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High Wage Workers and High Wage Peers

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  • Michele Battisti

Abstract

This paper investigates the effect of co-worker characteristics on wages, measured by the average person effect of coworkers in a wage regression. The effect of interest is identified from within-firm changes in workforce composition, controlling for person effects, firm effects, and sector-specific time trends. My estimates are based on a linked employer employee dataset for the population of workers and firms of the Italian region of Veneto for years 1982–2001. I find that a 10 percent increase in the average labour market value of co-workers' skills is associated with a 3.6 percent wage premium. I also find that around one fourth of the wage variation previously explained by unobserved firm heterogeneity is actually due to variation in co-worker skills, and that between 10 and 15 percent of the immigrant wage gap can be explained by differences in coworker characteristics.

Suggested Citation

  • Michele Battisti, 2013. "High Wage Workers and High Wage Peers," ifo Working Paper Series 168, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:ifowps:_168
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    2. Hartog, Joop & Raposo, Pedro, 2017. "Are starting wages reduced by an insurance premium for preventing wage decline? Testing the prediction of Harris and Holmstrom (1982)," Labour Economics, Elsevier, vol. 48(C), pages 105-119.
    3. Bentsen, Kristian Hedeager & Munch, Jakob R. & Schaur, Georg, 2019. "Education spillovers within the workplace," Economics Letters, Elsevier, vol. 175(C), pages 57-59.
    4. Serafinelli, Michel, 2013. "Good Firms, Worker Flows and Productivity," MPRA Paper 49055, University Library of Munich, Germany, revised 12 Aug 2013.
    5. BELLINO, Antonella & CELI, Giuseppe, 2016. "The Migration-Trade Nexus in the Presence of Vertical and Horizontal Product Differentiation," CELPE Discussion Papers 137, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
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    7. Grinza, Elena & Quatraro, Francesco, 2019. "Workers’ replacements and firms’ innovation dynamics: New evidence from Italian matched longitudinal data," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    8. Arellano-Bover, Jaime & Saltiel, Fernando, 2021. "Differences in On-the-Job Learning across Firms," IZA Discussion Papers 14473, Institute of Labor Economics (IZA).
    9. Carlo Dell’Aringa & Claudio Lucifora & Laura Pagani, 2015. "Earnings differentials between immigrants and natives: the role of occupational attainment," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-18, December.
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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J79 - Labor and Demographic Economics - - Labor Discrimination - - - Other

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