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Firms and Wage Setting

Paper Session

Friday, Jan. 3, 2025 10:15 AM - 12:15 PM (PST)

Hilton San Francisco Union Square, Union Square 24
Hosted By: Econometric Society
  • Chair: Simon Mongey, Federal Reserve Bank of Minneapolis

Public Perceptions of Discrimination at Large Firms

Patrick Kline
,
University of California-Berkeley
Evan Rose
,
University of Chicago
Christopher Walters
,
University of California-Berkeley

Abstract

What do job seekers believe about the tendency of large firms to discriminate? We analyze a large online survey eliciting beliefs about the recruiting conduct of firms. A rank order choice model is used to construct measures of perceived discrimination at each firm along with perceived levels of hiring discretion and selectivity. Perceived gender discrimination correlates strongly with firm specific contact gaps in a large correspondence experiment, while perceived racial discrimination is insignificantly related to racial contact gaps. Respondents believe that selective firms discriminate more often but also that managers have less discretion at such firms. In contrast, the correspondence evidence suggests, in line with much empirical research, that discretion is a positive predictor of racial discrimination and that much discrimination occurs at less selective firms.

Earnings Dynamics and Firm-Level Shocks

Benjamin U. Friedrich
,
Northwestern Unversity
Lisa Laun
,
Institute for Evaluation of Labour Market and Education Policy
Costas Meghir
,
Yale University
Luigi Pistaferri
,
Stanford University

Abstract

We use matched employer-employee data from Sweden to study the role of the firm in affecting the stochastic properties of wages. Our model accounts for endogenous participation and mobility decisions. We find that firm-specific permanent productivity shocks transmit to individual wages, but the effect is mostly concentrated among the high-skilled workers. The pass-through of temporary shocks is smaller in magnitude and similar for high- and low-skilled workers. The updates to worker-firm specific match effects over the life of a firm-worker relationship are small. Substantial growth
in earnings variance over the life cycle for high-skilled workers is driven by firms. In particular, cross-sectional wage variances by age 55 are roughly one-third higher relative to a scenario with no pass-through of firm shocks onto wages.

Labor Market Power, Tax Progressivity and Inequality

David Berger
,
Duke University
Kyle Herkenhoff
,
University of Minnesota
Simon Mongey
,
Federal Reserve Bank of Minneapolis
Adam Alexander Oppenheimer
,
University of Minnesota-Twin Cities

Abstract

Environment - Study a stationary general equilibrium economy in which ...
- Heterogeneous households consume, save, choose (i) firm to work at, (ii) hours to work - Heterogeneous firms strategically set wages facing dist. of household labor supply
Tax progressivity
- More progressive taxes make labor supply more inelastic
- In imperfectly competitive labor markets, firms internalize these effects
Positive
- Match joint distribution of marginal propensities to consume and earn, by income
JEL Classifications
  • J0 - General