TY - JOUR
T1 - Wages, productivity, and the dynamic interaction of businesses and workers
AU - Haltiwanger, John C.
AU - Lane, Julia I.
AU - Spletzer, James R.
N1 - Funding Information:
We would like to thank Victor Aguirregabiria, David Card, Daniel Hamermesh, Andrew Hildreth, David Levine, Jonathan Leonard, Joe Tracy, Jan Van Ours, two anonymous referees and numerous conference and seminar participants for their thoughtful comments, as well as Sasan Bahktiari, Javier Miranda, and Bryce Stephens for their research assistance. We would like to thank the ASA/NSF/Census Fellowship program as well as grants from the NSF for financial support and the Center for Economic Studies and the Longitudinal Employer-Household Dynamics (LEHD) program at the Bureau of the Census where this research was conducted. The microdata used in this paper are confidential US Code Title 13. They were assembled as part of a precursor project to the Census Bureau's LEHD program, which is supported by NSF Grant SES-9978093. The Census Bureau will make a fully-documented version of these data available to external researchers as a part of the LEHD program, where John Haltiwanger and Julia Lane are also Research Fellows. The views expressed herein are those of the authors and do not necessarily reflect the views of the Bureau of the Census or the Bureau of Labor Statistics.
PY - 2007/6
Y1 - 2007/6
N2 - This paper exploits a new matched universal and longitudinal employer-employee database at the US Census Bureau to empirically investigate the link between firms' choice of worker mix and the implied relationships between productivity and wages. We particularly focus on the decision making process of new firms and examine the role of both learning and selection. Our key empirical results are:(i)We find substantial and persistent differences in earnings per worker, output per worker, and worker mix across businesses within narrowly defined industries, which remain even after controlling for other observable characteristics.(ii)Within narrowly defined industries, mature businesses locate along an upward sloping productivity/worker skill profile and a closely related upward sloping earnings per worker/worker skill profile.(iii)We find that new businesses exhibit even greater heterogeneity in earnings and productivity than do mature businesses, but that they adjust their worker mix in a manner consistent with selection and learning effects. As firms age, businesses that have made "errors" with their worker mix (and on other dimensions) either exit or adjust their worker skill mix in the direction of the profiles of mature businesses.
AB - This paper exploits a new matched universal and longitudinal employer-employee database at the US Census Bureau to empirically investigate the link between firms' choice of worker mix and the implied relationships between productivity and wages. We particularly focus on the decision making process of new firms and examine the role of both learning and selection. Our key empirical results are:(i)We find substantial and persistent differences in earnings per worker, output per worker, and worker mix across businesses within narrowly defined industries, which remain even after controlling for other observable characteristics.(ii)Within narrowly defined industries, mature businesses locate along an upward sloping productivity/worker skill profile and a closely related upward sloping earnings per worker/worker skill profile.(iii)We find that new businesses exhibit even greater heterogeneity in earnings and productivity than do mature businesses, but that they adjust their worker mix in a manner consistent with selection and learning effects. As firms age, businesses that have made "errors" with their worker mix (and on other dimensions) either exit or adjust their worker skill mix in the direction of the profiles of mature businesses.
KW - Firm productivity
KW - Firm/worker interaction
KW - Matched employer-employee data
KW - Workforce composition
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U2 - 10.1016/j.labeco.2005.10.005
DO - 10.1016/j.labeco.2005.10.005
M3 - Article
AN - SCOPUS:34247218455
SN - 0927-5371
VL - 14
SP - 575
EP - 602
JO - Labour Economics
JF - Labour Economics
IS - 3
ER -