Wage Changes, Establishment Growth, and the Effect of Composition Bias

Monica Galizzi
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Monica Galizzi: University of Massachusetts, Lowell

Eastern Economic Journal, 2005, vol. 31, issue 2, 165-184

Abstract: This paper examines the relationship between wages and employment at the establishment level. It exploits a sample of Italian firms and workers. To correct for a potential labor composition effect, estimations use both the change in the firm's average wage and the mean of individual wage changes within the firm. Expanding firms are characterized by higher wage growth. The establishment's effect also prevails on the industry's effect, suggesting that wage changes result from the workers' accumulation of firm-specific skills, or from some rent-sharing mechanisms. The role of this "inside" factor seems also symmetric between expanding and declining firms.

Keywords: Bias; Employment; Wage (search for similar items in EconPapers)
JEL-codes: E24 J16 J24 J31 M51 (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:31:y:2005:i:2:p:165-184

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