The Productivity-Wage Premium: Does Size Still Matter in a Service Economy?

Berlingieri, Giuseppe; Calligaris, Sara; Criscuolo, Chiara

doi:10.1257/pandp.20181068

Cited by 43 publications

(30 citation statements)

References 31 publications

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“…Among others, Faggio et al (2010) find evidence of a positive correlation (for Swedish firms) between average wages and labor productivity, while Berlingieri et al (2017) highlight how wage dispersion is significantly linked to increasing differences between high and low productivity firms, even controlling for the sectors' skill composition. Berlingieri et al (2018) find a positive link between firm productivity, measured as per worker output, and wage premium. Card and Di Nardo (2002) show that, notwithstanding a rising skill premium (associated to eventual complementarity between computers and skilled work), relative wage inequality was stabilized from the 1990s.…”

Section: Related Literaturementioning

confidence: 77%

Skill Biased Technical Change and Misallocation: A Unified Framework

2019

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Due to strict reliance on competitive labor markets, standard approaches which measure skill biased technical change (SBTC) conflate labor market distortions which prevent firms from choosing the efficient ratio between skilled and unskilled labor and 'true' SBTC. This contrasts with recent evidence on decoupling between wages and productivity. To overcome this limitation, we present a unified framework to estimate SBTC which accounts for factor accumulation (FA) effects, and quantifies the discrepancy (i.e., relative misallocation) between the wage ratio (skilled to unskilled) and the marginal rate of technical substitution (MRTS). The suggested methodology takes advantage of recent developments in nonparametric estimation methods (i.e., discrete smoothing) that allow us to estimate the marginal productivity of inputs at the country-sector level directly from data. Over the 1995-2005 period, we find a 3% yearly growth rate for the MRTS between skilled and unskilled labor and show such change to be almost entirely driven by SBTC, rather than FA, on average. In most cases, SBTC and MRTS growth do not come with increasing skill premia; this fosters the decoupling and results in relative misallocation patterns (across countries and sectors) which are quite heterogeneous, for which we report a 6% overall increase. Finally, we show evidence that relative misallocation increased less in country-sectors in which it was larger at the beginning of the period and grew more in country-sectors characterized by: (a) higher skill-intensity; (b) lower bargaining power of skilled over unskilled workers; and (c) lower FA effects.

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Section: Related Literaturementioning

confidence: 77%

Skill Biased Technical Change and Misallocation: A Unified Framework

2019

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“…The global productivity slowdown has coincided with an apparent increasing performance gap between firms at the frontier and other firms at the global level (Andrews, Criscuolo and Gal, 2016 [8]; Berlingieri, Blanchenay and Criscuolo, 2017 [9]). A similar widening gap has been found within countries in Germany and Switzerland and to some extent in Belgium (OECD, 2018 [10]; OECD, 2017 [11]; OECD, 2017 [12]).…”

Section: Weak Growth In Services Even At the Productivity Frontiermentioning

confidence: 99%

Adapting business framework conditions to deal with disruptive technologies in Denmark

Hermansen¹,

Millot²

2019

OECD Economics Department Working Papers

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“…The existence of a firm size/wage premium has long been studied (Brown and Medoff, 1989;Troske, 1999). However, some studies have recently pointed out the relationship between productivity and wage inequality (Berlingieri et al, 2018). They show that the link between wages and productivity is strong, especially in the service sector.…”

Section: Accounting For Between-establishment Inequalitymentioning

confidence: 99%

Wage Inequality During the Long-Term Stagnation in Japan: Changes Within and Between Establishments

Akesaka

Miyoshi

2018

SSRN Journal

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Wage inequality between individuals has changed little in Japan in recent times unlike in other developed countries. We examine changes in wage inequality within and between establishments during the prolonged stagnation period in Japan. Using a micro-level worker-establishment dataset from 1991 to 2012, we find changes in inequality during the 1990s. First, an increase in the variance in the establishment fixed effects expanded men's between-establishment inequality. Meanwhile, a reduction of returns to tenure decreased men's within-establishment inequality and thus suppressed rising individual wage inequality. Second, we find a different trend in women's wage inequality. Between-establishment inequality was larger than that of men in the early 1990s. However, since the structure of wage inequality in men changed significantly, the composition of inequality between men and women has become similar in recent years. Finally, the assortativeness between workers and establishment rose for both sexes.

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The Productivity-Wage Premium: Does Size Still Matter in a Service Economy?

Cited by 43 publications

References 31 publications

Skill Biased Technical Change and Misallocation: A Unified Framework

Skill Biased Technical Change and Misallocation: A Unified Framework

Adapting business framework conditions to deal with disruptive technologies in Denmark

Wage Inequality During the Long-Term Stagnation in Japan: Changes Within and Between Establishments

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