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Decomposing productivity and wage effects of intraestablishment labor restructuring

Author

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  • Mika Maliranta

    (Research Institute of the Finnish Economy ETLA)

  • Pekka Ilmakunnas

    (Helsinki School of Economics & HECER)

Abstract

Aggregate productivity growth can be decomposed into growth within establishments, between establishments, and the impact of entering and exiting establishments. We demonstrate that such a productivity decomposition formula can also be used for studying intraestablishment restructuring through the inflow and outflow of workers. There are, however, three requirements: Firstly, comprehensive longitudinal linked employeremployee data are needed. Secondly, now the productivity decomposition formula cannot be used for accounting but must be used as an estimation model. Thirdly, the decomposition formula should be such that a meaningful interpretation of its components is possible. The decomposition can also account for different worker types, e.g. age groups. We apply such a method to study the productivity growth and wage growth within the establishments of the Finnish business sector. The results provide empirical evidence on economic incentives for hiring young workers and separating older workers.

Suggested Citation

  • Mika Maliranta & Pekka Ilmakunnas, 2005. "Decomposing productivity and wage effects of intraestablishment labor restructuring," Labor and Demography 0511003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpla:0511003
    Note: Type of Document - pdf; pages: 28
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    References listed on IDEAS

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    Cited by:

    1. Pekka Ilmakunnas & Mika Maliranta, 2016. "How does the age structure of worker flows affect firm performance?," Journal of Productivity Analysis, Springer, vol. 46(1), pages 43-62, August.
    2. repec:spo:wpmain:info:hdl:2441/6144 is not listed on IDEAS
    3. Maliranta, Mika & Asplund, Rita, 2007. "Training and Hiring Strategies to Improve Firm Performance," Discussion Papers 1105, The Research Institute of the Finnish Economy.
    4. Sandrine Levasseur, 2008. "Progrès technologique et employabilité des seniors," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(3), pages 155-184.
    5. repec:spo:wpecon:info:hdl:2441/6144 is not listed on IDEAS
    6. repec:hal:spmain:info:hdl:2441/6144 is not listed on IDEAS
    7. repec:hal:wpspec:info:hdl:2441/6144 is not listed on IDEAS
    8. Liis Roosaar & Jaan Masso & Urmas Varblane, 2017. "The Structural Change And Labour Productivity Of Firms: Do Changes In The Age And Wage Structure Of Employees Matter?," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 103, Faculty of Economics and Business Administration, University of Tartu (Estonia).

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    More about this item

    Keywords

    employer-employee data; labor productivity; productivity decomposition; wage determination; worker turnover;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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