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My Pay is Too Bad (I Quit). Your Pay is Too Good (You're Fired)

This paper is about how surpluses of labour contracts are shared by the employee and her firm. For this purpose, I look at the relationship between individual wages and employeremployee separation patterns. The paper suggests a model which estimates (otherwise unobserved) alternative wage and individual productivity measures from matched employer-employee data. These estimates can be used to address rent sharing hypotheses. Results of an application of the model to a large Danish register data set suggest that firms appropriate large shares of the returns to tenure. There is no evidence of gender discrimination with respect to rent sharing, and no evidence of rent sharing coefficients being different across regions which are distinguished by their labour market thickness.

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File URL: http://www.hha.dk/nat/wper/07-5_jmk.pdf
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Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 07-5.

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Length: 39 pages
Date of creation: 01 Jan 2007
Date of revision:
Handle: RePEc:hhs:aareco:2007_005
Contact details of provider: Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Phone: +45 89 486396
Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx

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  1. Judith K. Hellerstein & David Neumark & Kenneth R. Troske, 1997. "Market Forces and Sex Discrimination," NBER Working Papers 6321, National Bureau of Economic Research, Inc.
  2. Margolis, David N. & Salvanes, Kjell G., 2001. "Do Firms Really Share Rents with Their Workers?," IZA Discussion Papers 330, Institute for the Study of Labor (IZA).
  3. Pedro Martins, 2009. "Rent sharing before and after the wage bill," Applied Economics, Taylor & Francis Journals, vol. 41(17), pages 2133-2151.
  4. Christensen, Bent Jesper & Mortensen, Dale & Neumann, George R. & Werwatz, Axel, 2000. "On the job search and the wage distribution," SFB 373 Discussion Papers 2000,108, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  5. Mahmood Arai & Fredrik Heyman, 2009. "Microdata evidence on rent-sharing," Applied Economics, Taylor & Francis Journals, vol. 41(23), pages 2965-2976.
  6. David Margolis & Kjell G, Salvanes, 2001. "Do Firms Really Share Rents with their Workers," Working Papers 2001-16, Centre de Recherche en Economie et Statistique.
  7. Gielen, Anne C. & van Ours, Jan C., 2006. "Why Do Worker-Firm Matches Dissolve?," IZA Discussion Papers 2165, Institute for the Study of Labor (IZA).
  8. McLaughlin, Kenneth J, 1994. "Rent Sharing in an Equilibrium Model of Matching and Turnover," Journal of Labor Economics, University of Chicago Press, vol. 12(4), pages 499-523, October.
  9. Edward P. Lazear & Sherwin Rosen, 1979. "Rank-Order Tournaments as Optimum Labor Contracts," NBER Working Papers 0401, National Bureau of Economic Research, Inc.
  10. Erling Barth & Harald Dale-Olsen, 1999. "Monopsonistic Discrimination and the Gender-Wage Gap," NBER Working Papers 7197, National Bureau of Economic Research, Inc.
  11. David G. Blanchflower & Andrew J. Oswald & Peter Sanfey, 1992. "Wages, Profits and Rent-Sharing," NBER Working Papers 4222, National Bureau of Economic Research, Inc.
  12. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
  13. Ilmakunnas, Pekka & Maliranta, Mika, 2003. "Technology, Labor Characteristic and Wage-productivity Gaps," Discussion Papers 860, The Research Institute of the Finnish Economy.
  14. Nekby, Lena, 2003. "Gender differences in rent sharing and its implications for the gender wage gap, evidence from Sweden," Economics Letters, Elsevier, vol. 81(3), pages 403-410, December.
  15. Suen, Wing, 2000. "Testing Rent Sharing Using Individualized Measures of Rent: Evidence from Domestic Helpers," Economic Inquiry, Western Economic Association International, vol. 38(3), pages 470-86, July.
  16. Harvey, A C, 1976. "Estimating Regression Models with Multiplicative Heteroscedasticity," Econometrica, Econometric Society, vol. 44(3), pages 461-65, May.
  17. Hall, Robert E & Lazear, Edward P, 1984. "The Excess Sensitivity of Layoffs and Quits to Demand," Journal of Labor Economics, University of Chicago Press, vol. 2(2), pages 233-57, April.
  18. repec:dgr:kubcen:200657 is not listed on IDEAS
  19. Blackaby, David & Booth, Alison L & Frank, Jeff, 2002. "Outside Offers and the Gender Pay Gap: Empirical Evidence from the UK," CEPR Discussion Papers 3549, C.E.P.R. Discussion Papers.
  20. Gerard A. Pfann, 2006. "Downsizing and Heterogeneous Firing Costs," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 158-170, February.
  21. Booth, Alison & Jeff Frank & David Blackaby, 2003. "Outside Offers and the Gender Pay Gap: Empirical Evidence from the UK Academic Labour Market," Royal Economic Society Annual Conference 2003 28, Royal Economic Society.
  22. Oswald, Andrew, 1996. "Rent-Sharing in the Labor Market," The Warwick Economics Research Paper Series (TWERPS) 474, University of Warwick, Department of Economics.
  23. James L. Medoff & Katharine G. Abraham, 1981. "Are Those Paid More Really More Productive? The Case of Experience," Journal of Human Resources, University of Wisconsin Press, vol. 16(2), pages 186-216.
  24. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
  25. Blau, Francine D & Kahn, Lawrence M, 1992. "The Gender Earnings Gap: Learning from International Comparisons," American Economic Review, American Economic Association, vol. 82(2), pages 533-38, May.
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