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Ownership Networks and Labor Income

Author

Listed:
  • Huneeus, Federico
  • Larrain, Borja
  • Larrain, Mauricio
  • Prem, Mounu

Abstract

We document a novel relationship between networks of firms linked through ownership (i.e., business groups) and labor income using matched employer-employee data for Chile. Business group affiliation is associated with higher wages, even after controlling for firm size and individual worker effects. The group premium is stronger for top workers; hence, group firms have higher wage dispersion. The premium remains present when comparing group firms and matched stand-alone firms, and in within-firm comparisons using transitions in and out of groups. Our results are consistent with workers reaching higher productivity and wages by leveraging their skills on the group’s organizational structure.

Suggested Citation

  • Huneeus, Federico & Larrain, Borja & Larrain, Mauricio & Prem, Mounu, 2022. "Ownership Networks and Labor Income," SocArXiv weqsz, Center for Open Science.
    • Handle: RePEc:osf:socarx:weqsz
    DOI: 10.31219/osf.io/weqsz
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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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