Explaining the Effects of Capital Sector for Income Determination

This article endeavors to explicate some of the mechanisms whereby the dual sector distinction is relevant for earnings determination. We estimate both direct and indirect sectoral effects, disaggregate the dependent variable into hourly wage and annual hours worked components and explore the interplay between sector and occupational distributions. The final section attempts to evaluate dualism in a somewhat broader sense. In particular, we explore the extent to which capital sectors exhaust the relevance of industrial structure for earnings. We find that substantial interindustry variation in wages exists net of sector.