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Comparing micro-evidence on rent sharing from two different econometric models

Sabien Dobbelaere () and Jacques Mairesse ()

Labour Economics, 2018, vol. 52, issue C, 18-26

Abstract: The extent to which employers share rents with their employees is typically assessed by estimating the responsiveness of workers’ wages on firms’ ability to pay. This paper compares rent-sharing estimates using such a wage determination regression with estimates based on a productivity regression that relies on standard firm-level input and output data. Using a large matched firm-worker panel data sample for French manufacturing, we find that the respective industry distributions of the rent-sharing estimates are correlated and slightly overlap, but are significantly different on average. Precisely, if we only rely on the firm-level information, we obtain an average rent-sharing estimate of roughly 0.30 for the productivity regression and 0.17 for the wage determination regression. When we also take advantage of the worker-level information to control for unobserved worker ability in the model of wage determination, we find as expected a lower average value of 0.10.

Keywords: Rent sharing; Wage equation; Production function; Matched employer-employee data (search for similar items in EconPapers)
JEL-codes: C23 D21 J31 J51 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Comparing Micro-Evidence on Rent Sharing from Two Different Econometric Models (2017) Downloads
Working Paper: Comparing micro-evidence on rent sharing from two different econometric models (2017) Downloads
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DOI: 10.1016/j.labeco.2018.02.009

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