworker characteristics by the average labor market value of coworkers’ observed and unobserved characteristics The effect of interest is identified from within-firm changes in workforce composition, controlling for person effects, firm effects, and sector-specific time trends. My estimates are based on a very large linked employer employee dataset of workers and firms from the Italian region of Veneto for the years 1982-2001. I find that a 10-percent increase in the average labour market value of coworker skills is associated with a 3.6 percent wage premium. Between 10 and 15 percent of the immigrant wage gap can be explained by differences in coworker characteristics. The last chapter investigates the effects of providing school districts with supplemental funding to support the language development of students who speak a non-standard English dialect. Exploiting the staggered uptake of this funding across school districts in British Columbia we find that the policy substantially improved the reading scores of Aboriginal students between grade 4 and grade 7.