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Decomposing productivity and wage effects of intraestablishment labor restructuring

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Author Info
Mika Maliranta (Research Institute of the Finnish Economy ETLA)
Pekka Ilmakunnas (Helsinki School of Economics & HECER)

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Abstract

Aggregate productivity growth can be decomposed into growth within establishments, between establishments, and the impact of entering and exiting establishments. We demonstrate that such a productivity decomposition formula can also be used for studying intraestablishment restructuring through the inflow and outflow of workers. There are, however, three requirements: Firstly, comprehensive longitudinal linked employeremployee data are needed. Secondly, now the productivity decomposition formula cannot be used for accounting but must be used as an estimation model. Thirdly, the decomposition formula should be such that a meaningful interpretation of its components is possible. The decomposition can also account for different worker types, e.g. age groups. We apply such a method to study the productivity growth and wage growth within the establishments of the Finnish business sector. The results provide empirical evidence on economic incentives for hiring young workers and separating older workers.

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Paper provided by EconWPA in its series Labor and Demography with number 0511003.

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Length: 28 pages
Date of creation: 04 Nov 2005
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Handle: RePEc:wpa:wuwpla:0511003

Note: Type of Document - pdf; pages: 28
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Web page: http://129.3.20.41

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Related research
Keywords: employer-employee data; labor productivity; productivity decomposition; wage determination; worker turnover;

Other versions of this item:

Find related papers by JEL classification:
C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs

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References listed on IDEAS
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.:
  1. Martin Neil Baily & Eric J. Bartelsman & John Haltiwanger, 2001. "Labor Productivity: Structural Change And Cyclical Dynamics," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 420-433, August. [Downloadable!] (restricted)
    Other versions:
  2. Christopher R. Bollinger & Amitabh Chandra, 2005. "Iatrogenic Specification Error: A Cautionary Tale of Cleaning Data," Journal of Labor Economics, University of Chicago Press, vol. 23(2), pages 235-258, April. [Downloadable!]
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    Other versions:
    • Jeremy Greenwood & Boyan Jovanovic, 2000. "Accounting for Growth," RCER Working Papers 475, University of Rochester - Center for Economic Research (RCER). [Downloadable!]
    • Jeremy Greenwood & Boyan Jovanovic, 2001. "Accounting for Growth," NBER Chapters, in: New Developments in Productivity Analysis, pages 179-224 National Bureau of Economic Research, Inc. [Downloadable!]
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    Other versions:
  5. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October. [Downloadable!] (restricted)
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    Other versions:
  7. John C. Haltiwanger & Julia I. Lane & James R. Spletzer, 1999. "Productivity Differences across Employers: The Roles of Employer Size, Age, and Human Capital," American Economic Review, American Economic Association, vol. 89(2), pages 94-98, May. [Downloadable!] (restricted)
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    Other versions:
  10. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9. [Downloadable!] (restricted)
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  12. Bernard, Andrew B & Jones, Charles I, 1996. "Productivity across Industries and Countries: Time Series Theory and Evidence," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 135-46, February. [Downloadable!] (restricted)
    Other versions:
  13. Pekka Ilmakunnas & Mika Maliranta & Jari Vainiomaki, 2000. "The Roles of Employer and Employee Characteristics for Plant Productivity," Econometric Society World Congress 2000 Contributed Papers 1349, Econometric Society. [Downloadable!]
  14. Pekka Ilmakunnas & Mika Maliranta, 2005. "Technology, Labour Characteristics and Wage-productivity Gaps," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(5), pages 623-645, October. [Downloadable!] (restricted)
    Other versions:
  15. Abowd, John M. & Kramarz, Francis, 1999. "The analysis of labor markets using matched employer-employee data," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 40, pages 2629-2710 Elsevier. [Downloadable!] (restricted)
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    Other versions:
Full references

Cited by:
(explanations, 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.)

  1. Stefan Napel & Mika Widgrén, 2006. "The European Commission - Appointment, Preferences and Institutional Relations," Discussion Papers 999, The Research Institute of the Finnish Economy. [Downloadable!]
    Other versions:
  2. Olli Martikainen & Jussi Autere & Markku Nurmela, 2006. "Performance Improvement in Public Organizations, How to Leverage ICT Investments," Discussion Papers 1022, The Research Institute of the Finnish Economy. [Downloadable!]
  3. Terttu Luukkonen, 2006. "Venture Capital Industry in Finland - Country Report for the Venture Fun Project," Discussion Papers 1003, The Research Institute of the Finnish Economy. [Downloadable!]
  4. Kari Alho, 2006. "Climate Policies and Economic Growth," Discussion Papers 1024, The Research Institute of the Finnish Economy. [Downloadable!]
  5. Morris Teubal & Terttu Luukkonen, 2006. "Venture Capital Industries and Policies: Some Cross-Country Comparisons," Discussion Papers 1006, The Research Institute of the Finnish Economy. [Downloadable!]
  6. Kari O. E. Alho, 2006. "Labour Market Institutions and the Effectiveness of Tax and Benefit Policies in Enchancing Employment: A General Equilibrium Analysis," Discussion Papers 1008, The Research Institute of the Finnish Economy. [Downloadable!]
  7. Jyrki Ali-Yrkkö, 2006. "Technology Sourcing Through Acquisitions – Do High Quality Patents Attract Acquires?," Discussion Papers 1025, The Research Institute of the Finnish Economy. [Downloadable!]
  8. Mika Maliranta & Rita Asplund, 2007. "Training and Hiring Strategies to Improve Firm Performance," Discussion Papers 1105, The Research Institute of the Finnish Economy. [Downloadable!]
  9. Ewa Balcerowicz, 2006. "Poland´s Enterprise Environment - A Polish View," Discussion Papers 998, The Research Institute of the Finnish Economy. [Downloadable!]
  10. Aija Leiponen, 2005. "Clubs and Standards: The Role of Industry Consortia in Standardization of Wirelelss Telecommunications," Discussion Papers 997, The Research Institute of the Finnish Economy. [Downloadable!]
  11. Sandrine Levasseur, 2008. "Progrès technologique et employabilité des seniors," Documents de Travail de l'OFCE 2008-16, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
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