The Effects of Firm and Co-Worker Behaviors on Employee Outcomes: Quasi-experimental Evidence from Administrative Data
Friday, Jan. 4, 2019 8:00 AM - 10:00 AM
- Chair: Patrick M. Kline, University of California-Berkeley
The Effects of Partial Employment Protection Reforms: Evidence from Italy
AbstractWe combine matched employer-employee data with firm financial records to study a 2001 Italian reform that lifted constraints on the employment of temporary contract workers while maintaining rigid employment protection regulations for employees hired under permanent employment contracts. Exploiting the staggered implementation of the law across different collective bargaining agreements, we find that the reform led to an increase in the incidence of temporary contracts but failed to raise employment significantly and lowered the earnings of new entrants. By contrast, the reform was successful in decreasing firms' labor costs, leading to higher profitability, some gains in managerial pay, and a rise in within-firm earnings inequality. Our findings suggest that the main beneficiaries of this "partial reform" to employment protection were firms, managers, and older incumbent workers. Rent-sharing estimates show that workers on a temporary contract receive only 66% of the rents shared by firms with workers hired under a permanent contract.
How Responsive are Wages to Demand within the Firm? Evidence from Idiosyncratic Export Demand Shocks
AbstractHow much do employees’ wages directly reflect their employer’s labor demand, rather than competition from other employers in the labor market? We test the wage incidence of product demand shocks by studying a quasi-experiment that idiosyncratically shocked individual firms’ export demand without systematically affecting similar firms’ product or labor demand. Our shocks measure how much Portuguese exporters’ sales were impacted by where—but not what—they had been selling before the recession of 2008. These shocks predict changes in output, payroll, and hiring at affected firms, but not at rival employers in the same labor market segment. An idiosyncratic shock that changes output by 10 percent in the medium-run causes wages of pre-2008 employees to change proportionally by 1.5 percent, relative to trend. Consistent with a simple framework, we find that these pass-through effects are larger in industries with lower employee turnover rates and in firms with higher pay premiums. These findings offer evidence that heterogeneous firm dynamics can plausibly generate substantial cross-sectional wage dispersion, but only in less-fluid labor markets.
The Role of Firms in Determining Work Hours
AbstractThe freedom with which workers can choose their work hours is an important determinant of worker and family well-being. With competition among employers, it should be possible for a worker to find a job with the desired work hours and the desired schedule (day, evening, night). But when surveyed, many part-time workers say they would prefer full-time work, and many full-time workers say they would prefer a shorter workweek.
In this project, we examine the role of employers in setting working time and the extent to which differences between desired and actual work hours are due to employers’ constraining the work-hour choices of workers. Preliminary evidence suggests that employers offer tied wage-hour packages that reflect their technology and organization of production. In particular, 35 percent of work hour variation is due to employer effects (or constraints), as opposed to the preferences of workers. Based on the findings, we examine policies that might increase the ability of workers to choose work hours that align more closely with their preferences.
- J3 - Wages, Compensation, and Labor Costs