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- To estimate the results in this paper, I implement the user-written Stata command a2reg, which estimates the model as described in Abowd and Kramarz (1999).44 I estimate the problem in two parts. First, I run a regression of log wages on dummies for year, county×year, industry×year, married, and number of children. I then save the residuals from this regression. Next, I use a2reg to estimate a regression of residualized wages this period on average education in the firm last period. Note that a2reg requires all variables to be non-missing. Thus, after the first step above, I drop all observations with missing values of either average education of coworkers last period, workplace, or residual wage this period.
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- To obtain standard errors, a2reg requires a user written bootstrap. I thus also program a bootstrap that runs over the entire procedure.45 44Amine Ouazad, Program for the Estimation of Two-Way Fixed Effects, available at http://personal.lse.ac.uk/ouazad/, 2007. 45I produced the standard errors using 50 bootstraps.
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- To show that this approach works using the data, I have replicated Table 3 from Angrist (2014). My columns 1–3 and 5–7 estimate identical regressions to those in Angrist’s paper. Specifically, in the first column I estimate the effect of a college degree on wages. In the second column, I estimate the effect of average education at the municipality level on wages.42 In the third column, I estimate the effect of both average education and given worker’s own schooling (college degree or not) on wages.
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- Worker ID RAMS, Statistics Sweden, 1985–2012 Wages Arb, Statistics Sweden, 1985–2011 Private employee wages for firms with over 50 employees. Includes people who had hourly wages and were employed at companies/organizations in the private sector Wages Tjm, Statistics Sweden, 1985–2011 Private official wages for firms with over 500 employees. Includes people who had a monthly salary and worked at a company/organization in the private sector Wages Kommun, Statistics Sweden, 1985--2011 Public employee wages at the local level.
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