Wages, Profits and Capital Intensity: Evidence from Matched Worker-Firm Data

Mahmood Arai

No 1999:3, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: In this paper I use data on workers matched whit firms balance-sheet reports to examine the relation between wages and firms´ ability to pay. Results indicate that experienced and highly educated workers are sorted into profitable firms. Wages are significantly correlated to profits and capital-labor ratio, after controlling for workers quality (observed characteristics as well as time-invariant individual effects), job characteristics, local unemployment, firms´ employment history and employer size. These are mainly within industry effects attributed to wage determination at the firm-level. The conclusion is that previous studies based on industry data substantially underestimate the impacts of profits on wages.

Keywords: wages; profits; capital intensity; rent-sharing (search for similar items in EconPapers)
JEL-codes: D31 J31 (search for similar items in EconPapers)
Pages: 27 pages
Date: 1999-04-30
New Economics Papers: this item is included in nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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http://www2.ne.su.se/paper/wp99_03.pdf (application/pdf)
http://www2.ne.su.se/paper/wp99_03tab.pdf Firm data and tables (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:sunrpe:1999_0003

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