The Ddeterminants of Individual Wages in Australia: Competitive and Non‐Competitive Influences

This work provides a test of competitive theories of wage determination by examining the wages of identical workers across industry classifications. The finding that a set of significant industry wage differentials exists would seem to contradict a purely competitive theory of wage determination. However, the apparent presence of unmeasured human capital that is correlated with industry status does provide one potential competitive explanation for the industry wage effects. Moreover, non‐competitive explanations for the differences in industry wages, such as efficiency wage theory or institutional factors, appear to be inconsistent with the nature of the wage differentials.