It ain’t where you’re from, it’s where you’re at: Hiring origins, firm heterogeneity, and wages

Addario, Sabrina Di; Kline, Patrick; Saggio, Raffaele; Sølvsten, Mikkel

doi:10.1016/j.jeconom.2021.12.017

Cited by 46 publications

(7 citation statements)

References 56 publications

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“…Before any workers arrive, the firm commits to a persistent maximum wage w(v) ∈ [0 1]; the firm does not individually tailor wage offers to workers, consistent with the empirical findings of Di Addario, Kline, Saggio, and Sølvsten (2022). We discuss the case in which the firm can set different maximum wages for ex ante heterogeneous workers in the Supplemental Material.…”

Section: Setupsupporting

confidence: 62%

Equilibrium Effects of Pay Transparency

Cullen¹,

Pakzad-Hurson

2023

ECTA

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The discourse around pay transparency has focused on partial equilibrium effects: how workers rectify pay inequities through informed renegotiation. We investigate how employers respond in equilibrium. We study a model of bargaining under two‐sided incomplete information. Our model predicts that transparency reduces the individual bargaining power of workers, leading to lower average wages. A key insight is that employers credibly refuse to pay high wages to any one worker to avoid costly renegotiations with others. When workers have low individual bargaining power, pay transparency has a muted effect. We test our model with an event‐study analysis of U.S. state‐level laws protecting the right of private sector workers to communicate salary information with their coworkers. Consistent with our theoretical predictions, transparency laws empirically lead wages to decline by approximately 2%, and wage declines are smallest in magnitude when workers have low individual bargaining power.

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Section: Setupsupporting

confidence: 62%

Equilibrium Effects of Pay Transparency

Cullen¹,

Pakzad-Hurson

2023

ECTA

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show abstract

“…We therefore rely on random projection methods (Johnson and Lindenstrauss, 1984;Achlioptas, 2003) to approximate θKSS , the implementation details of which are discussed in greater depth in Appendix D.2. Code producing all of the results in this paper are available in an online replication archive (Di Addario et al, 2022).…”

Section: Leave-out Estimationmentioning

confidence: 99%

'It Ain't Where You're from, it's Where You're at': Hiring Origins, Firm Heterogeneity, and Wages

et al. 2021

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“…One limitation of these models is that the component of wage inequality attributed to differences between firms may be biased if unobserved differences between employees cause high-wage workers to sort into high-wage firms. Hence, further extensions use longitudinal LEED to estimate two-way or higher order fixed-effects models that can account for the unobserved characteristics of both workers and firms (Abowd et al, 1999), match-specific effects between workers and firms (Woodcock, 2008) and firm origin and destination effects (Di Addario et al 2022). One can then obtain a fuller picture of the contributions of worker, firm, and match-specific heterogeneity to residual wage inequality.…”

Section: Evidence Of Earnings Inequality Between Social Groupsmentioning

confidence: 99%