Wages and The Rist of Plant Closings

Timothy Dunne and Mark Roberts

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: This paper examines the empirical relationship between the probability a plant closes and the compensation paid to the employees in the plant. The paper uses data on over 6500 manufacturing plants from the LRD to estimate the market hedonic wage locus and the probability of plant failure. The empirical results reported in this paper indicate that the probability of plant failure is systematically related to the plant’s market share, age, recent growth, and variable cost to revenue ratio. The market hedonic wage regression indicates that workers employed by multi-plant firms earn a positive compensating wage differential for the risk of plant closing but workers employed in single-plant firms do not. Additionally, the paper provides evidence on the general pattern of wage variation across heterogeneous employers. Establishment wage rates are significantly affected by plant size, age, geographic location, industry, capital intensity, and value added per worker.

Keywords: CES; economic; research; micro; data; microdata; chief; economist (search for similar items in EconPapers)
Date: 1990-08
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: WAGES AND THE RISK OF PLANT CLOSING (1990)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:90-6

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