Article: article from journal or magazin.
The Importance of Firms in Wage Determination
Fit ins are central to many theories of the labor market. However, the actual degree to which firms shape the structure of wages is still not well understood. this paper investigates (i) the importance of firms in explaining wage differences across individuals and industries, and (ii) how the nature of interfirm mobility job-to-job vs. job-unemployment-job - affects the relative importance of firms and workers in wage determination. Results indicate that (i) firms are much more important in explaining the variance of average wages across industries rather than across individuals, and (ii) using job-to-job transitions to identify the firm's contribution to the wage rate reduces the importance of firm wage policies in explaining wage differences by as much a 50%.
Interfirm mobility, Wage determination, Industry wage differentials, Matched employer employee data
Web of science
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