Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/27624
Authors: 
Zwick, Thomas
Year of Publication: 
2009
Series/Report no.: 
ZEW Discussion Papers 09-005
Abstract: 
This paper characterises establishments that pay higher seniority wages than their competitors. It tests whether seniority wages are paid on the basis of agency, human capital or efficiency wage considerations. A representative linked employeremployee panel and an innovative two-step estimation strategy are used to first calculate individual seniority wages taking into account that match quality biases tenure effects on wages. Then individual seniority wages are aggregated to the establishment level. Finally, the seniority wage indicator is explained by establishment characteristics. This contribution shows that large, profitable and establishments with a highly qualified workforce pay high seniority wages. Also collective bargaining coverage and works councils have a positive impact and the share of foreigners, training intensity and initial wage levels have a negative correlation with seniority wages. The results support an agency based motivation for seniority wages.
Subjects: 
Seniority Wages
Establishment Characteristics
Linked Employer-Employee Data
JEL: 
J14
J21
J31
Document Type: 
Working Paper

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