Using Twins to Resolve the Twin Problem of Having a Bad Job and a Low Wage

: Böckerman Petri, Ilmakunnas Pekka, Vainiomäki Jari

Publisher: IZA

: 2014

We use data on twins matched to register-based information on earnings to examine the

long-standing puzzle of non-existent compensating wage differentials. The use of twin data

allows us to remove otherwise unobserved productivity differences that were the prominent

reason for estimation bias in the earlier studies. Using twin differences we find evidence for

positive compensation of adverse working conditions in the labor market.