Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/177356
Authors: 
Muriel Hernández, Beatriz
Year of Publication: 
2016
Series/Report no.: 
Development Research Working Paper Series 04/2016
Abstract: 
This article analyzes the importance of firm characteristics to explain earnings in urban Bolivia. Initially I propose a new simple theoretical model of segmented labor market where, in equilibrium, individual and firm variables jointly determine earnings at the worker level. The key for achieving this equilibrium is that workers have both specific preferences and heterogonous skills provided by years of schooling, which are in turn associated to certain firms. Given the household surveys information, I estimate two alternative earnings functions from this model, one for unsalaried workers, for which there is detailed firm data and one for salaried workers, in which sector, size and formality are used as firm proxies. I find not only that firm characteristics are fundamental determinants of earnings but that regressions that include only individual characteristics present highly overestimated coefficients.
Subjects: 
earnings functions
labor market segmentation
firm characteristics
Bolivia
JEL: 
C26
J20
J24
J31
Document Type: 
Working Paper

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