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Wage Dispersion and Allocation of Jobs

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  • Heyman, Fredrik

    ()
    (Research Institute of Industrial Economics)

Abstract

This paper use Swedish establishment-level panel data on job turnover and wages to test the hypothesis of a positive relation between job reallocation and wage compression as proposed by Bertola & Rogerson (1997). The effect of wage dispersion on job turnover is negative and significant in the manufacturing sector. The wage compression effect is stronger on job destruction than on job creation, suggesting that wages are more rigid downward than upward. For the service sector results are reversed. Further results include (i) a strong positive relationship between the industry share of temporary employees and job turnover and (ii) a negative relationship between the amount of working-time flexibility and job reallocation. The estimation method is industry fixed-effect models that control for sector heterogeneity.

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File URL: http://swopec.hhs.se/hastef/papers/hastef0479.pdf
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Bibliographic Info

Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 479.

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Length: 23 pages
Date of creation: 22 Oct 2001
Date of revision:
Publication status: Published as Heyman, Fredrik, 'How Wage Compression Affects Job Turnover' in Journal of Labor Research, 2008, pages 11-26.
Handle: RePEc:hhs:hastef:0479

Contact details of provider:
Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
Phone: +46-(0)8-736 90 00
Fax: +46-(0)8-31 01 57
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Web page: http://www.hhs.se/
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Related research

Keywords: Job creation and job destruction; Wage dispersion; Temporary employment contracts.;

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References

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  1. Alonso-Borrego, Cesar, 1998. "Demand for labour inputs and adjustment costs: evidence from Spanish manufacturing firms," Labour Economics, Elsevier, vol. 5(4), pages 475-497, December.
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  3. Prakash Loungani & Bharat Trehan, 1997. "Job creation and destruction," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may2.
  4. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June.
  5. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier.
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  8. Ricardo J. Caballero & Mohamad L. Hammour, 1994. "On the Timing and Efficiency of Creative Destruction," NBER Working Papers 4768, National Bureau of Economic Research, Inc.
  9. bertola, G. & Rogerson, R., 1996. "Institutions and Labor Reallocation," Papers 272, Banca Italia - Servizio di Studi.
  10. Mortensen, Dale T., 1994. "The cyclical behavior of job and worker flows," Journal of Economic Dynamics and Control, Elsevier, vol. 18(6), pages 1121-1142, November.
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  14. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 397-415, July.
  15. Moene, Karl Ove & Wallerstein, Michael, 1997. "Pay Inequality," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 403-30, July.
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  17. Cabrales, Antonio & Hopenhayn, Hugo A., 1997. "Labor-market flexibility and aggregate employment volatility," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 46(1), pages 189-228, June.
  18. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
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Cited by:
  1. Haouas, Ilham & Yagoubi, Mahmoud & Heshmati, Almas, 2002. "The Impacts of Trade Liberalization on Employment and Wages in Tunisian Industries," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  2. Heyman, Fredrik, 2008. "How Wage Compression Affects Job Turnover," Working Paper Series 729, Research Institute of Industrial Economics.

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