Wage Premium and Rent Sharing of a Dominant Sector: The Gaming of Macao

ABSTRACT We examined the hidden wage differences between gaming, a dominant sector of the small open economy, Macao, and non‐gaming. The findings reveal significant and persistent wage gaps between the gaming industry and other sectors of the economy, even after accounting for labour‐market differences. Croupiers earned the highest wage premium among occupations. This is consistent with rent sharing and labour supply restrictions. Casino concessionaires are well‐capitalized and licensed, possessing strong market power that generates substantial profits. They share these profits with their employees through higher salaries, a practice endorsed by both the local government and the public. Additionally, croupier positions are limited to residents, allowing them to enjoy the largest wage premia among professions. The wage premia for gaming workers may have decreased as a result of casino businesses' operating surpluses declining sharply during COVID‐19.