Augmenting the Human Capital Earnings Equation with Measures of Where People Work

Erling Barth, James Davis and Richard Freeman

Working Paper from Harvard University OpenScholar

Abstract: 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.

Date: 2016-01
New Economics Papers: this item is included in nep-cse, nep-hrm, nep-ltv and nep-sbm
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Related works:
Journal Article: Augmenting the Human Capital Earnings Equation with Measures of Where People Work (2018)
Working Paper: Augmenting the Human Capital Earnings Equation with Measures of Where People Work (2016)
Chapter: Augmenting the Human Capital Earnings Equation with Measures of Where People Work (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:qsh:wpaper:427826

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