SEMINAR239

Title：Understanding High-Wage and Low-Wage Firms

Speaker：Horng Chern Wong，Ecole Polytechnique

Time：October 12th 2020,  15:30-17:00

Online seminar

About the speaker：

Horng is a labor economist with research interests in macroeconomics and international trade. He is currently a postdoctoral researcher at CREST - Ecole Polytechnique. He will start as an assistant professor at Stockholm University in Fall 2021. His recent projects are about firms' labor market power and the geographical distribution of exporters.

Abstract:

I study why some firms pay a wage premium relative to others for identical workers. To unpack the firm wage premium distribution, I develop and implement a novel structural decomposition using datasets covering the universe of employers and employees in France. Existing research shows that firm wage premia depend on firms' labor productivity and wage-setting power. This paper shows that they also depend on firms' product market power and labor share of production. My findings suggest that: (i) without taking the latter set of firm characteristics into account, workhorse models of firm wage premia overestimate the relative importance of firms' labor productivity and wage-setting power, (ii) conventional measures of labor misallocation overstate the degree of misallocation, and (iii) exceptionally productive superstar firms have low labor shares of revenue not only because they have high product market power, but also because they have high labor market power and low labor shares of production.