Firm Pay Dynamics

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 15014

Classification and Topics

• Classification: Wirtschaft ; Wage Level and Structure; Wage Differentials ; Firm Behavior: Empirical Analysis ; Personal Income, Wealth, and Their Distributions ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; New Firms; Startups
• Subject: earnings inequality ; worker and firm heterogeneity ; firm dynamics ; linked employer-employee data ; two-way fixed effects model ; akm

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Engbom, Niklas ; Moser, Christian ; Sauermann, Jan
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/250675
• Last update: 10.03.2025, 11:41 AM CET