Which ladder to climb? : wages of workers by job, plant, and education

Abstract

How much does your wage depend on what you learned, for whom you work, or what job you do? Using largely unexplored administrative data from Germany allows us to relate 80% of wage variation to observable characteristics of jobs, firms, and workers. One wage determinant stands out: the hierarchy level of a job, summarizing its responsibility, complexity, and required independence. This variable is typically absent in other data sources. Climbing the hierarchy ladder explains almost all of the rise in wage dispersion and half of the wage growth by age. It also is key to explaining gender wage differences.