Working Papers

Firms, Productivity, and Returns to Tenure

Job Market Paper - (Newest Version)

I show that the well-documented positive relationships between wages and tenure and wages and firm-level productivity partly originate from the same mechanisms. Using an extension of Abowd et al. (1999) and Danish administrative data, I find that workers at more productive firms tend to see larger increases in wages over time while starting wages have a relatively weak connection to firm-level productivity. I show that these differences across firms are not due to composition effects or “quick learner” workers sorting into productive firms, but are a causal effect of being employed at a productive firm. A third of these gains from tenure are portable when switching employers even when separating involuntarily, indicating that these differences in returns partly reflect heterogeneity across firms in the rate at which employees acquire general human capital. Worker mobility patterns suggest that non-portable gains are primarily driven by differences in the rate of learning about worker-firm match quality.

Wage effects of labor market tightness

I study the impact of labor market tightness on wages. Using Danish data on vacancies and unemployment at the occupational level and firm-level data on the occupational composition of employees, I construct novel firm-specific measures of labor market tightness. Using these measures, I estimate the causal impact of labor market tightness on wages at the firm level. I find a positive effect on wages in response to changes in tightness. The results are in line with the qualitative implications of the canonical search and matching model of the labor market. (Draft available here)
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Work in progress

Firm Beliefs About Wage Setting

-with Antoine Bertheau

This paper yields new insights into why similar workers are paid differently by surveying Danish firms on their belief about wage setting and linking responses to administrative data. We first assess whether firms correctly perceive their actual position on the wage distribution by asking whether they pay higher or lower wages than firms competing for the same workers and comparing the answers to objective wage measures. We find that a substantial minority of firms misperceive their position on the wage distribution. Innacurate belief is more likely to occur for smaller and younger firms. Innacurate beliefs is associated with higher workers' separation rate. We then document firm’s motives to set higher or lower wages than their competitors. The main motive for setting high wages is in line with search models, i.e., to retain and attract new employees. Efficiency wage and rent-sharing motives come next. Compensating for negative job characteristics is the least common motive to set high wages.

Aggregate Demand Shocks and Prices — Micro Evidence and Macro Implications

-with Tobias Renkin