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Human Capital and Worker Productivity: Direct Evidence from LInk Employer-Employee Data

In: Contributions in Memory of Zvi Griliches


  • John M. Abowd
  • Francis Kramarz


The long literatures on the determinants of wage rates at the individual level and on the empirical relation between productivity and wage rates intersect when attention is focused on longitudinally linked employer-employee data. We estimate separate statistical components of wage rates associated with the observable individual characteristics, unobservable individual heterogeneity and unobservable employer heterogeneity. We define general human capital as the portable components of the full-time, full-year wage rate. Within each employer in the linked sample, we create employer-aggregates of the general human capital. We then estimate the relation between sales per employee, general human capital, and employer wage heterogeneity using micro data for the employing firms. The results reveal direct statistical links between the productivity outcome (sales/worker) and general human capital, controlling for firm-specific wage rate heterogeneity, which can be interpreted as specific human capital or as part of a firm-specific compensation strategy.
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  • John M. Abowd & Francis Kramarz, 2010. "Human Capital and Worker Productivity: Direct Evidence from LInk Employer-Employee Data," NBER Chapters,in: Contributions in Memory of Zvi Griliches, pages 323-338 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:12238

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    References listed on IDEAS

    1. Attanasio, Orazio & Goldberg, Pinelopi K. & Pavcnik, Nina, 2004. "Trade reforms and wage inequality in Colombia," Journal of Development Economics, Elsevier, vol. 74(2), pages 331-366, August.
    2. Sanchez-Paramo, Carolina & Schady, Norbert, 2003. "Off and running? Technology, trade and the rising demand for skilled workers in Latin America," Policy Research Working Paper Series 3015, The World Bank.
    3. Eli Bekman & John Bound & Stephen Machin, 1998. "Implications of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1245-1279.
    4. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
    5. Timothy Besley & Robin Burgess, 2004. "Can Labor Regulation Hinder Economic Performance? Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 91-134.
    6. Hanson, G.H. & Harrison, A., 1995. "Trade, Technology and Wage Inequality," Papers 95-20, Columbia - Graduate School of Business.
    7. Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-468, November.
    8. Eli Berman, 2000. "Does Factor-Biased Technological Change Stifle International Covergence? Evidence from Manufacturing," NBER Working Papers 7964, National Bureau of Economic Research, Inc.
    9. Berman, Eli & Machin, Stephen, 2000. "Skill-Based Technology Transfer around the World," Oxford Review of Economic Policy, Oxford University Press, vol. 16(3), pages 12-22, Autumn.
    10. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
    11. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    12. F. Zilibotti & P. Aghion & R. Burgess, 2004. "The Unequal Effects of Trade Liberalization: Theory and Evidence from India," 2004 Meeting Papers 40, Society for Economic Dynamics.
    13. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins of Technology-Skill Complementarity," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 693-732.
    14. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1993. "A Comparison of Changes in the Structure of Wages," NBER Working Papers 4297, National Bureau of Economic Research, Inc.
    15. Griliches, Zvi, 1986. "Economic data issues," Handbook of Econometrics,in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 3, chapter 25, pages 1465-1514 Elsevier.
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    Cited by:

    1. Susana Iranzo & Fabiano Schivardi & Elisa Tosetti, 2008. "Skill Dispersion and Firm Productivity: An Analysis with Employer-Employee Matched Data," Journal of Labor Economics, University of Chicago Press, vol. 26(2), pages 247-285, April.
    2. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 967-1015.
    3. Navon, Guy, 2009. "Human Capital Spillovers in the Workplace: Labor Diversity and Productivity," MPRA Paper 17741, University Library of Munich, Germany.

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