Working Papers:
Abstract: There is a large literature documenting that workers in exporting firms receive higher wages on average than workers in non-exporting firms. This is also the case in Denmark, where the unconditional exporter wage gap is 3 percent. However, little is known about the sources behind this gap: Is it because more productive firms export, or because more productive worker select into the export sector, or is it because matches in the export sector are more productive? In this paper we decompose the gap into these different sources. We are the first to show that the presence of worker exporter-specific skills, that are unobservable to the econometrician, is the primary driver of the gap. The exporter wage gap is a result of workers working in sectors (export or non-export) where they have comparative advantage. To reach this finding, we employ a novel econometric strategy and exploit two state-of-art estimators. We start out with an AKM-style wage equation with worker, firm and match fixed effects. We then use the model in a series of classical decompositions of the exporter wage gap. Critically, our novel finding only emerges after allowing workers to have exporter-specific time-invariant skills. Before allowing for this extension we find that exporting firms on average have higher firm fixed effects increasing the gap, while their workers have lower individual fixed effects, closing the wage gap. However, allowing workers to have time-invariant skills specific to the exporting sector fundamentally changes the conclusion: Workers in exporting firms have skills that are particularly valuable in the exporting sector, therefore generating higher wages in that sector. We also show that workers make job transitions based on these differential returns. Finally, we show that our findings are not changed substantially if we instead perform the analysis in a non-linear framework instead of the linear AKM-style framework.
Work in progress:
Abstract: This paper develops a search-matching model where heterogeneous workers produce in teams within heterogeneous firms. The combination of team production and firm heterogeneity is novel and the model allows for a separate understanding of the importance of firm heterogeneity and coworker heterogeneity for labor market transitions, wages and productivity. I estimate the model using indirect inference and Danish matched employer-employee data. I find that production features complimentary between workers and firms, but stronger complementarity between coworkers. Interestingly, the traditional worker-firm sorting channel is almost absent in the estimated model, while coworker sorting accounts for more than 10 percent of wage variation.
Abstract: This paper studies wage and mobility dynamics in the Danish labor market using a flexible estimation framework recently developed by Bonhomme, Lamadon, and Manresa (2019).Wages in the economy are well approximated by a relatively limited set of worker and firm types. I find that additive log wages between worker and firm contributions is a good approximation of the wage structure of the Danish economy. The results imply strong sorting between workers and firms that is strengthened dynamically through downward mobility of low type workers placed in high type firms. Finally, I contribute to the literature on increasing assortative wage sorting by applying the framework sequentially over a 30 year period. Compared to the two-way fixed effectmodel of Abowd, Kramarz, and Margolis (1999) I find much higher levels of sorting (0.3 to 0.4), but a similar pattern of increasing sorting.