INTERINDUSTRY WAGE DIFFERENTIALS AND EFFICIENCY WAGES - SOME CANADIAN EVIDENCE

Using the 1986 Labour Market Activity Survey as our major source of data, we estimate interindustry wage differentials in Canada at the one- and two-digit levels of industry aggregation for various types of workers. The major findings are that substantial interindustry wage differentials exist and are relatively stable over time; that the pattern of interindustry wage differentials is very similar for different kinds of workers; and that these differentials cannot be explained easily by compensating factors. The differentials seem to be consistent with the rent-sharing explanations of the labour market, such as those based on the notion of efficiency wages.