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Wages and Seniority When Coworkers Matter: Estimating a Joint Production Economy Using Norwegian Administrative Data

  • Ferrall, Christopher

    ()

    (Queen's University)

  • Salvanes, Kjell G.

    ()

    (Norwegian School of Economics)

  • Sørensen, Erik Ø.

    ()

    (Norwegian School of Economics)

We develop an equilibrium model of wages and estimate it using administrative data from Norway. Coworkers interact through a task­-assignment model, and wages are determined through multi­lateral bargaining over the surplus that accrues to the workforce. Seniority affects wages through workplace output and relative bargaining power. These channels are separately identified by imposing equilibrium restrictions on data observing all workers within workplaces. We find joint production is important. Seniority affects bargaining power but is unproductive. We reinterpret gender and firm­-size effects in wages in light of the rejection of linearly separable production.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4130.

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Length: 51 pages
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4130
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