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

51 Pages Posted: 28 Apr 2009

See all articles by Christopher Ferrall

Christopher Ferrall

Queen's University - Department of Economics

Kjell G. Salvanes

Norwegian School of Economics (NHH) - Department of Economics; IZA Institute of Labor Economics

Erik Sorensen

Norwegian School of Economics (NHH) - Department of Economics

Abstract

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 multi-lateral 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.

Keywords: wage distributions, productivity, matched data, multilateral bargaining, assignment models

JEL Classification: D2, J3, J24, L25, J7

Suggested Citation

Ferrall, Christopher and Salvanes, Kjell G. and Sorensen, Erik, Wages and Seniority When Coworkers Matter: Estimating a Joint Production Economy Using Norwegian Administrative Data. IZA Discussion Paper No. 4130. Available at SSRN: https://ssrn.com/abstract=1395077

Christopher Ferrall (Contact Author)

Queen's University - Department of Economics ( email )

99 University Avenue
Kingston K7L 3N6, Ontario
Canada K7L 3N6
613-545-6658 (Phone)
613-545-6658 (Fax)

Kjell G. Salvanes

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway
+47 5 595 9315 (Phone)
+47 5 595 9543 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Erik Sorensen

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
Bergen, NO-5045
Norway

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