Risk of Firm Closure and Wages in Brazil: Compensating Wage Di erentials or Bargaining Concessions?
AbstractThe economic theory proposes two hypotheses for the relationship between wages and risk of job loss due to rm (or plant) closure. The rst hypothesis posits that workers at greater risk should be compensated by higher wages. This is known as the theory of compensating wage diferentials. The second hypothesis states that workers at rms with a greater risk of closure would be willing to exchange higher wages for longer-term stability in the job. This is known as the theory of bargaining concessions. There is a paucity of empirical studies on this issue, and the results have been inconsistent. The aim of this paper is to provide evidence for the Brazilian manufacturing industry. To accomplish that, diferent risk measures, diferent databases, and di erent econometric methods are used. All the tests performed in this study con rm the theory of compensating wage diferentials.
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Bibliographic InfoPaper provided by Universidade Federal do Paraná, Department of Economics in its series Working Papers with number 0077.
Length: 23 pages
Date of creation: 2008
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exit; bankruptcy; severance payments; insolvency; wage determination;
Find related papers by JEL classification:
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-10-21 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"Wages and the Risk of Displacement,"
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- Carneiro, Anabela & Portugal, Pedro, 2010. "Wages and the risk of displacement," Working Paper Series 1159, European Central Bank.
- Anabela Carneiro & Pedro Portugal, 2003. "Wages and the Risk of Displacement," CEF.UP Working Papers 0308, Universidade do Porto, Faculdade de Economia do Porto.
- Dunne, T. & Roberts, M.J., 1990. "Wages And The Risk Of Plant Closing," Papers 6-90-2, Pennsylvania State - Department of Economics.
- Omar M. G. Keshk, 2003. "CDSIMEQ: A program to implement two-stage probit least squares," Stata Journal, StataCorp LP, vol. 3(2), pages 157-167, June.
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