Firm Pay Dynamics

Christian Moser, Niklas Engbom and Jan Sauermann

No 16922, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the nature of firm pay dynamics. To this end, we propose a statistical model that extends the seminal framework by Abowd, Kramarz and Margolis (1999) to allow for idiosyncratically time-varying firm pay policies. We estimate the model using linked employer-employee data for Sweden from 1985 to 2016. By drawing on detailed firm financials data, we show that firms that become more productive and accumulate capital raise pay, whereas firms lower pay as they add workers. A secular increase in firm-year pay dispersion in Sweden since 1985 is accounted for by greater persistence of firm pay among incumbent firms as well as greater dispersion in firm pay among entrant firms, as opposed to more volatile firm pay.

Keywords: Earnings inequality; Worker and firm heterogeneity; Firm dynamics; Linked employer-employee data; Two-way fixed effects model; Akm (search for similar items in EconPapers)
JEL-codes: D22 D31 E24 J31 M13 (search for similar items in EconPapers)
Date: 2022-01
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP16922 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Firm pay dynamics (2023)
Working Paper: Firm Pay Dynamics (2022)
Working Paper: Firm Pay Dynamics (2022)
Working Paper: Firm pay dynamics (2021)
Working Paper: Firm Pay Dynamics (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:16922

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP16922

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().