Augmenting the Human Capital Earnings Equation with Measures of Where People Work / Erling Barth, James Davis, Richard B. Freeman.

Format:

Book

Author/Creator:

Barth, Erling.

Contributor:

National Bureau of Economic Research.

Davis, James.

Freeman, Richard B.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22512.

NBER working paper series no. w22512

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

We augment standard ln earnings equations with variables reflecting unmeasured attributes of workers and measured and unmeasured attributes of their employer. Using panel employee-establishment data for US manufacturing we find that the observable employer characteristics that most impact earnings are: number of workers, education of co-workers, capital equipment per worker, industry in which the establishment produces, and R&D intensity of the firm. Employer fixed effects also contribute to the variance of ln earnings, though substantially less than individual fixed effects. In addition to accounting for some of the variance in earnings, the observed and unobserved measures of employers mediate the estimated effects of individual characteristics on earnings and increasing earnings inequality through the sorting of workers among establishments.

Notes:

Print version record

August 2016.