Title: Testing Rent Sharing Using Individualized Measures of Rent: Evidence from Domestic Helpers
Reference Number: 1002
Publication Date: April 2000

Wing Suen
School of Economics and Finance, The University of Hong Kong

The market for resident domestic helpers offers a rare opportunity where the surplus from employment relationship can be quantitatively measured for each individual employee. Using the difference between employer's cost of time and employee's wage as a measure of rent, it is found that wages for domestic helpers are positively related to rent. However the apparent sharing of rent is better explained by matching than by efficiency wage models. Rent sharing is observed even in households where monitoring or turnover costs are low. Rent sharing is not observed among newly arrived foreign domestic helpers, whose ability remains to be revealed.

Published in Economic Inquiry 38:3 (July 2000), pp. 470-486.

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Last modified: 01/23/2007