Firm Pay Dynamics

44 Pages Posted: 2 Mar 2020 Last revised: 18 Nov 2020

See all articles by Niklas Engbom

Niklas Engbom

New York University (NYU); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Christian Moser

Columbia University; Federal Reserve Bank of Minneapolis; Centre for Economic Policy Research (CEPR)

Date Written: August 21, 2020

Abstract

We study the nature of firm pay dynamics using matched employer-employee and firm financials data from Sweden. To this end, we propose and estimate a statistical model that extends the seminal framework by Abowd, Kramarz, and Margolis (1999b) to account for idiosyncratically time-varying firm pay policies. We validate the model by showing that firm-year pay estimates are systematically related to measures of firm performance. We then apply the model to assess the role of firm pay dynamics in accounting for the rise in earnings inequality in Sweden, to characterize within-firm pay differences over time, to measure firm pay mobility, and to quantify ex-ante versus ex-post heterogeneity in firm pay differences over the firm life cycle.

Keywords: Wage Determination, Mobility, Worker and Firm Heterogeneity, Two-Way Fixed Effects Model, AKM, Firm Dynamics, Inequality Trends, Income Risk, Insurance within the Firm

JEL Classification: J31, D22, D31, E24, M13

Suggested Citation

Engbom, Niklas and Moser, Christian, Firm Pay Dynamics (August 21, 2020). Columbia Business School Research Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=3531250 or http://dx.doi.org/10.2139/ssrn.3531250

Niklas Engbom

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Christian Moser (Contact Author)

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States
6093564653 (Phone)

HOME PAGE: http://www.economoser.com

Federal Reserve Bank of Minneapolis ( email )

90 Hennepin Avenue
Minneapolis, MN 55480
United States

HOME PAGE: http://www.economoser.com/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
198
Abstract Views
1,133
rank
190,578
PlumX Metrics