Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/222149 
Year of Publication: 
2019
Citation: 
[Journal:] IZA Journal of Labor Economics [ISSN:] 2193-8997 [Volume:] 8 [Issue:] 3 [Publisher:] Sciendo [Place:] Warsaw [Year:] 2019 [Pages:] 1-24
Publisher: 
Sciendo, Warsaw
Abstract: 
Aggregate wages display little cyclicality compared to what a standard model would predict. Wage rigidities are an obvious candidate, but the existing literature has emphasized the need to take into account the growing importance of worker composition effects, especially during downturns. This paper seeks to understand the role of firm heterogeneity for aggregate wage dynamics with reference to the Italian case. Using a newly available dataset based on social security records covering the universe of Italian employers between 1990 and 2015, we document that firm composition effects increasingly matter in explaining aggregate wage growth and largely reflect shifts of labor from low-paying to high-paying firms, especially in the most recent years. We find that changes in reallocation of workers across firms accounted for approximately one-fourth of aggregate wage growth during the crisis.
Subjects: 
aggregate wage dynamics
reallocation
firm composition effects
JEL: 
D61
E24
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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