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Wage Changes, Establishment Growth, and the Effect of Composition Bias

Author

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  • Monica Galizzi

    (University of Massachusetts, Lowell)

Abstract

This paper examines the relationship between wages and employment at the establishment level. It exploits a sample of Italian firms and workers. To correct for a potential labor composition effect, estimations use both the change in the firm's average wage and the mean of individual wage changes within the firm. Expanding firms are characterized by higher wage growth. The establishment's effect also prevails on the industry's effect, suggesting that wage changes result from the workers' accumulation of firm-specific skills, or from some rent-sharing mechanisms. The role of this "inside" factor seems also symmetric between expanding and declining firms.

Suggested Citation

  • Monica Galizzi, 2005. "Wage Changes, Establishment Growth, and the Effect of Composition Bias," Eastern Economic Journal, Eastern Economic Association, vol. 31(2), pages 165-184, Spring.
    • Handle: RePEc:eej:eeconj:v:31:y:2005:i:2:p:165-184
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume31/V31N2P165_184.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Bias; Employment; Wage;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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