The Division of Unexpected Revenue Shocks

Paulo Bastos, Natália Monteiro and Odd Rune Straume

No 13/2021, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: We estimate the effects of unexpected revenue shocks on worker compensation. We propose a new methodology to identify the unexpected component of demand shocks at the firm-level, which uses gaps between observed and recently forecasted GDP growth in export destinations (weighted by the initial share of destinations in firms' total sales). Using employer-employee panel data, we find that unexpected demand shocks are partly transmitted to workers in the form of higher average wages, with most of the rises occurring close to the top of the within-firm wage distribution. We find little evidence of adjustments in the skill composition of the workforce. The unequal average distribution of rents is mainly driven by wage effects in firms managed by high-skilled managers, and by changes in overtime and other pay. This suggests that different types of managers implement different pay systems in the firm.

Keywords: Unexpected revenue shocks; firm performance; exports; rent sharing; managers. (search for similar items in EconPapers)
JEL-codes: F16 F66 J6 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-bec, nep-int and nep-lab
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