Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18395
Authors: 
Pannenberg, Markus
Spiess, Martin
Year of Publication: 
2007
Series/Report no.: 
DIW Discussion Papers 663
Abstract: 
We propose a generalized estimating equations approach to the analysis of the mean and the covariance structure of a bivariate time series process of panel data with mixed continuous and discrete dependent variables. The approach is used to jointly analyze wage dynamics and the incidence of profit-sharing in West Germany. Our findings reveal a significantly positive conditional correlation of wages and the incidence of profit-sharing. Furthermore, they indicate that permanent unobserved individual ability is comparatively more important in the profit-sharing than in the wage equation and show that shocks have a long-lasting effect on transitory wages but not on the incidence of profit-sharing. Hence, the results support theoretical predictions that selection into profit-sharing is mostly due to unobservable ability and that profit-sharing ties wages more closely to productivity.
Subjects: 
generalized estimating equations
covariance structure
longitudinal data
real wages
variable pay
JEL: 
J33
J31
C35
C33
D31
Document Type: 
Working Paper

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