Earnings Dynamics and Firm-Level Shocks

Benjamin Friedrich, Lisa Laun, Costas Meghir and Luigi Pistaferri

No 25786, NBER Working Papers from National Bureau of Economic Research, Inc

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. The pass-through of temporary shocks is smaller in magnitude and similar for high- and low-skilled workers. 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. In particular, cross-sectional wage variances by age 55 are roughly one-third higher relative to a scenario with no pass-through of firm shocks onto wages.

JEL-codes: I18 J24 J31 J63 (search for similar items in EconPapers)
Date: 2019-04
New Economics Papers: this item is included in nep-bec and nep-eur
Note: LS
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Citations: View citations in EconPapers (28)

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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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