This paper examines differences in pay for equally skilled workers indifferent industries. The major finding is that there is substantialdispersion in wages across industries, even after allowing for measured andunmeasured labor quality, working conditions, fringe benefits, transitorydemand shocks, threat of unionization, union bargaining power, firm size andother factors. Some direct evidence in favor of efficiency wage theories ispresented. The evidence suggests that industry wage differentials aresuccessful in eliciting better performance through reduced turnover andincreased effort.