Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/20672
Authors: 
Martins, Pedro Silva
Year of Publication: 
2004
Series/Report no.: 
IZA Discussion paper series 1376
Abstract: 
Many biases plague the estimation of rent sharing in labour markets. Using a Portuguese matched employer-employee panel, these biases are addressed in this paper in three complementary ways: 1) Controlling directly for the fact that firms that share more rents will, ceteris paribus, have lower net-of-wages profits. 2) Instrumenting profits via interactions between the exchange rate and the share of exports in firms? total sales. 3) Considering firm or firm/worker spell fixed effects and highlighting the role of downward wage rigidity. These approaches clarify conflicting findings in the literature and result, in our preferred specification, in a Lester range of pay dispersion of 56%, also shown to be robust to a number of competitive interpretations.
Subjects: 
rent sharing
instrumental variables
matched employer-employee data
fixed effects
JEL: 
J31
C33
J41
Document Type: 
Working Paper

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