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Firms and Wages: Evidence from Displaced Workers


  • Thomas F. Crossley


I use a unique data set of Canadian displaced workers to measure the effects of firm of employment on wages. This data set has the advantage of consisting of a sample of workers changing jobs for reasons (product demand shifts or technological changes) that are largely orthogonal to their individual levels of “ability”. It is also drawn from a labor market with wage-setting institutions that are quite similar to the U.S. My main findings are that, even within narrowly-defined industries, there are economically large and statistically significant firm wage effects that cannot be accounted for by unobserved worker heterogeneity. For a number of reasons, including the evidence I present on tenure, these effects are not easily attributable to compensating differentials, thus suggesting a role for models in which job rents play a role.

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  • Thomas F. Crossley, "undated". "Firms and Wages: Evidence from Displaced Workers," Canadian International Labour Network Working Papers 22, McMaster University.
  • Handle: RePEc:mcm:cilnwp:22

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    Cited by:

    1. Jeff Borland, 2000. "Economic Explanations of Earnings Distribution Trends in the International Literature and Application to New Zealand," Treasury Working Paper Series 00/16, New Zealand Treasury.
    2. Meng, Xin, 2004. "Gender earnings gap: the role of firm specific effects," Labour Economics, Elsevier, vol. 11(5), pages 555-573, October.

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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