The Importance of Firms in Wage Determination

Max Gruetter () and Rafael Lalive
Additional contact information
Max Gruetter: Lucerne Statistics

No 1367, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Firms are central to many theories of the labor market. However, the extent to which firms affect wages has only recently been explored using matched employer-employee data. This paper investigates (i) the importance of firms in explaining wage differences across individuals and industries, and (ii) how the nature of interfirm mobility – job-to-job vs. job-unemployment-job – affects the relative importance of firms and workers in wage determination. Results indicate that (i) firms are much more important in explaining the variance of average wages across industries rather than individuals, and (ii) using job-to-job transitions reduces the importance of firm wage policies in explaining differences.

Keywords: matched employer employee data; interfirm mobility; wage determination; industry wage differentials (search for similar items in EconPapers)
JEL-codes: C23 J31 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2004-10
New Economics Papers: this item is included in nep-bec
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Citations: View citations in EconPapers (24)

Published - published in: Labour Economics, 2009, 16 (2), 149-160

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Related works:
Journal Article: The importance of firms in wage determination (2009)
Working Paper: The Importance of Firms in Wage Determination
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