Earnings Dynamics and Firm-Level Shocks

Benjamin Friedrich, Lisa Laun, Costas Meghir and Luigi Pistaferri
Additional contact information
Benjamin Friedrich: Northwestern University, Kellogg School of Management
Luigi Pistaferri: Stanford University, NBER, CEPR and SIEPR

No 2175, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We use matched employer-employee data from Sweden to study the role of the firm in affecting the stochastic properties of wages. Our model accounts for endogenous participation and mobility decisions. We find that firm-specific permanent productivity shocks transmit to individual wages, but the effect is mostly concentrated among the high-skilled workers; firm-specific temporary shocks mostly affect the low-skilled. The updates to worker-firm specific match effects over the life of a firm-worker relationship are small. Substantial growth in earnings variance over the life cycle for high-skilled workers is driven by firms accounting for 44% of cross-sectional variance by age 55.

Keywords: Earnings dynamics; Inequality; Earnings dispersion; Rent sharing; Matched employer-employee data; competition in labor markets; Lifecycle wage growth; Lifecycle wage dispersion (search for similar items in EconPapers)
JEL-codes: J24 J31 J62 J63 J64 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2019-04
New Economics Papers: this item is included in nep-bec, nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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Related works:
Working Paper: Earnings Dynamics and Firm-Level Shocks (2024)
Working Paper: Earnings dynamics and firm-level shocks (2021)
Working Paper: Earnings Dynamics and Firm-Level Shocks (2019)
Working Paper: Earnings Dynamics and Firm-Level Shocks (2019)
Working Paper: Earnings Dynamics and Firm-Level Shocks (2018)
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