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Wages and Recruitment: Evidence from External Wage Changes


  • Torberg Falch


This paper estimates the causal effect of the wage on the recruitment rate at the establishment level. During the 1990s, the wage setting for certified teachers in Norway was completely centralized, with a wage premium of about 10 percent at schools with severe recruitment problems in the past and located in one specific region. The empirical approach exploits within-school variation in wage premium eligibility and that teacher supply is observed at these schools with excess demand for teachers. In a difference-in-differences framework, I find that the wage premium increased the recruitment rate by 6–7 percentage points. The finding is robust to model specification and sample, but larger for young teachers than old teachers. The results indicate that the short-run labor supply elasticity towards the individual establishment is about 1.4.

Suggested Citation

  • Torberg Falch, 2013. "Wages and Recruitment: Evidence from External Wage Changes," CESifo Working Paper Series 4078, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4078

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    References listed on IDEAS

    1. Brown, Alessio & Merkl, Christian & Snower, Dennis, 2015. "An Incentive Theory Of Matching," Macroeconomic Dynamics, Cambridge University Press, vol. 19(03), pages 643-668, April.
    2. Alan B. Krueger, 1988. "The Determinants of Queues for Federal Jobs," ILR Review, Cornell University, ILR School, vol. 41(4), pages 567-581, July.
    3. Ernesto Dal Bó & Frederico Finan & Martín A. Rossi, 2013. "Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 1169-1218.
    4. John Pencavel, 1998. "The Market Work Behavior and Wages of Women: 1975-94," Journal of Human Resources, University of Wisconsin Press, vol. 33(4), pages 771-804.
    5. Depew, Briggs & Sorensen, Todd A., 2011. "Elasticity of Supply to the Firm and the Business Cycle," IZA Discussion Papers 5928, Institute for the Study of Labor (IZA).
    6. Clotfelter, Charles & Glennie, Elizabeth & Ladd, Helen & Vigdor, Jacob, 2008. "Would higher salaries keep teachers in high-poverty schools? Evidence from a policy intervention in North Carolina," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1352-1370, June.
    7. Michael R Ransom & Ronald L. Oaxaca, 2010. "New Market Power Models and Sex Differences in Pay," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 267-289, April.
    8. Torberg Falch, 2011. "Teacher Mobility Responses to Wage Changes: Evidence from a Quasi-natural Experiment," American Economic Review, American Economic Association, vol. 101(3), pages 460-465, May.
    9. Boris Hirsch & Thorsten Schank & Claus Schnabel, 2010. "Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 291-330, April.
    10. Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2009. "Employer monopsony power in the labor market for undocumented workers," FRB Atlanta Working Paper 2009-14, Federal Reserve Bank of Atlanta.
    11. Torberg Falch, 2010. "The Elasticity of Labor Supply at the Establishment Level," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 237-266, April.
    12. Jordan D. Matsudaira, 2014. "Monopsony in the Low-Wage Labor Market? Evidence from Minimum Nurse Staffing Regulations," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 92-102, March.
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    More about this item


    recruitment; wages; labor supply; teacher mobility;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets


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