Extant research on the gender pay gap suggests that men and women who do the same work for the same employer receive similar pay, so that processes sorting people into jobs are thought to account for the vast majority of the pay gap. Data that can identify women and men who do the same work for the same employer are rare, and research informing this crucial aspect of gender differences in pay is several decades old and from a limited number of countries. Here, using recent linked employer–employee data from 15 countries, we show that the processes sorting people into different jobs account for substantially less of the gender pay differences than was previously believed and that within-job pay differences remain consequential.

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The increasing regional divergence in wages and labor market participation in the Western world has been linked to constraints on inter-regional mobility. Social networks, which have been shown to influence human behavior and mobility decisions, may play a role in determining whether individuals are able to move to high-opportunity regions. This study uses employer-employee data from Sweden to investigate the influence of social networks on residential mobility, specifically examining the effect of family ties, former co-workers, and university peers on the migration decisions of individuals aged 18-35. The study finds that the presence of social contacts at the target destination increases the probability of a move, with the importance of different types of ties varying by marital status. The study also finds that people are more likely to move to places where they have contacts if the target region is less accessible or if they are less resourceful in terms of income or education. Overall, the results suggest that social networks can play a significant role in determining mobility to high-opportunity regions and highlight the potential importance of policies aimed at increasing social connectedness in disadvantaged regions.

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Summary article in the Hungarian press

This study aims to contribute to the literature of firms and occupations as prominent drivers of wage-inequality in multiple ways. First, we synthesize novel modelling approaches of recent studies in the field and use administrative linked employeremployee panel data from an Eastern European country, Hungary, to assess the contribution of individual, firm and job heterogeneity – and their interactions – to overall wage inequality. Consistent with earlier findings from Western Europe, Scandinavia, the US and Brazil, we show that firm heterogeneity provides around 22%, individual heterogeneity 50%, and occupational heterogeneity 8% of overall wage dispersion, with wage sorting between firms and individuals in itself explaining around 9%. Notably, around half of this contribution is accountable to observable subcomponents of individual and firm wage effects. Also, the same magnitude of assortativity can be found between individuals and occupations. Utilizing unique features of our data, we compare mathematics and literature test score records of 10th grade students to their future labor market outcomes, finding a positive correlation between test scores and future firm value added, a direct evidence for assortative matching in productivity. Finally we assess sorting along observable characteristics, such as gender, education, occupation or age of workers, and the ownership of employers.

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We compare the wages of skilled workers in multinational enterprises (MNEs) versus domestic firms, the earnings of domestic firm workers with past, future and no MNE experience, and estimate how the presence of ex-MNE peers affects the wages of domestic firm employees. The analysis relies on monthly panel data covering half of the Hungarian population and their employers in 2003–2011. We identify the returns to MNE experience from changes of ownership, wages paid by new firms of different ownership, and the movement of workers between enterprises. We find high contemporaneous and lagged returns to MNE experience and significant spillover effects. Foreign acquisition has a moderate wage impact, but there is a wide gap between new MNEs and domestic firms. The findings, taken together, suggest that MNE employees accumulate partly transferable knowledge, valued in the high-wage segment of the local economy that is connected with the MNEs via worker turnover.

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Summary article in the Hungarian press

It is well documented that earnings inequalities have risen in many high-income countries. Less clear are the linkages between rising income inequality and workplace dynamics, how within- and between-workplace inequality varies across countries, and to what extent these inequalities are moderated by national labor market institutions. In order to describe changes in the initial between- and within-firm market income distribution we analyze administrative records for 2,000,000,000+ job years nested within 50,000,000+ workplace years for 14 high-income countries in North America, Scandinavia, Continental and Eastern Europe, the Middle East, and East Asia. We find that countries vary a great deal in their levels and trends in earnings inequality but that the between-workplace share of wage inequality is growing in almost all countries examined and is in no country declining. We also find that earnings inequalities and the share of between-workplace inequalities are lower and grew less strongly in countries with stronger institutional employment protections and rose faster when these labor market protections weakened. Our findings suggest that firm-level restructuring and increasing wage inequalities between workplaces are more central contributors to rising income inequality than previously recognized.

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We address the presence, magnitude, and composition of wage gains related to former co-workers and discuss the mechanisms that could explain their existence. Using Hungarian linked employer–employee administrative data and proxying actual co-workership with overlapping work histories, we show that the overall wage gain attributable to former co-workers consists of multiple elements: a contact-specific, an individual-specific, a firm-specific and a match- specific component. Former co-workers, besides the direct effect of their presence, may funnel individuals into high-paying firms, enhance the sorting of good quality workers into firms, and may contribute to the creation of better employer–employee matches. By introducing and applying a wage-decomposition technique, we demonstrate that there are non-negligible differences between linked and market hires in all empirically separable wage elements. By focusing on specific scenarios, we provide additional empirical evidence in favor of employee referral and information transmission as the main drivers of co-worker gains.

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