High Wage Workers and High Wage Firms

John M. Abowd (), Francis Kramarz () and David N. MARGOLIS

Econometrica, 1999, vol. 67, issue 2, pages 251-334

Abstract: Using a longitudinal sample of one million French workers and 500,000 employing firms, the authors decompose real total annual compensation per worker into components: observable employee characteristics, personal heterogeneity, firm heterogeneity, and residual. Unobserved personal heterogeneity is a very important source of wage variation. Unobserved firm heterogeneity, while important, is not as important as person effects. Enterprises that hire high-wage workers are more productive but not more profitable. Enterprises that pay higher wages, controlling for person effects, are more productive and more profitable. Person effects explain about 90 percent of interindustry and firm-size wage differences while firm effects explain substantially less.

Date: 1999
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Related works:
Working Paper: High-Wage Workers and High-Wage Firms (1995)
Working Paper: High-Wage Workers and High-Wage Firms (1995)
Working Paper: High-Wage Workers and High-Wage Firms (1994)
Working Paper: High Wage Workers and High Wage Firms (1994)
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