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Wage Determination Across Firms

July 11, 2019

DECRG Kuala Lumpur Seminar Series

  • I study why some firms pay a wage premium relative to others for identical workers. To do so, I develop a structural framework in which firms differ in four dimensions: productivity, labor market power (as in frictional labor market models), product market power, and production technology (as in macro models of the labor share).  I estimate the framework using rich administrative datasets on employers and employees in the entire French private sector. Given the estimated heterogeneity in productivity and labor market power, standard frictional labor market models predict firm wage premia that are an order of magnitude more dispersed than the data counterpart. I reconcile model and data by showing that the effect of firm productivity and labor market power dispersion on the firm wage premium distribution is primarily offset by more productive firms using production technologies in which output is inelastic with respect to labor inputs. Finally, I provide a novel decomposition of the firm wage premium distribution and find that labor demand differences across firms account for three quarters of firm wage premia variation.

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  • Horng is a Ph.D. candidate in economics at the University of Warwick. His research interests fall in the intersection of macroeconomics and labor economics. His current research focuses on firms' role in determining the income distribution. In particular, his most recent work studies how firm characteristics and labor market structure affect wage inequality.


  • WHEN: Thursday, July 11, 2019; 12:30 -2:00PM
  • WHERE: World Bank Malaysia Office, Level 3, Sasana Kijang, No. 2, Jalan Dato’ Onn
  • RSVP: Kindly RSVP by Wednesday, July 10, 2019