The empirical literature on compensating wage differentials has a mixed history. While there have been some successes, much of this research finds weak support for the theory of equalizing differences. We argue that this weak support is the result of bias due to dispersion in total job values,...

We propose a simple model of wage dispersion arising from oligopsonistic competition in the labor market. Our model has workers who are equally able but who have heterogeneous preferences for non-wage characteristics, while employers have heterogeneous productivity characteristics. We completely...