<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Aggregate wages display little cyclicality compared to what a standard model would predict. Wage rigidities are an obvious candidate, but the existing literature has emphasized the need to take into account the growing importance of worker composition effects, especially during downturns. This paper seeks to understand the role of firm heterogeneity for aggregate wage dynamics with reference to the Italian case. Using a newly available dataset based on social security records covering the universe of Italian employers between 1990 and 2015, we document that firm composition effects increasingly matter in explaining aggregate wage growth and largely reflect shifts of labor from low-paying to high-paying firms, especially in the most recent years. We find that changes in reallocation of workers across firms accounted for approximately one-fourth of aggregate wage growth during the crisis.</p></abstract>

Aggregate wages display little cyclicality compared to what a standard model would predict. Wage rigidities are an obvious candidate, but the existing literature has emphasized the need to take into account the growing importance of worker composition effects, especially during downturns. This paper seeks to understand the role of firm heterogeneity for aggregate wage dynamics with reference to the Italian case. Using a newly available dataset based on social security records covering the universe of Italian employers between 1990 and 2015, we document that firm composition effects increasingly matter in explaining aggregate wage growth and largely reflect shifts of labor from low-paying to high-paying firms, especially in the most recent years. We find that changes in reallocation of workers across firms accounted for approximately one-fourth of aggregate wage growth during the crisis.

Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics

IZA Journal of Labor Economics

This work is licensed under the Creative Commons Attribution 4.0 Public License.

{"article-title":"Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics"}

Aggregate wages display little cyclicality compared to what a standard model would predict. Wage rigidities are an obvious candidate, but the existing...

Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics

Pubblicato online: 01 ago 2019

Pagine: -

DOI: https://doi.org/10.2478/izajole-2019-0003

Parole chiave
aggregate wage dynamics, reallocation, firm composition effects

© 2019 Effrosyni Adamopoulou, Emmanuele Bobbio, Marta De Philippis and Federico Giorgi, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 Public License.

Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics

Pubblicato online: 01 ago 2019

Pagine: -

DOI: https://doi.org/10.2478/izajole-2019-0003

Parole chiaveaggregate wage dynamics, reallocation, firm composition effects

© 2019 Effrosyni Adamopoulou, Emmanuele Bobbio, Marta De Philippis and Federico Giorgi, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 Public License.

Parole chiave
aggregate wage dynamics, reallocation, firm composition effects