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 literature has emphasized the need to take into account the growing importance of worker composition effects, especially during downturns. This paper...
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Online Access: | https://doi.org/10.2478/izajole-2019-0003 |
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doaj-18d305e5fb3247c98824f302d43f7e8f2021-09-05T21:02:07ZengSciendoIZA Journal of Labor Economics2193-89972019-08-018152210.2478/izajole-2019-0003izajole-2019-0003Reallocation and the Role of Firm Composition Effects on Aggregate Wage DynamicsAdamopoulou Effrosyni0Bobbio Emmanuele1Philippis Marta De2Giorgi Federico3Directorate General for Economics, Statistics and Research, Structural Economic Analysis Directorate, Bank of Italy, Via Nazionale 91, 00184Rome, ItalyDirectorate General for Economics, Statistics and Research, Structural Economic Analysis Directorate, Bank of Italy, Via Nazionale 91, 00184Rome, ItalyDirectorate General for Economics, Statistics and Research, Structural Economic Analysis Directorate, Bank of Italy, Via Nazionale 91, 00184Rome, ItalyDirectorate General for Economics, Statistics and Research, Structural Economic Analysis Directorate, Bank of Italy, Via Nazionale 91, 00184Rome, ItalyAggregate 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.https://doi.org/10.2478/izajole-2019-0003aggregate wage dynamicsreallocationfirm composition effectsd61e24 |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Adamopoulou Effrosyni Bobbio Emmanuele Philippis Marta De Giorgi Federico |
spellingShingle |
Adamopoulou Effrosyni Bobbio Emmanuele Philippis Marta De Giorgi Federico Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics IZA Journal of Labor Economics aggregate wage dynamics reallocation firm composition effects d61 e24 |
author_facet |
Adamopoulou Effrosyni Bobbio Emmanuele Philippis Marta De Giorgi Federico |
author_sort |
Adamopoulou Effrosyni |
title |
Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics |
title_short |
Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics |
title_full |
Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics |
title_fullStr |
Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics |
title_full_unstemmed |
Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics |
title_sort |
reallocation and the role of firm composition effects on aggregate wage dynamics |
publisher |
Sciendo |
series |
IZA Journal of Labor Economics |
issn |
2193-8997 |
publishDate |
2019-08-01 |
description |
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. |
topic |
aggregate wage dynamics reallocation firm composition effects d61 e24 |
url |
https://doi.org/10.2478/izajole-2019-0003 |
work_keys_str_mv |
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