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The Employer Age-Wage Effect: Evidence from Matched Employer-Employee Data

Author

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  • Heyman, Fredrik

    (Trade Union Institute for Economic Research)

Abstract

This paper uses a large matched employer-employee data set for Sweden to study the relationship between firm age and individual wages, systematically addressing a variety of possible explanations for observing a firm-age wage effect. Results show considerable heterogeneity across years, along segments of the firm age distribution and across industries. A positive and significant firm age-wage premium, robust to a number of control variables, is found in 1995. This effect is not found for 1987 and 1991, two periods characterised by different business cycle conditions than 1995. The relationship between firm age and wages is not monotonic; rather it varies along segments of the firm age distribution. It also differs systematically across different sectors of the economy. A positive firm age effect is found only in the manufacturing sector. Finally, taking into account that larger firms are also older firms, results show that inclusion of firm age does not alter the positive effect of firm size on wages.

Suggested Citation

  • Heyman, Fredrik, 2004. "The Employer Age-Wage Effect: Evidence from Matched Employer-Employee Data," Working Paper Series 193, Trade Union Institute for Economic Research.
  • Handle: RePEc:hhs:fiefwp:0193
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    File URL: http://swopec.hhs.se/fiefwp/papers/WP193.pdf
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    Cited by:

    1. Lundborg, Per, 2005. "Wage Fairness, Growth and the Utilization of R&D Workers," Working Paper Series 206, Trade Union Institute for Economic Research.
    2. Udo Brixy & Susanne Kohaut & Claus Schnabel, 2007. "Do Newly Founded Firms Pay Lower Wages? First Evidence from Germany," Small Business Economics, Springer, vol. 29(1), pages 161-171, June.
    3. Lundborg, Per, 2005. "Wage Theories for the Swedish Labour Market," Working Paper Series 207, Trade Union Institute for Economic Research.

    More about this item

    Keywords

    Wages; firm age; firm size; matched employer-employee data;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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