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High Wage Workers and High Wage Peers

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  • Michele Battisti

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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 personeffects, 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 regionof 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 alsofind 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 coworkercharacteristics.

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Bibliographic Info

Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 168.

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Date of creation: 2013
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Handle: RePEc:ces:ifowps:_168

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Related research

Keywords: Spillover effects; linked employer-employee dataset; skill segregation.;

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References

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  1. Joseph G. Altonji & Ching-I Huang & Christopher R. Taber, 2010. "Estimating the Cream Skimming Effect of School Choice," NBER Working Papers 16579, National Bureau of Economic Research, Inc.
  2. Bagger, Jesper & Sørensen, Kenneth L. & Vejlin, Rune, 2013. "Wage sorting trends," Economics Letters, Elsevier, Elsevier, vol. 118(1), pages 63-67.
  3. Cingano, Federico, 2003. "Returns to specific skills in industrial districts," Labour Economics, Elsevier, Elsevier, vol. 10(2), pages 149-164, April.
  4. Card, David & Devicienti, Francesco & Maida, Agata, 2011. "Rent-Sharing, Hold-up, and Wages: Evidence from Matched Panel Data," IZA Discussion Papers 6086, Institute for the Study of Labor (IZA).
  5. Harminder Battu & Clive R. Belfield & Peter J. Sloane, 2003. "Human Capital Spillovers within the Workplace: Evidence for Great Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 65(5), pages 575-594, December.
  6. Cristian Bartolucci & Francesco Devicienti, 2013. "BetterWorkers Move to Better Firms: A Simple Test to Identify Sorting," Carlo Alberto Notebooks, Collegio Carlo Alberto 332, Collegio Carlo Alberto.
  7. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche, Centre interuniversitaire de recherche en économie quantitative, CIREQ 9503, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  8. Brock,W.A. & Durlauf,S.N., 2003. "Multinomial choice with social interactions," Working papers, Wisconsin Madison - Social Systems 1, Wisconsin Madison - Social Systems.
  9. Rasmus Lentz & Jesper Bagger, 2009. "An Empirical Model of Wage Dispersion with Sorting," 2009 Meeting Papers, Society for Economic Dynamics 964, Society for Economic Dynamics.
  10. David Card & Jörg Heining & Patrick Kline, 2012. "Workplace Heterogeneity and the Rise of West German Wage Inequality," NBER Working Papers 18522, National Bureau of Economic Research, Inc.
  11. Marcus Dittrich & Andreas Knabe & Kristina Leipold, 2011. "Spillover Effects of Minimum Wages: Theory and Experimental Evidence," CESifo Working Paper Series 3576, CESifo Group Munich.
  12. Brock, William A & Durlauf, Steven N, 2001. "Discrete Choice with Social Interactions," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 68(2), pages 235-60, April.
  13. George J. Borjas, 1987. "Self-Selection and the Earnings of Immigrants," NBER Working Papers 2248, National Bureau of Economic Research, Inc.
  14. Peter Arcidiacono & Gigi Foster & Natalie Goodpaster & Josh Kinsler, 2012. "Estimating spillovers using panel data, with an application to the classroom," Quantitative Economics, Econometric Society, Econometric Society, vol. 3(3), pages 421-470, November.
  15. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2008. "Social Connections and Incentives in the Workplace: Evidence from Personnel Data," IZA Discussion Papers 3917, Institute for the Study of Labor (IZA).
  16. Steve J. Davis & John Haltiwanger, 1991. "Wage Dispersion Between and Within U.S. Manufacturing Plants, 1963-1986," NBER Working Papers 3722, National Bureau of Economic Research, Inc.
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Cited by:
  1. Serafinelli, Michel, 2013. "Good Firms, Worker Flows and Productivity," MPRA Paper 47508, University Library of Munich, Germany.
  2. Thomas Cornelissen & Christian Dustmann & Uta Schönberg, 2013. "Peer Effects in the Workplace," CESifo Working Paper Series 4398, CESifo Group Munich.

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