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High-Wage Workers and High-Wage Firms

Author Info

Listed author(s):
  • Abowd, J.M.
  • Kramarz, F.
  • Margolis, D.N.

Abstract

We study a longitudinal sample of over one million French workers and over 500,000 employing firms. Real total annual compensation per worker is decomposed into components related to observable characteristics, worker heterogeneity, firm heterogeneity and residual variation. Except for the residual, all components may be correlated in an arbitrary fashion. At the level of the individual, we find that person-effects, especially those not related to observables like education, are the most important source of wage variation in France. Firm-effects, while important, are not as important as person-effects. At the level of firms, we find that enterprises that hire high-wage workers are more productive but not more profitable. They are also more capital and high-skilled employee intensive. Enterprises that pay higher wages, controlling for person-effects, are more productive and more profitable. They are also more capital intensive but are not more high-skilled labor intensive. We also find that person-effects explain 92% of inter-industry wage differentials.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/1866/2120
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Paper provided by Universite de Montreal, Departement de sciences economiques in its series Cahiers de recherche with number 9503.

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Length: 72 pages
Date of creation: 1995
Handle: RePEc:mtl:montde:9503
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Web page: http://www.sceco.umontreal.ca

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Find related papers by JEL classification:
  • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
  • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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