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Human Capital and Worker Productivity: Direct Evidence from LInk Employer-Employee Data

In: Contributions in Memory of Zvi Griliches

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  • John M. Abowd
  • Francis Kramarz

Abstract

The long literatures on the determinants of wage rates at the individual level and on the empirical relation between productivity and wage rates intersect when attention is focused on longitudinally linked employer-employee data. We estimate separate statistical components of wage rates associated with the observable individual characteristics, unobservable individual heterogeneity and unobservable employer heterogeneity. We define general human capital as the portable components of the full-time, full-year wage rate. Within each employer in the linked sample, we create employer-aggregates of the general human capital. We then estimate the relation between sales per employee, general human capital, and employer wage heterogeneity using micro data for the employing firms. The results reveal direct statistical links between the productivity outcome (sales/worker) and general human capital, controlling for firm-specific wage rate heterogeneity, which can be interpreted as specific human capital or as part of a firm-specific compensation strategy.

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This chapter was published in:

  • Jacques Mairesse & Manuel Trajtenberg, 2010. "Contributions in Memory of Zvi Griliches," NBER Books, National Bureau of Economic Research, Inc, number mair10-1, July.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 12238.

    Handle: RePEc:nbr:nberch:12238

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    Cited by:
    1. S. Iranzo & F. Schivardi & E. Tosetti, 2006. "Skill dispersion and firm productivity: an analysis with employer-employee matched data," Working Paper CRENoS 200617, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    2. Pekka Ilmakunnas & Hannu Piekkola, 2014. "Intangible investment in people and productivity," Journal of Productivity Analysis, Springer, vol. 41(3), pages 443-456, June.
    3. Navon, Guy, 2009. "Human Capital Spillovers in the Workplace: Labor Diversity and Productivity," MPRA Paper 17741, University Library of Munich, Germany.
    4. Card, David & Heining, Jörg & Kline, Patrick, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," IZA Discussion Papers 7200, Institute for the Study of Labor (IZA).
    5. Pekka Ilmakunnas & Seija Ilmakunnas, 2011. "Diversity at the Workplace: Whom Does it Benefit?," De Economist, Springer, vol. 159(2), pages 223-255, June.

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