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Wages and Recruitment: Evidence from External Wage Changes

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  • Torberg Falch

Abstract

This paper estimates the causal effect of the wage on the recruitment rate at the establishment level. During the 1990s, the wage setting for certified teachers in Norway was completely centralized, with a wage premium of about 10 percent at schools with severe recruitment problems in the past and located in one specific region. The empirical approach exploits within-school variation in wage premium eligibility and that teacher supply is observed at these schools with excess demand for teachers. In a difference-in-differences framework, I find that the wage premium increased the recruitment rate by 6–7 percentage points. The finding is robust to model specification and sample, but larger for young teachers than old teachers. The results indicate that the short-run labor supply elasticity towards the individual establishment is about 1.4.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4078.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4078

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Related research

Keywords: recruitment; wages; labor supply; teacher mobility;

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References

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  1. Torberg Falch, 2008. "The elasticity of labor supply at the establishment level," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 1106, Princeton University, Department of Economics, Industrial Relations Section..
  2. Alan B. Krueger, 1988. "The Determinants of Queues for Federal Jobs," NBER Working Papers 2499, National Bureau of Economic Research, Inc.
  3. Depew, Briggs & Sorensen, Todd A., 2011. "Elasticity of Supply to the Firm and the Business Cycle," IZA Discussion Papers 5928, Institute for the Study of Labor (IZA).
  4. Dal Bó, Ernesto & Finan, Frederico S. & Rossi, Martín A., 2012. "Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service," IZA Discussion Papers 6645, Institute for the Study of Labor (IZA).
  5. Brown, Alessio J. G. & Merkl, Christian & Snower, Dennis J., 2010. "An Incentive Theory of Matching," Open Access Publications from Kiel Institute for the World Economy, Kiel Institute for the World Economy (IfW) 37391, Kiel Institute for the World Economy (IfW).
  6. Torberg Falch, 2011. "Teacher Mobility Responses to Wage Changes: Evidence from a Quasi-natural Experiment," American Economic Review, American Economic Association, American Economic Association, vol. 101(3), pages 460-65, May.
  7. Clotfelter, Charles & Glennie, Elizabeth & Ladd, Helen & Vigdor, Jacob, 2008. "Would higher salaries keep teachers in high-poverty schools? Evidence from a policy intervention in North Carolina," Journal of Public Economics, Elsevier, Elsevier, vol. 92(5-6), pages 1352-1370, June.
  8. John Pencavel, 1998. "The Market Work Behavior and Wages of Women: 1975-94," Journal of Human Resources, University of Wisconsin Press, vol. 33(4), pages 771-804.
  9. Michael R. Ransom & Ronald L. Oaxaca, 2008. "New Market Power Models and Sex Differences in Pay," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 1110, Princeton University, Department of Economics, Industrial Relations Section..
  10. Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2009. "Employer monopsony power in the labor market for undocumented workers," Working Paper, Federal Reserve Bank of Atlanta 2009-14, Federal Reserve Bank of Atlanta.
  11. Boris Hirsch & Thorsten Schank & Claus Schnabel, 2008. "Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 1111, Princeton University, Department of Economics, Industrial Relations Section..
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