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High Wage Workers and High Wage Peers

Listed author(s):
  • Michele Battisti

    ()

This paper investigates the effect of co-worker characteristics on wages, measured by the average person effect of coworkers in a wage regression. The effect of interest is identified from within-firm changes in workforce composition, controlling for person effects, firm effects, and sector-specific time trends. My estimates are based on a linked employer employee dataset for the population of workers and firms of the Italian region of Veneto for years 1982–2001. I find that a 10 percent increase in the average labour market value of co-workers' skills is associated with a 3.6 percent wage premium. I also find that around one fourth of the wage variation previously explained by unobserved firm heterogeneity is actually due to variation in co-worker skills, and that between 10 and 15 percent of the immigrant wage gap can be explained by differences in coworker characteristics.

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File URL: http://www.cesifo-group.de/DocDL/IfoWorkingPaper-168.pdf
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Paper provided by ifo Institute - Leibniz Institute for Economic Research at the University of Munich in its series ifo Working Paper Series with number 168.

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Date of creation: 2013
Handle: RePEc:ces:ifowps:_168
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