The Importance of Firms in Wage Determination

Max Gruetter and Rafael Lalive

No 207, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: Firms are central to many theories of the labor market. However, the extent to which firms affect wages has only recently been explored using matched employer-employee data. This paper investigates (i) the importance of firms in explaining wage differences across individuals and industries, and (ii) how the nature of interfirm mobility � job-to-job vs. job-unemployment-job � affects the relative importance of firms and workers in wage determination. Results indicate that (i) firms are much more important in explaining the variance of average wages across industries rather than individuals, and (ii) using job-to-job transitions reduces the importance of firm wage policies in explaining differences.

Keywords: interfirm mobility; wage determination; industry wage differentials; matched employer employee data (search for similar items in EconPapers)
JEL-codes: C23 J31 (search for similar items in EconPapers)
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Citations: View citations in EconPapers (70)

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Related works:
Journal Article: The importance of firms in wage determination (2009)
Working Paper: The Importance of Firms in Wage Determination (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:iewwpx:207

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