Firm Pay Dynamics

Niklas Engbom (), Christian Moser and Jan Sauermann
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Niklas Engbom: New York University

No 15014, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the nature of firm pay dynamics. To this end, we propose a statistical model that extends the seminal framework by Abowd, Kramarz and Margolis (1999) to allow for idiosyncratically time-varying firm pay policies. We estimate the model using linked employer-employee data for Sweden from 1985 to 2016. By drawing on detailed firm financials data, we show that firms that become more productive and accumulate capital raise pay, whereas firms lower pay as they add workers. A secular increase in firm-year pay dispersion in Sweden since 1985 is accounted for by greater persistence of firm pay among incumbent firms as well as greater dispersion in firm pay among entrant firms, as opposed to more volatile firm pay.

Keywords: worker and firm heterogeneity; two-way fixed effects model; earnings inequality; akm; firm dynamics; linked employer-employee data (search for similar items in EconPapers)
JEL-codes: D22 D31 E24 J31 M13 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2022-01
New Economics Papers: this item is included in nep-bec, nep-eur, nep-hrm, nep-lma and nep-mac
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Published - published in: Journal of Econometrics , 2023, 233 (1), 396 - 423

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Related works:
Journal Article: Firm pay dynamics (2023)
Working Paper: Firm Pay Dynamics (2022)
Working Paper: Firm Pay Dynamics (2022)
Working Paper: Firm pay dynamics (2021)
Working Paper: Firm Pay Dynamics (2020)
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