The Employer Age-Wage Effect: Evidence from Matched Employer-Employee Data
AbstractThis paper uses a large matched employer-employee data set for Sweden to study the relationship between firm age and individual wages, systematically addressing a variety of possible explanations for observing a firm-age wage effect. Results show considerable heterogeneity across years, along segments of the firm age distribution and across industries. A positive and significant firm age-wage premium, robust to a number of control variables, is found in 1995. This effect is not found for 1987 and 1991, two periods characterised by different business cycle conditions than 1995. The relationship between firm age and wages is not monotonic; rather it varies along segments of the firm age distribution. It also differs systematically across different sectors of the economy. A positive firm age effect is found only in the manufacturing sector. Finally, taking into account that larger firms are also older firms, results show that inclusion of firm age does not alter the positive effect of firm size on wages.
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Bibliographic InfoPaper provided by Trade Union Institute for Economic Research in its series Working Paper Series with number 193.
Length: 31 pages
Date of creation: 25 May 2004
Date of revision:
Wages; firm age; firm size; matched employer-employee data;
Find related papers by JEL classification:
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-02 (All new papers)
- NEP-EEC-2004-06-02 (European Economics)
- NEP-LTV-2004-06-02 (Unemployment, Inequality & Poverty)
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- Lundborg, Per, 2005. "Wage Fairness, Growth and the Utilization of R&D Workers," Working Paper Series 206, Trade Union Institute for Economic Research.
- Brixy, Udo & Kohaut, Susanne & Schnabel, Claus, 2004.
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