AKM Worker-Firm Fixed Effects

Score ↕	Year ↕	Title	Authors ↕	Theme ↕
10	2013	Workplace Heterogeneity and the Rise of West German Wage Inequality* core ↗ This paper directly addresses the core AKM framework by estimating worker and establishment fixed effects to decompose wage inequality over time. It specifically investigates the role of firm wage premiums and assortative matching, which are central themes of the research project. Abstract We study the role of establishment-specific wage premiums in generating recent increases in West German wage inequality. Models with additive fixed effects for workers and establishments are fit into four subintervals spanning the period from 1985 to 2009. We show that these models provide a good approximation to the wage structure and can explain nearly all of the dramatic rise in West German wage inequality. Our estimates suggest that the increasing dispersion of West German wages has arisen from a combination of rising heterogeneity between workers, rising dispersion in the wage premiums at different establishments, and increasing assortativeness in the assignment of workers to...	David Card, Jörg Heining, Patrick Kline
10	2019	A Distributional Framework for Matched Employer Employee Data core ↗ This paper directly addresses the core AKM framework by proposing a distributional model for matched employer-employee data that handles worker-firm heterogeneity and sorting. It extends the standard additive assumption to allow for non-linear interactions and dynamic mobility, providing structural estimators that are central to the project's methodology and identification themes. We propose a framework to identify and estimate earnings distributions and worker composition on matched panel data, allowing for two‐sided worker‐firm unobserved heterogeneity and complementarities in earnings. We introduce two models: a static model that allows for nonlinear interactions between workers and firms, and a dynamic model that allows, in addition, for Markovian earnings dynamics and endogenous mobility. We show that this framework nests a number of structural models of wages and worker mobility. We establish identification in short panels, and develop tractable two‐step estimators where firms are classified in a first step. Applying our method to Swedish administrative data...	Stéphane Bonhomme, Thibaut Lamadon, Elena Manresa
10	2020	Leave‐Out Estimation of Variance Components core ↗ This paper directly addresses the project's focus on the AKM framework by introducing leave-out estimators specifically designed to correct the limited mobility bias in variance decomposition of worker and firm effects. It provides the methodological foundation and empirical evidence for how worker-firm sorting and mobility constraints distort wage inequality measures, which is central to the researcher's study. We propose leave‐out estimators of quadratic forms designed for the study of linear models with unrestricted heteroscedasticity. Applications include analysis of variance and tests of linear restrictions in models with many regressors. An approximation algorithm is provided that enables accurate computation of the estimator in very large data sets. We study the large sample properties of our estimator allowing the number of regressors to grow in proportion to the number of observations. Consistency is established in a variety of settings where plug‐in methods and estimators predicated on homoscedasticity exhibit first‐order biases. For quadratic forms of increasing rank, the limiting...	Patrick Kline, Raffaele Saggio, Mikkel Sølvsten
10	2006	Wage Bargaining with On-the-Job Search: Theory and Evidence core ↗ This paper directly addresses the equilibrium interpretation of firm wage premiums through search-and-matching theory, explicitly modeling how on-the-job search and employer competition determine wages. It provides empirical evidence on the relative importance of between-firm competition versus bargaining power, which is a core dimension of the research project. Most applications of Nash bargaining over wages ignore between-employer competition for labor services and attribute all of the workers' rent to their bargaining power. In this paper, we write and estimate an equilibrium model with strategic wage bargaining and on-the-job search and use it to take another look at the determinants of wages in France. There are three essential determinants of wages in our model: productivity, competition between employers resulting from on-the-job search, and the workers' bargaining power. We find that between-firm competition matters a lot in the determination of wages, because it is quantitatively more important than wage bargaining à la Nash in raising...	Pierre Cahuc, Fabien Postel‐Vinay, Jean‐Marc Robin
10	1999	High Wage Workers and High Wage Firms core ↗ This paper directly implements the AKM framework to decompose wage variation into worker and firm fixed effects using matched employer-employee data from France. It provides foundational empirical evidence on the relative importance of worker versus firm effects and their correlation with firm productivity, which is central to the project's focus on wage decomposition and firm wage premiums. We study a longitudinal sample of over one million French workers from more than five hundred thousand employing firms. We decompose real total annual compensation per worker into components related to observable employee characteristics, personal heterogeneity, firm heterogeneity, and residual variation. Except for the residual, all components may be correlated in an arbitrary fashion. At the level of the individual, we find that person effects, especially those not related to observables like education, are a very important source of wage variation in France. Firm effects, while important, are not as important as person effects. At the level of firms, we find that enterprises that hire...	John M. Abowd, Françis Kramarz, David Margolis
9	2018	Firming Up Inequality* ↗ This paper is directly relevant as it utilizes the matched employer-employee data framework to decompose wage inequality into worker, firm, and sorting components, addressing the core themes of the AKM model and variance decomposition. It specifically investigates assortative matching and how firm wage premiums relate to worker composition, which are central to the project's focus on identifying and estimating worker and firm effects. Abstract We use a massive, matched employer-employee database for the United States to analyze the contribution of firms to the rise in earnings inequality from 1978 to 2013. We find that one-third of the rise in the variance of (log) earnings occurred within firms, whereas two-thirds of the rise occurred due to a rise in the dispersion of average earnings between firms. However, this rising between-firm variance is not accounted for by the firms themselves but by a widening gap between firms in the composition of their workers. This compositional change can be split into two roughly equal parts: high-wage workers became increasingly likely to work in high-wage firms (i.e., sorting...	Jae Song, David J. Price, Fatih Guvenen, et al.
9	2014	The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data ↗ This paper directly addresses the project's fourth dimension on the role of international trade by analyzing how offshoring shocks transmit to wages using matched employer-employee data. It provides empirical evidence on how trade impacts the wage decomposition and worker-firm dynamics, aligning closely with the research focus on trade, offshoring, and wage effects. We employ data that match the population of Danish workers to the universe of private-sector Danish firms, with product-level trade flows by origin- and destination-countries. We document new stylized facts about offshoring and instrument for offshoring and exporting. Within job spells, offshoring increases (decreases) the high-skilled ( low-skilled) wage; exporting increases the wages of all skill-types; the net wage-effect of trade varies substantially within the same skill-type; conditional on skill, the wage-effect of offshoring varies across task characteristics. We estimate the overall effects of offshoring on workers' present and future income streams by constructing pre-...	David Hummels, Rasmus Jørgensen, Jakob Roland Munch, et al.
9	2002	Equilibrium Wage Dispersion with Worker and Employer Heterogeneity core ↗ This paper directly addresses the project's core interest in the equilibrium interpretation of firm fixed effects by constructing a structural search-and-matching model with worker and employer heterogeneity. It provides a theoretical framework for how on-the-job search and wage bargaining generate firm wage premiums and offers a variance decomposition of wage dispersion that complements the AKM framework. We construct and estimate an equilibrium search model with on–the–job–search. Firms make take–it–or–leave–it wage offers to workers conditional on their characteristics and they can respond to the outside job offers received by their employees. Unobserved worker productive heterogeneity is introduced in the form of cross–worker differences in a “competence” parameter. On the other side of the market, firms also are heterogeneous with respect to their marginal productivity of labor. The model delivers a theory of steady–state wage dispersion driven by heterogenous worker abilities and firm productivities, as well as by matching frictions. The structural model is estimated using matched...	Fabien Postel‐Vinay, Jean‐Marc Robin
9	2021	Imperfect Competition, Compensating Differentials, and Rent Sharing in the US Labor Market core ↗ This paper directly addresses the project's focus on rent-sharing and the decomposition of wages by estimating an equilibrium model of the labor market with two-sided heterogeneity. It utilizes matched employer-employee panel data to quantify labor market rents, compensating differentials, and worker sorting, which are core components of the AKM framework and its equilibrium interpretations. We quantify the importance of imperfect competition in the US labor market by estimating the size of labor market rents earned by American firms and workers. We construct a matched employer-employee panel dataset by combining the universe of US business and worker tax records for the period 2001–2015. Using this panel data, we identify and estimate an equilibrium model of the labor market with two-sided heterogeneity where workers view firms as imperfect substitutes because of heterogeneous preferences over nonwage job characteristics. The model allows us to draw inference about imperfect competition, worker sorting, compensating differentials, and rent sharing. (JEL D24, H24, H25, J22...	Thibaut Lamadon, Magne Mogstad, Bradley Setzler
9	2021	Learning From Coworkers ↗ This paper directly addresses the project's theme of time-varying worker components by empirically and theoretically modeling peer learning spillovers within firms. It provides a structural framework for estimating how coworker interactions generate wage dynamics, which complements the standard AKM worker fixed effects approach. We investigate learning at the workplace. To do so, we use German administrative data that contain information on the entire workforce of a sample of establishments. We document that having more‐highly‐paid coworkers is strongly associated with future wage growth, particularly if those workers earn more. Motivated by this fact, we propose a dynamic theory of a competitive labor market where firms produce using teams of heterogeneous workers that learn from each other. We develop a methodology to structurally estimate knowledge flows using the full‐richness of the German employer‐employee matched data. The methodology builds on the observation that a competitive labor market prices coworker...	Gregor Jarosch, Ezra Oberfield, Esteban Rossi‐Hansberg
9	2023	The Anatomy of Sorting—Evidence From Danish Data core ↗ This paper directly addresses the core project theme of identifying worker and firm effects and analyzing assortative matching by extending AKM frameworks with a flexible mixture model. It quantifies various sources of sorting and wage decomposition, which are central to the researcher's interest in the variance decomposition of wage inequality and the dynamics of worker-firm assignment. In this paper, we formulate and estimate a flexible model of job mobility and wages with two‐sided heterogeneity. The analysis extends the finite mixture approach of Bonhomme, Lamadon, and Manresa (2019) and Abowd, McKinney, and Schmutte (2019) to develop a new Classification Expectation‐Maximization algorithm that ensures both worker and firm latent‐type identification using wage and mobility variations in the data. Workers receive job offers in worker‐type segmented labor markets. Offers are accepted according to a logit form that compares the value of the current job with that of the new job. In combination with flexibly estimated layoff and job finding rates, the analysis quantifies the...	Rasmus Lentz, Suphanit Piyapromdee, Jean‐Marc Robin
9	2008	High Wage Workers and Low Wage Firms: Negative Assortative Matching or Limited Mobility Bias? core [Title only] This paper directly addresses the core AKM identification challenge of limited mobility bias, which is a primary theme in the project. It also tackles negative assortative matching between workers and firms, linking key theoretical and empirical dimensions of the research agenda. No abstract available.	Andrews, Gill, Schank, et al.
9	2023	Robot Adoption and Labor Market Dynamics [Title only] This title directly addresses the project's focus on how automation shocks transmit to wage outcomes and firm-level pay policies. It likely explores the impact of robot adoption on worker mobility and wage decomposition, which are core themes in the research agenda. No abstract available.	Humlum
8	2010	Inequality and Unemployment in a Global Economy ↗ This paper directly addresses the project's interest in how international trade shocks, such as export expansions and import competition, transmit to firm wage premiums and alter wage inequality. It aligns with the equilibrium interpretation of firm fixed effects by linking productivity, workforce composition, and labor market frictions to wage distributions. This paper develops a new framework for examining the determinants of wage distributions that emphasizes within-industry reallocation, labor market frictions, and differences in workforce composition across firms. More productive firms pay higher wages and exporting increases the wage paid by a firm with a given productivity. The opening of trade enhances wage inequality and can either raise or reduce unemployment. While wage inequality is higher in a trade equilibrium than in autarky, gradual trade liberalization first increases and later decreases inequality.	Elhanan Helpman, Oleg Itskhoki, Stephen J. Redding
8	2013	Rent-sharing, Holdup, and Wages: Evidence from Matched Panel Data core ↗ This paper directly addresses rent-sharing, a core theme of the project, by quantifying how firm-specific capital accumulation translates into higher worker wages using matched employer-employee data. It provides empirical evidence on the mechanism of wage determination within the AKM framework, specifically linking firm effects to firm performance and bargaining power. Rent-sharing by workers can reduce the incentives for investment if some of the returns to sunk capital are captured in higher wages. We propose a simple measure of this "holdup" effect based on the size of the wage offset for firm-specific capital accumulation. Using Social Security earnings records for workers in the Veneto region of Italy linked to detailed financial data for their employers, we find strong evidence of rent-sharing, with an elasticity of wages with respect to potential rents per worker of around 4%, arising mainly at larger firms with higher price-cost margins. On the other hand, we find little evidence that bargaining lowers the return on investment. Instead, firm-level...	David Card, Francesco Devicienti, Agata Maida
8	2017	The Macrodynamics of Sorting between Workers and Firms core ↗ This paper directly addresses the equilibrium interpretation of firm fixed effects through search-and-matching theory, specifically focusing on assortative matching and sorting dynamics between heterogeneous workers and firms. It provides a theoretical foundation for understanding how worker-firm assignment in equilibrium generates and sustains wage premiums, which is a core dimension of the research project. We develop an equilibrium model of on-the-job search with ex ante heterogeneous workers and firms, aggregate uncertainty, and vacancy creation. The model produces rich dynamics in which the distributions of unemployed workers, vacancies, and worker-firm matches evolve stochastically over time. We prove that the surplus function, which fully characterizes the match value and the mobility decision of workers, does not depend on these distributions. This result means the model is tractable and can be estimated. We illustrate the quantitative implications of the model by fitting to US aggregate labor market data from 1951–2012. The model has rich implications for the cyclical dynamics of the...	Jeremy Lise, Jean‐Marc Robin
8	2008	Trade, Firms, and Wages: Theory and Evidence ↗ This paper directly addresses the project's fourth dimension by examining how international trade shocks transmit to firm wage premiums. It provides empirical evidence on how export expansion and import competition alter wage outcomes, aligning with the study of trade's impact on firm-worker wage decomposition. How does trade liberalization affect wages? This is the first paper to consider in theory and data how the impact of final and intermediate input tariff cuts on workers' wages varies with the global engagement of their firm. Our model predicts that a fall in output tariffs lowers wages at import-competing firms, but boosts wages at exporting firms. Similarly, a fall in input tariffs raises wages at import-using firms relative to those at firms that only source locally. Using highly detailed Indonesian manufacturing census data for the period 1991 to 2000, we find considerable support for the model's predictions.	Mary Amiti, Donald R. Davis
8	2018	Production and Learning in Teams ↗ This paper directly addresses the project's theme of coworker learning spillovers within the firm by modeling how peer human capital affects individual productivity and wage dynamics. It provides both theoretical grounding in equilibrium sorting and empirical evidence from matched employer-employee data, aligning closely with the project's focus on team production and time-varying worker components. The effect of coworkers on the learning and the productivity of an individual is measured combining theory and data. The theory is a frictional equilibrium model of the labor market in which production and the accumulation of human capital of an individual are allowed to depend on the human capital of coworkers. The data is a matched employer-employee dataset of US firms and workers. The measured production function is supermodular. The measured human capital function is non-linear: Workers catch-up to more knowledgeable coworkers, but are not dragged-down by less knowledgeable ones. The market equilibrium features a pattern of sorting of coworkers across teams that is inefficiently...	Kyle Herkenhoff, Jeremy Lise, Guido Menzio, et al.
8	2016	It's Where You Work: Increases in the Dispersion of Earnings across Establishments and Individuals in the United States [Title only] This paper is highly relevant as it directly addresses the decomposition of wage inequality into worker and establishment components, which is central to the AKM framework. It provides foundational empirical evidence on the dispersion of earnings across firms and individuals, informing the project's focus on variance decomposition and firm effects. No abstract available.	Barth, Bryson, Davis, et al.
7	2017	Peer Effects in the Workplace ↗ This paper directly addresses the project's dimension on time-varying worker components by estimating peer effects and coworker learning spillovers within firms. It employs methods to account for endogenous sorting and peer group formation, providing empirical evidence on how coworker interactions influence wages beyond static individual fixed effects. Existing evidence on peer effects in the productivity of coworkers stems from either laboratory experiments or real-world studies referring to a specific firm or occupation. In this paper, we aim at providing more generalizable results by investigating a large local labor market, with a focus on peer effects in wages rather than productivity. Our estimation strategy—which links the average permanent productivity of workers' peers to their wages—circumvents the reflection problem and accounts for endogenous sorting of workers into peer groups and firms. On average over all occupations, and in the type of high-skilled occupations investigated in studies on knowledge spillover, we find only...	Thomas Cornelißen, Christian Dustmann, Uta Schönberg
7	2014	Tenure, Experience, Human Capital, and Wages: A Tractable Equilibrium Search Model of Wage Dynamics ↗ This paper is closely related as it explicitly models human capital accumulation and employer heterogeneity, directly addressing the project's interest in time-varying worker components and firm wage premiums. Its equilibrium search framework provides theoretical context for how worker-firm assignment and on-the-job search sustain wage dynamics beyond static fixed effects. We develop and estimate an equilibrium job search model of worker careers, allowing for human capital accumulation, employer heterogeneity, and individual-level shocks. Wage growth is decomposed into contributions of human capital and job search, within and between jobs. Human capital accumulation is largest for highly educated workers. The contribution from job search to wage growth, both within and between jobs, declines over the first ten years of a career—the “job-shopping” phase of a working life—after which workers settle into high-quality jobs using outside offers to generate gradual wage increases, thus reaping the benefits from competition between employers. (JEL J24, J31, J63, J64)	Jesper Bagger, François Fontaine, Fabien Postel‐Vinay, et al.
7	2019	Who Profits from Patents? Rent-Sharing at Innovative Firms core [Title only] The title explicitly mentions 'Rent-Sharing,' which is a core application area of the AKM framework and wage decomposition methods discussed in the project. The focus on 'Innovative Firms' suggests an analysis of how specific firm shocks (like patents) translate into wage premiums, fitting the project's interest in firm-level pay policies and productivity shocks. No abstract available.	Kline, Petkova, Williams, et al.
4	2016	Learning by Working in Big Cities ↗ The paper addresses worker fixed effects and experience accumulation, which relates to the project's theme of time-varying worker components. However, its focus on urban wage premiums and spatial sorting is tangentially related to the core AKM framework and firm-level mechanisms emphasized in the project. Individual earnings are higher in bigger cities.We consider three reasons: spatial sorting of initially more productive workers, static advantages from workers' current location, and learning by working in bigger cities. Using rich administrative data for Spain, we find that workers in bigger cities do not have higher initial unobserved ability as reflected in fixed effects. Instead, they obtain an immediate static premium and accumulate more valuable experience. The additional value of experience in bigger cities persists after leaving and is stronger for those with higher initial ability. This explains both the higher mean and greater dispersion of earnings in bigger cities.	Jorge De la Roca, Diego Puga
10	2002	Computing Person and Firm Effects Using Linked Longitudinal Employer-Employee Data This paper is a foundational methodological contribution to the AKM framework, providing the exact algorithms and formulas for estimating person and firm fixed effects in linked employer-employee data. It directly addresses the core identification and estimation techniques central to the researcher's project on decomposing wage inequality into worker and firm components. In this paper we provide the exact formulas for the direct least squares estimation of statistical models that include both person and firm effects. We also provide an algorithm for determining the estimable functions of the person and firm effects (the identifiable effects). The computational techniques are also directly applicable to any linear two-factor analysis of covariance with two high-dimension non-orthogonal factors. We show that the application of the exact solution does not change the substantive conclusions about the relative importance of person and firm effects in the explanation of log real compensation; however, the correlation between person and firm effects is negative...	John M. Abowd, Robert H. Creecy, Françis Kramarz
10	2009	The LEHD Infrastructure Files and The Creation of The Quarterly Workforce Indicators ↗ This paper describes the LEHD Infrastructure Files and Quarterly Workforce Indicators, which constitute the primary matched employer-employee panel data source for estimating AKM worker and firm effects. It details the data infrastructure, confidentiality methods, and integration processes that enable the empirical research on wage decomposition, mobility, and firm effects central to the project. data sources at the Census Bureau, these statistics offer unprecedented detail on the local dynamics of labor markets.Despite the fine geographic and industry detail, the confidentiality of the underlying micro-data is maintained by the application of new, state-of-the-art protection methods.The underlying data infrastructure was designed by the Longitudinal Employer-Household Dynamics (LEHD) Program at the Census Bureau (Abowd, Haltiwanger, and Lane 2004).The Census Bureau collaborates with its state partners, the suppliers of critical administrative records from the state unemployment insurance programs, through the Local Employment Dynamics (LED) cooperative federal-state...	John M. Abowd, Bryce Stephens, Lars Vilhuber, et al.
10	2011	Imperfect Competition in the Labor Market ↗ This paper is a core study for the project as it utilizes matched employer-employee panel data to estimate labor market rents and decompose wage inequality, directly aligning with the AKM framework's focus on worker and firm effects. It explicitly addresses key themes such as worker-firm sorting, rent-sharing, and the equilibrium interpretation of firm wage premiums through imperfect competition. We quantify the importance of imperfect competition in the US labor market by estimating the size of labor market rents earned by American firms and workers. We construct a matched employer-employee panel dataset by combining the universe of US business and worker tax records for the period 2001–2015. Using this panel data, we identify and estimate an equilibrium model of the labor market with two-sided heterogeneity where workers view firms as imperfect substitutes because of heterogeneous preferences over nonwage job characteristics. The model allows us to draw inference about imperfect competition, worker sorting, compensating differentials, and rent sharing. (JEL D24, H24, H25, J22...	Alan Manning
10	2008	High Wage Workers and Low Wage Firms: Negative Assortative Matching or Limited Mobility Bias? ↗ This paper directly addresses the project's focus on limited mobility bias and its correction in the AKM framework, which is a core methodological theme. It also tackles the identification and estimation of assortative matching between workers and firms, a key theoretical and empirical component of the research agenda. Summary In the empirical literature on assortative matching using linked employer–employee data, unobserved worker quality appears to be negatively correlated with unobserved firm quality. We show that this can be caused by standard estimation error. We develop formulae that show that the estimated correlation is biased downwards if there is true positive assortative matching and when any conditioning covariates are uncorrelated with the firm and worker fixed effects. We show that this bias is bigger the fewer movers there are in the data, which is ‘limited mobility bias’. This result applies to any two-way (or higher) error components model that is estimated by fixed effects methods. We...	Martyn Andrews, Leonard Gill, Thorsten Schänk, et al.
10	1997	Rent-Sharing and Wages: Evidence from Company and Establishment Panels ↗ This paper is a foundational study for the project as it provides seminal evidence for rent-sharing, a key mechanism linking firm characteristics to wages within the AKM framework. It directly addresses the project's interest in how firm-level pay policies respond to profitability shocks and contributes to the empirical understanding of the firm effect component of wage decomposition. A central question in labor economics and macroeconomics is whether the textbook competitive model provides an adequate representation of the labor market. Using longitudinal data on companies and establishments, this article suggests that it may not. As predicted by rent-sharing models of the labor market, changes in profitability are shown to feed through into long-run changes in wages. These are not temporary wage effects and are not driven by the unionized workplaces in the data. The article's estimates imply that, for rent-sharing reasons alone, Lester's "range" of wages is approximately 16%.	Andrew J. Oswald
10	2009	The Importance of Firms in Wage Determination ↗ This is the seminal paper by Abowd, Kramarz, and Margolis (1999) that establishes the AKM framework for decomposing wages into worker and firm fixed effects. It directly addresses the project's core focus on identifying firm wage premiums, the role of worker mobility in estimation, and the variance decomposition of wage inequality. Fit ins are central to many theories of the labor market. However, the actual degree to which firms shape the structure of wages is still not well understood. this paper investigates (i) the importance of firms in explaining wage differences across individuals and industries, and (ii) how the nature of interfirm mobility job-to-job vs. job-unemployment-job - affects the relative importance of firms and workers in wage determination. Results indicate that (i) firms are much more important in explaining the variance of average wages across industries rather than across individuals, and (ii) using job-to-job transitions to identify the firm's contribution to the wage rate reduces the...	M. Grütter, Rafael Lalive
10	2022	How Much Should We Trust Estimates of Firm Effects and Worker Sorting? ↗ This paper directly addresses the core AKM framework and the critical issue of limited mobility bias, which is a central theme of the project. It provides essential methodological context on bias correction techniques that are vital for accurately estimating worker and firm effects. Many studies use matched employer-employee data to estimate a statistical model of earnings determination with worker and firm fixed effects. Estimates based on this model have produced influential yet controversial conclusions. The objective of this paper is to assess the sensitivity of these conclusions to the biases that arise because of limited mobility of workers across firms. We use employer-employee data from the United States and several European countries while taking advantage of both fixed effects and random effects methods for bias correction. We find that limited mobility bias is severe and that bias correction is important.	Stéphane Bonhomme, Kerstin Holzheu, Thibaut Lamadon, et al.
10	2012	Workplace Heterogeneity and the Rise of West German Wage Inequality ↗ This paper directly applies the AKM framework to decompose wage inequality using matched employer-employee data, explicitly estimating worker and firm fixed effects over time. It addresses core project themes by analyzing the contributions of worker heterogeneity, firm wage premiums, and assortative matching to the rise in wage inequality. We study the role of establishment-specific wage premiums in generating recent increases in West German wage inequality. Models with additive fixed effects for workers and establishments are fit in four distinct time intervals spanning the period 1985-2009. Unlike standard wage models, specifications with both worker and plant-level heterogeneity components can explain the vast majority of the rise in wage inequality. Our estimates suggest that the increasing variability of West German wages results from a combination of rising heterogeneity between workers, rising variability in the wage premiums at different establishments, and increasing assortativeness in the matching of workers to...	David Card, Jörg Heining, Patrick Kline
10	2008	Sorting in the Labor Market: Theory and Measurement This paper directly addresses the project's core theme of assortative matching by analyzing and correcting bias in the measurement of sorting between skilled workers and productive firms. It provides essential methodological insights into the AKM framework's limitations regarding sorting, which is a key component of the project's variance decomposition analysis. Are more skilled workers employed by more productive firms? Are complementarities important in production? We provide three contributions to the measurement of sorting. First, we use a standard frictional sorting model to show that the standard empirical method used to measure sorting in the labor market can be biased in favor of not detecting sorting. Second, we isolate the economic mechanism responsible for this bias. Finally, we propose an alternative method to detect sorting that is immune from this bias. According to the model, sorting is prevalent in labor markets, as measured by our alternative method, but the standard method fails to detect it. This paper was part of my...	Rafael Lopes de Melo
10	2020	How Much Should we Trust Estimates of Firm Effects and Worker Sorting? ↗ This paper directly addresses the project's core AKM framework by investigating limited mobility bias and its impact on the estimation of firm effects and worker sorting. It provides essential methodological insights into variance decomposition and the reliability of standard fixed-effects estimates, which are central to the researcher's focus on identification and bias correction. Many studies use matched employer-employee data to estimate a statistical model of earnings determination where log-earnings are expressed as the sum of worker effects, firm effects, covariates, and idiosyncratic error terms. Estimates based on this model have produced two influential yet controversial conclusions. First, firm effects typically explain around 20% of the variance of log-earnings, pointing to the importance of firm-specific wage-setting for earnings inequality. Second, the correlation between firm and worker effects is often small and sometimes negative, indicating little if any sorting of high-wage workers to high-paying firms. The objective of this paper is to assess the...	Stéphane Bonhomme, Kerstin Holzheu, Thibaut Lamadon, et al.
10	2022	Firm pay dynamics ↗ This paper directly addresses the project's core theme by extending the foundational AKM framework to model idiosyncratically time-varying firm pay policies, which is a central component of the research agenda. It provides empirical evidence on how firm-level productivity shocks and hiring dynamics drive wage premiums, aligning perfectly with the study of non-stationary firm effects and rent-sharing mechanisms. We study the nature of firm pay dynamics. To this end, we propose a statistical model that extends the seminal framework by Abowd et al. (1999) to allow for idiosyncratically time-varying firm pay policies. We estimate the model using linked employer–employee data for Sweden from 1985 to 2016. By drawing on detailed firm financials data, we show that firms that become more productive and accumulate capital raise pay, whereas firms lower pay as they add workers. A secular increase in firm-year pay dispersion in Sweden since 1985 is accounted for by greater persistence of firm pay among incumbent firms as well as greater dispersion in firm pay among entrant firms, as opposed to more volatile...	Niklas Engbom, Christian Moser, Jan Sauermann
10	2017	High Wage Workers Work for High Wage Firms ↗ This paper directly addresses the AKM framework by identifying and correcting the incidental parameter problem that biases the estimation of assortative matching between workers and firms. It provides essential methodological tools for accurately measuring the correlation of worker and firm types, which is central to understanding wage decomposition and sorting in matched employer-employee data. We develop a new approach to measuring the correlation between the types of matched workers and firms. Our approach accurately measures the correlation in data sets with many workers and firms, but a small number of independent observations for each. Using administrative data from Austria, we find that the correlation between worker and firm types lies between 0.4 and 0.6. We use artificial data sets with correlated worker and firm types to show that our estimator is accurate. In contrast, the Abowd, Kramarz and Margolis (1999) fixed effects estimator suggests no correlation between types in our data set. We show both theoretically and empirically that this reflects an incidental parameter...	Kataŕına Borovičková, Robert Shimer
10	2019	Leave-out Estimation of Variance Components ↗ This paper directly addresses the limited mobility bias and leave-out corrections central to the researcher's project on identifying and estimating worker and firm effects. It provides the specific methodological tool for leave-out estimation of variance components in two-way fixed effects models, which is critical for accurate wage decomposition. We propose leave-out estimators of quadratic forms designed for the study of linear models with unrestricted heteroscedasticity. Applications include analysis of variance and tests of linear restrictions in models with many regressors. An approximation algorithm is provided that enables accurate computation of the estimator in very large datasets. We study the large sample properties of our estimator allowing the number of regressors to grow in proportion to the number of observations. Consistency is established in a variety of settings where plug-in methods and estimators predicated on homoscedasticity exhibit first-order biases. For quadratic forms of increasing rank, the limiting...	Patrick Kline, Raffaele Saggio, Mikkel Sølvsten
10	2020	Do Firm Effects Drift? Evidence from Washington Administrative Data ↗ This paper directly addresses the project's core focus on the AKM framework by empirically investigating the time-series properties of firm effects, a key theme in the research agenda. It employs relevant methodological tools such as rolling and time-varying AKM models while applying leave-out corrections to address limited mobility bias, providing essential evidence on firm effect persistence and cyclical sorting. We study the time-series properties of firm effects in the two-way fixed effects model popularized by Abowd, Kramarz, and Margolis (1999) (AKM) using two approaches. The firstthe rolling AKM approach (R-AKM)-estimates AKM models separately for successive twoyear intervals. The second-the time-varying AKM approach (TV-AKM)-is an extension of the original AKM model that allows for unrestricted interactions of year and firm indicators. We apply to both approaches the leave-out methodology of Kline, Saggio and Slvsten (2020) to correct for biases in the estimated variance components. Using administrative wage records from Washington State, we find, first, that firm effects for hourly wage rates...	Marta Lachowska, Alexandre Mas, Raffaele Saggio, et al.
10	2023	AKM Effects for German Labour Market Data from 1985 to 2021 ↗ This paper provides the foundational AKM worker and firm fixed effects for German administrative data, which is central to the project's core methodological framework. It directly supports research on wage decomposition, inequality, and the empirical identification of worker-firm matching patterns. Abstract This article describes the processing and accessibility of the person and establishment fixed wage effects in German administrative data. These effects have been estimated following the approach of Abowd, J., Kramarz, F., and Margolis, D. (1999. High wage workers and high wage firms. Econometrica 67: 251–333) and Card, D., Heining, J., and Kline, P. (2013. Workplace heterogeneity and the rise of West German wage inequality. Q. J. Econ. 128: 967–1015). They can be linked to most of the available administrative datasets provided by the Research Data Center (FDZ) of the German Federal Employment Agency at the Institute for Employment Research (IAB). They are available for different...	Benjamin Lochner, Stefanie Wolter, Stefan Seth
10	2020	Workforce composition, productivity and pay: the role of firms in wage inequality ↗ This paper directly addresses the project's core theme by using matched employer-employee data to decompose wage inequality into firm-specific premiums and workforce sorting components. Its findings on the magnitude of firm effects and their relation to productivity align perfectly with the AKM framework and the study of rent-sharing and wage inequality. In many OECD countries, low productivity growth has coincided with rising inequality. Widening wage and productivity gaps between firms may have contributed to both developments. This paper uses a new harmonised cross-country linked employer-employee dataset for 14 OECD countries to analyse the role of firms in wage inequality. The main finding is that, on average across countries, changes in the dispersion of average wages between firms explain about half of the changes in overall wage inequality. Two thirds of these changes in between-firm wage inequality are accounted for by changes in productivity-related premia that firms pay their workers above common market wages. The remaining third...	Chiara Criscuolo, Alexander Hijzen, Cyrille Schwellnus, et al.
10	2006	Worker-Firm Heterogeneity and Matching: An analysis using worker and firm fixed effects estimated from LEED ↗ This paper directly applies the AKM framework to decompose wage variance into worker and firm fixed effects, which is the central methodological focus of the project. It also extensively analyzes the sorting component of the decomposition and the variance contributions, aligning perfectly with the project's core themes on identification, variance decomposition, and assortative matching. This paper uses Statistics New Zealand’s Linked Employer-Employee Data (LEED) over the six year period April 1999–March 2005 to derive and analyse estimates of two-way worker and firm fixed effects components of job earnings rates. The fixed effects estimates reflect the portable earnings premium that each worker receives in whichever firm they work for, and the time-invariant premium that each firm pays to all the workers it employs. Our main estimates use full-time equivalent annual earnings for each job-year observation weighted by its effective employment, which involves about 18.7 million job-year observations for 2.8 million employees and 320,000 firms. Our analysis focuses on three...	David C. Maré, Dean Hyslop, David Mare, et al.
10	2005	Human Capital and Worker Productivity: Direct Evidence from Linked Employer-Employee Data ↗ This paper is authored by Abowd and Kramarz, the creators of the AKM framework which forms the core methodology of the research project. It provides direct empirical evidence on worker human capital and productivity using linked employer-employee data, directly addressing the project's focus on wage decomposition and worker effects. John M. ABOWD, Francis KRAMARZ, Human Capital and Worker Productivity: Direct Evidence from Linked Employer-Employee Data, Annales d'Économie et de Statistique, No. 79/80, Contributions in memory of Zvi Griliches (JULY/DECEMBER 2005), pp. 323-338	ABOWD, Kramarz
10	2021	Trends in Wage Inequality in the Netherlands ↗ This paper directly applies the AKM framework to decompose wage inequality into worker, firm, and sorting components using matched employer-employee data. It specifically addresses the project's core themes of variance decomposition and the role of assortative matching in driving wage inequality trends. Abstract In this paper I analyze changes in the wage distribution in the Netherlands. I use a matched employer-employee dataset that covers the population of employees. Wage inequality increases over the period of 2001–2016. Changes in between-firm wage components are responsible for nearly the entire increase. Increases in the variance of workers’ skills and increases in worker sorting and worker segregation explain the majority of the rise in the variance of wages. These changes are accompanied by a pattern where variation in educational degree and firm average wages become more correlated over time. Finally, it is suggested that labor market institutions in the Netherlands play an...	Colja Schneck
10	2022	Assortative labor matching, city size, and the education level of workers ↗ This paper directly applies the AKM framework to decompose wages and analyze assortative matching, which is a core theme of the project. It also explicitly addresses limited mobility bias and extends the standard model to account for geographic heterogeneity in worker-firm sorting. We investigate the heterogeneity of assortative labor matching with respect to geography, skills, and tasks. Our contribution is to separate plant quality by education level and occupation tasks using the AKM-model. We introduce a geology-related instrument to analyze the city effect and address limited mobility bias. Using rich administrative worker-plant dataset for Norway, we show that matching of the college educated have a strong city effect. The IV estimates indicate that a doubling of city size increases the correlation between worker and plant quality by 9 percentage points. A wage decomposition shows that matching accounts for 22% of the urban wage premium adjusted for sorting. In...	Stefan Leknes, Jørn Rattsø, Hildegunn E. Stokke
10	2024	Firm wage effects ↗ This paper is a comprehensive review of the AKM framework, directly addressing the project's core methodology for identifying and estimating firm wage effects. It extensively covers key themes including variance decomposition, limited mobility bias corrections, and the equilibrium interpretation of firm premiums via search-and-matching theory. This paper reviews the literature on firm wage differences and the fixed effects methods typically used to measure these differences. High wage firms tend to be more productive, larger, more sought after by workers, and to employ more credentialed and higher wage workers. The latest evidence suggests high wage firms also tend to offer better amenities and are prone to outsourcing and mass layoffs. Reviewing the requirements of the “AKM model” of Abowd et al. (1999), I provide a graph theoretic interpretation of the restrictions this model places on the wage changes of workers who switch employers and examine the extent to which they are satisfied in a benchmark dataset. Assumptions are...	Patrick Kline
10	2004	The Importance of Firms in Wage Determination ↗ This paper is a foundational work for the AKM framework, directly addressing the identification of firm fixed effects and their contribution to wage variance. It explicitly analyzes the limited mobility bias by comparing job-to-job versus job-unemployment transitions, which is central to the project's focus on identification strategies and leave-out corrections. Firms are central to many theories of the labor market. However, the actual degree to which firms shape the structure of wages is still not well understood. This paper investigates (i) the importance of firms in explaining wage differences across individuals and industries, and (ii) how the nature of interfirm mobility - job-to-job vs. job-unemployment-job - affects the relative importance of firms and workers in wage determination. Results indicate that (i) firms are much more important in explaining the variance of average wages across industries rather than across individuals, and (ii) using job-to-job transitions to identify the firm's contribution to the wage rate reduces the...	Max Gruetter, Rafael Lalive
10	1996	Product Quality and Worker Quality ↗ This paper is a foundational text by the creators of the AKM framework, directly addressing the core identification and estimation of worker and firm effects. It explicitly links product quality to worker quality, providing early theoretical and empirical grounding for the wage decomposition and sorting mechanisms central to the project. John M. Abowd, Francis Kramarz, Antoine Moreau, Product Quality and Worker Quality, Annales d'Économie et de Statistique, No. 41/42, La microéconométrie de la gestion des ressources humaines: Etudes internationales des pratiques d'entreprises / The Microeconometrics of Human-Resource Management: Multinational Studies of Firm Practices (Jan. - Jun., 1996), pp. 299-322	Abowd, Kramarz, Moreau
10	2018	Matching in Cities This paper directly addresses the project's core theme of assortative matching between workers and firms, providing empirical estimates of the correlation between worker and firm fixed effects using matched employer-employee data. It extends the AKM framework by analyzing how this sorting mechanism varies geographically and impacts wage inequality, which is a key component of the project's scope. In most countries, average wages tend to be higher in larger cities. In this paper, we focus on the role played by the matching of workers to firms in explaining geographical wage differences. Using rich administrative German data for 1985-2014, we show that wages in large cities are higher not only because large cities attract more high-quality workers, but also because high-quality workers are significantly more likely to be matched to high-quality plants. In particular, we find that assortative matching—measured by the correlation of worker fixed effects and plant fixed effects—is significantly stronger in large cities. The elasticity of assortative matching with respect to population...	Wolfgang Dauth, Sebastian Findeisen, Enrico Moretti, et al.
10	1997	Internal and External Labor Markets: An Analysis of Matched Longitudinal Employer-Employee Data ↗ This paper is a foundational study in the AKM framework, using matched longitudinal data to decompose wages into worker and firm effects, which is the core methodology of the project. It directly addresses the identification of these fixed effects and analyzes their contribution to wage inequality and firm-size differentials. We decompose the real annual full time compensation costs of 1.1 million French workers followed over 12 years into a part that reflects their external opportunity wage and a part that reflects their internal wage rate. Using these components of compensation we investigate the extent to which firm-size wage differentials and inter-industry wage differentials are due to variability in the external wage (person effects) versus variability in the internal wage (firm effects). For France, we find that most of the firm-size wage effect and most of the inter-industry wage effect is due to person effects differences in the external wage rates.	John M. Abowd, Françis Kramarz
10	2024	Firm Wage Effects ↗ This paper serves as a comprehensive review and methodological guide for the AKM framework, directly addressing the core identification issues, variance decomposition, and limited mobility bias central to the researcher's project. It also connects these static methods to equilibrium search models and discusses extensions like firm size premiums, aligning perfectly with the project's themes of estimation, interpretation, and theoretical underpinnings. This paper reviews the literature on firm wage differences and the fixed effects methods typically used to measure these differences.High wage firms tend to be more productive, larger, more sought after by workers, and to employ more credentialed and higher wage workers.The latest evidence suggests high wage firms also tend to offer better amenities and are prone to outsourcing and mass layoffs.Reviewing the requirements of the "AKM model" of Abowd, Kramarz, and Margolis (1999), I provide a graph theoretic interpretation of the restrictions this model places on the wage changes of workers who switch employers and examine the extent to which they are satisfied in a benchmark...	Patrick Kline
10	2018	Identifying Labor Market Sorting with Firm Dynamics This paper directly addresses the project's core themes of worker-firm sorting, wage inequality decomposition, and equilibrium search-and-matching models. It explicitly tackles the limited mobility bias inherent in static AKM frameworks by incorporating firm dynamics to identify complementarities and sorting effects. Studying wage inequality requires understanding how workers and firms match. I propose a novel strategy to identify the complementarities in production between unobserved worker and firm attributes, based on the idea that positive (negative) sorting implies that firms upgrade (downgrade) their workforce quality when they grow in size. I use German matched employer-employee data to estimate a search and matching model with worker-firm complementarities, job-to-job transitions, and firm dynamics. The relationship between changes in workforce quality and firm growth rates in the data informs the strength of complementarities in the model. Thus, this strategy bypasses the lack of identification...	Andreas Gulyas
10	2010	The Sources of Wage Variation: An Analysis Using Matched Employer-Employee Data This paper is a foundational study that explicitly applies the AKM framework to decompose wage variation into worker and firm fixed effects using large-scale matched employer-employee data. It directly addresses the core theme of variance decomposition in wage inequality, providing key empirical estimates for the relative importance of worker heterogeneity versus firm effects. This paper estimates a wage equation that includes worker- and firm fixed effects simultaneously, using a longitudinal matched employer-employee dataset covering virtually all Portuguese employees over a little more than two-decades. The exercise is performed under optimal conditions by using (a) data covering the whole population of employees and (b) adequate econometric methods and algorithms. The variation in log real hourly wages is then decomposed into six different components related to worker and firm characteristics (either observed or unobserved) and a residual component. It is found that worker heterogeneity is the most important source of wage variation (46.2 percent), due in...	Sònia Torres, Pedro Portugal, John T. Addison, et al.
10	2024	Heterogeneous Impacts of Trade Shocks on Workers ↗ The title explicitly addresses the project's fourth dimension on how trade shocks transmit to worker outcomes, which is a central theme alongside the core AKM framework. Although the abstract is empty, the title alone indicates direct relevance to the study of trade-induced wage inequality and its decomposition within matched employer-employee data. ABSTRACT	Patrick Arni, Peter Egger, Katharina Erhardt, et al.
10	2023	Introduction to the Special Issue: Models of linked employer–employee data: Twenty years after “High Wage Workers and High Wage Firms” ↗ [Title only] This paper serves as a comprehensive overview of the two decades of progress following the seminal AKM work, directly addressing the project's core framework and subsequent methodological advancements. It likely synthesizes key developments in identification, bias corrections, and the extension to time-varying effects, making it a foundational and highly relevant resource for the researcher. No abstract available.	David Card, Ian M. Schmutte, Lars Vilhuber
10	2014	Sorting and Wage Inequality This paper directly addresses the core AKM framework by challenging its additive assumptions through an assortative matching model with on-the-job search. It provides essential insights into the identification, estimation, and decomposition of wage inequality into worker, firm, and sorting components using matched employer-employee data. We measure the roles of the permanent component of worker and firm produc- tivities, complementarities between them, search frictions, and equilibrium sorting in driving German wage dispersion. We do this using a standard assortative matching model with on-the-job search. The model is identified and estimated using matched employer-employee data on wages and labor market transitions without imposing para- metric restrictions on the production technology. The modelâ€™s fit to the wage data is comparable to prominent wage regressions with additive worker and firm fixed effects that use many more degrees of freedom. Moreover, we propose a direct test that rejects the restrictions underlying...	Kory Kantenga, Tzuo-Hann Law
10	2026	LeaveOutKSS: Leave-Out Variance Component Estimation for Two-Way Fixed Effects Models ↗ This paper directly addresses the project's focus on limited mobility bias and leave-out corrections within the AKM framework by implementing variance component estimation for two-way fixed effects models. It provides essential methodological tools for accurately decomposing wage inequality into worker and firm components using matched employer-employee panel data. Implements leave-out estimation of variance components in two-way fixed effects models as an 'R' translation of the original 'MATLAB' package of Kline, Saggio, and Solvsten (2020) <<a href="https://doi.org/10.3982%2FECTA16410" target="_top">doi:10.3982/ECTA16410</a>>. The package includes graph-based connected-set pruning, leave-out bias correction, leverage computation by exact and randomized algorithms, fixed effect estimation helpers, and companion model-fit summaries for matched worker-firm panels in the spirit of Abowd, Kramarz, and Margolis (1999) <<a href="https://doi.org/10.1111%2F1468-0262.00020" target="_top">doi:10.1111/1468-0262.00020</a>>.	Vahid Moghani
10	2026	Replication Package for: "Firm-to-Firm Trade: Imports, Exports, and the Labor Market" ↗ This paper is directly relevant as it explicitly investigates how international trade shocks (imports and exports) transmit to the labor market, a core theme of the project's fourth dimension. Furthermore, the inclusion of co-author Francis Kramarz connects it to the foundational AKM framework central to the researcher's focus on worker and firm effects. "Firm-to-Firm Trade: Imports, Exports, and the Labor Market" by Jonathan Eaton, Samuel Kortum, and Francis Kramarz, conditionally accepted at Econometrica. This repository contains the replication package for "Firm-to-Firm Trade: Imports, Exports, and the Labor Market" by Jonathan Eaton, Samuel Kortum, and Francis Kramarz. Jingze Dong, Adaolisa Ezekobe, Etienne Guigue, Lorenzo Kaaks, Tanay Kondiparthy, Titouan Le Calvé, Gautier Lenfant, Lixing Liang, Jonathan Libgober, Alexis Maitre, Berengere Patault, Max Perez Leon, and Laurence Wicht provided excellent research assistance at different stages that allowed this package to be created. The code in this replication package constructs the...	Samuel Kortum, Jonathan Eaton, Françis Kramarz
10	2026	Replication Package for: "Firm-to-Firm Trade: Imports, Exports, and the Labor Market" ↗ This paper directly addresses the project's focus on international trade by analyzing how firm-to-firm trade, including imports and exports, transmits shocks to the labor market. The authors include Francis Kramarz, a co-developer of the AKM framework, ensuring the work is central to the study of worker and firm effects in wages. "Firm-to-Firm Trade: Imports, Exports, and the Labor Market" by Jonathan Eaton, Samuel Kortum, and Francis Kramarz, conditionally accepted at Econometrica. This repository contains the replication package for "Firm-to-Firm Trade: Imports, Exports, and the Labor Market" by Jonathan Eaton, Samuel Kortum, and Francis Kramarz. Jingze Dong, Adaolisa Ezekobe, Etienne Guigue, Lorenzo Kaaks, Tanay Kondiparthy, Titouan Le Calvé, Gautier Lenfant, Lixing Liang, Jonathan Libgober, Alexis Maitre, Berengere Patault, Max Perez Leon, and Laurence Wicht provided excellent research assistance at different stages that allowed this package to be created. The code in this replication package constructs the...	Samuel Kortum, Jonathan Eaton, Françis Kramarz
10	2026	A Users' Guide to Uncovering Worker and Firm Effects: The ABC of AKM ↗ This paper serves as a comprehensive guide to the foundational AKM framework, which is the central methodological pillar of the research project. It directly addresses the estimation, identification, and interpretation of worker and firm effects on wages using matched employer-employee data. The AKM model introduced by Abowd, Kramarz and Margolis (1999) has become a workhorse to study worker and firm heterogeneity, and to understand the sources of wage dispersion in the labor market using linked employer-employee data. In this article, we introduce the model and estimator, discuss some best practices for estimation, and review some empirical findings on the role of worker and firm heterogeneity in wage dispersion. While the AKM methodology has proven useful to analyze a host of questions in a variety of settings within labor economics and beyond, we also point to the need for methodological developments.	Stéphane Bonhomme, Elena Manresa, Thibaut Lamadon
10	2026	A Users' Guide to Uncovering Worker and Firm Effects: The ABC of AKM This paper provides a foundational guide to the AKM framework, which is the central methodological pillar of the researcher's project for decomposing wages into worker and firm effects. It directly addresses the core estimation techniques, best practices, and empirical findings relevant to understanding wage dispersion and heterogeneity using matched employer-employee data. The AKM model introduced by Abowd, Kramarz and Margolis (1999) has become a workhorse to study worker and firm heterogeneity, and to understand the sources of wage dispersion in the labor market using linked employer-employee data. In this article, we introduce the model and estimator, discuss some best practices for estimation, and review some empirical findings on the role of worker and firm heterogeneity in wage dispersion. While the AKM methodology has proven useful to analyze a host of questions in a variety of settings within labor economics and beyond, we also point to the need for methodological developments.	Stéphane Bonhomme, Elena Manresa, Thibaut Lamadon
10	2026	A Users’ Guide to Uncovering Worker and Firm Effects: The ABC of AKM ↗ This paper serves as a foundational guide to the AKM framework, directly addressing the project's core methodology for decomposing wages into worker and firm fixed effects. It provides essential context on estimation best practices and empirical findings regarding wage dispersion, which are central to the researcher's study. The AKM model introduced by Abowd, Kramarz, and Margolis (1999) has become a workhorse to study worker and firm heterogeneity, and to understand the sources of wage dispersion in the labor market using linked employer-employee data. In this article, we introduce the model and estimator, discuss some best practices for estimation, and review some empirical findings on the role of worker and firm heterogeneity in wage dispersion. While the AKM methodology has proven useful to analyze a host of questions in a variety of settings within labor economics and beyond, we also point to the need for methodological developments.	Stéphane Bonhomme, Thibaut Lamadon, Elena Manresa
9	1988	Efficiency Wages and the Inter-Industry Wage Structure ↗ This paper is a foundational study in the AKM framework, providing early empirical evidence for substantial industry-level wage premiums that persist after controlling for worker characteristics. Its focus on inter-industry wage dispersion and the link between wages and turnover directly informs the decomposition of wage inequality and the identification of firm effects in matched employer-employee data. This paper uses cross-sectional and longitudinal data to examine differences in pay for equally-skilled workers in different ind ustries. The major finding is that there is substantial dispersion in wages across industries, even after allowing for measured and unmeas ured labor quality, working conditions, fringe benefits, transitory d emand shocks, the threat of union-ization, union bargaining power, fi rm size, and other factors. In addition, evidence is presented demons trating that turnover has a negative relationship with industry wage differentials. These findings suggest that workers in high-wage indus tries receive noncompetitive rents. Copyright 1988 by The Econometric Society.	Alan B. Krueger, Lawrence H. Summers
9	2016	The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade ↗ This paper directly addresses the project's fourth dimension on the role of international trade, specifically focusing on how import competition shocks transmit to labor markets and wage outcomes. It provides critical empirical context for understanding the distributional consequences of trade on workers and local labor markets, which informs the broader analysis of wage decomposition and firm wage premiums. China's emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock...	David Autor, David Dorn, Gordon Hanson
9	1995	Exporters, Jobs, and Wages in U.S. Manufacturing: 1976-1987 ↗ This foundational paper directly addresses the project's fourth dimension on international trade by analyzing how export participation affects wages and employment. It provides key empirical evidence on the transmission of export expansion shocks to firm wage premiums, a central mechanism for understanding worker-firm wage decomposition in open economies. Andrew B. Bernard, J. Bradford Jensen, Robert Z. Lawrence, Exporters, Jobs, and Wages in U.S. Manufacturing: 1976-1987, Brookings Papers on Economic Activity. Microeconomics, Vol. 1995 (1995), pp. 67-119	Andrew B. Bernard, J. Bradford Jensen, Robert Z. Lawrence
9	2017	Firms and Labor Market Inequality: Evidence and Some Theory ↗ This paper directly addresses the core AKM framework by synthesizing rent-sharing evidence with the variance decomposition of wages into worker and firm effects. It provides theoretical grounding for interpreting firm fixed effects as wage premiums, which is central to the project's focus on identification and equilibrium interpretations of these effects. We synthesize two related literatures on firm-level drivers of wage inequality. Studies of rent sharing that use matched worker-firm data find elasticities of wages with respect to value added per worker in the range of 0.05–0.15. Studies of wage determination with worker and firm fixed effects typically find that firm-specific premiums explain 20% of overall wage variation. To interpret these findings, we develop a model of wage setting in which workers have idiosyncratic tastes for different workplaces. Simple versions of this model can rationalize standard fixed effects specifications and also match the typical rent-sharing elasticities in the literature.	David Card, Ana Rute Cardoso, Joerg Heining, et al.
9	2014	Trade Adjustment: Worker-Level Evidence* ↗ This paper directly addresses the project's fourth dimension by examining how international trade shocks transmit to labor markets using longitudinal matched employer-employee data. It provides empirical evidence on how import competition affects worker mobility, earnings, and firm attachment, which are central to understanding the dynamics of wage decomposition and firm-level pay policies under trade exposure. Abstract We analyze the effect of exposure to international trade on earnings and employment of U.S. workers from 1992 through 2007 by exploiting industry shocks to import competition stemming from China’s spectacular rise as a manufacturing exporter paired with longitudinal data on individual earnings by employer spanning close to two decades. Individuals who in 1991 worked in manufacturing industries that experienced high subsequent import growth garner lower cumulative earnings, face elevated risk of obtaining public disability benefits, and spend less time working for their initial employers, less time in their initial two-digit manufacturing industries, and more time working elsewhere...	David Autor, David Dorn, Gordon Hanson, et al.
9	2015	Bargaining, Sorting, and the Gender Wage Gap: Quantifying the Impact of Firms on the Relative Pay of Women * ↗ This paper directly applies the AKM framework to decompose the gender wage gap into worker sorting and firm bargaining components, addressing the project's focus on firm fixed effects and discrimination. It empirically quantifies how firm-level pay policies and assortative matching contribute to wage inequality, which are core themes of the research project. Abstract There is growing evidence that firm-specific pay premiums are an important source of wage inequality. These premiums will contribute to the gender wage gap if women are less likely to work at high-paying firms or if women negotiate (or are offered) worse wage bargains with their employers than men. Using longitudinal data on the hourly wages of Portuguese workers matched with income statement information for firms, we show that the wages of both men and women contain firm-specific premiums that are strongly correlated with simple measures of the potential bargaining surplus at each firm. We then show how the impact of these firm-specific pay differentials on the gender wage gap can...	David Card, Ana Rute Cardoso, Patrick Kline
9	1989	Industry Rents: Evidence and Implications ↗ This seminal paper provides the foundational empirical evidence for industry wage premiums, which is a direct precursor to the firm fixed effects literature central to the AKM framework. It establishes the existence of significant unobserved firm or group-level heterogeneity in wages, directly informing the variance decomposition and identification strategies discussed in the project. Lawrence F. Katz, Lawrence H. Summers, Robert E. Hall, Charles L. Schultze, Robert H. Topel, Industry Rents: Evidence and Implications, Brookings Papers on Economic Activity. Microeconomics, Vol. 1989 (1989), pp. 209-290	Lawrence F. Katz, Lawrence H. Summers, Robert E. Hall, et al.
9	1997	Employment and Wage Effects of Trade Liberalization: The Case of Mexican Manufacturing ↗ This paper directly addresses the project's dimension on international trade by analyzing how trade liberalization shocks transmit to firm wage premiums and worker wages. It provides empirical evidence on the distribution of trade rents between firms and workers, which is central to understanding the wage decomposition and rent-sharing mechanisms studied in the AKM framework. This article analyzes the effect of trade liberalization on employment and wages in the Mexican manufacturing sector. The study documents that many of the rents generated by trade protection were absorbed by workers in the form of a wage premium. Trade liberalization affected firm‐level employment and wages by shifting down industry product and labor demand. This in itself may have accounted for a 3%–4% decline in real wages on average. But trade reform also reduced the rents available to be captured by firms and workers. This had an additional negative effect on firm‐level employment and wages.	Ana Revenga
9	2015	Grouped Patterns of Heterogeneity in Panel Data ↗ This paper introduces grouped fixed-effects estimators that allow for time-varying heterogeneity, directly aligning with the project's focus on methods for capturing dynamic firm wage premiums beyond static effects. The proposed methodology provides a key empirical tool for analyzing how firm-level pay policies and worker-firm matching evolve over time in response to shocks. This paper introduces time-varying grouped patterns of heterogeneity in linear panel data models. A distinctive feature of our approach is that group membership is left unrestricted. We estimate the parameters of the model using a “grouped fixed-effects” estimator that minimizes a least squares criterion with respect to all possible groupings of the cross-sectional units. Recent advances in the clustering literature allow for fast and efficient computation. We provide conditions under which our estimator is consistent as both dimensions of the panel tend to infinity, and we develop inference methods. Finally, we allow for grouped patterns of unobserved heterogeneity in the study of the link...	Stéphane Bonhomme, Elena Manresa
9	2019	Who Profits from Patents? Rent-Sharing at Innovative Firms* ↗ This paper directly addresses the project's core theme of rent-sharing by identifying the causal transmission of firm-level productivity shocks (patents) to worker wages. It empirically estimates the share of firm rents captured by workers, a central component of the AKM framework's interpretation of firm fixed effects, and provides key evidence on how these premiums vary with worker tenure and sorting. This article analyzes how patent-induced shocks to labor productivity propagate into worker compensation using a new linkage of U.S. patent applications to U.S. business and worker tax records. We infer the causal effects of patent allowances by comparing firms whose patent applications were initially allowed to those whose patent applications were initially rejected. To identify patents that are ex ante valuable, we extrapolate the excess stock return estimates of Kogan et al. (2017) to the full set of accepted and rejected patent applications based on predetermined firm and patent application characteristics. An initial allowance of an ex ante valuable patent generates substantial...	Patrick Kline, Neviana Petkova, Heidi Williams, et al.
9	2016	It’s Where You Work: Increases in the Dispersion of Earnings across Establishments and Individuals in the United States ↗ This paper is a foundational study in the AKM framework, explicitly decomposing wage inequality into worker, firm, and sorting components. It directly addresses the project's core theme of understanding how firm fixed effects contribute to overall wage dispersion and inequality trends. This paper analyzes the role of establishments in the upward trend in dispersion of earnings that has become a central topic in economic analysis and policy debate. It decomposes changes in the variance of log earnings among individuals into the part due to changes in earnings among establishments and the part due to changes in earnings within establishments. The main finding is that much of the 1970s–2010s increase in earnings inequality results from increased dispersion of the earnings among the establishments where individuals work. Our results direct attention to the role of establishment-level pay setting and economic adjustments in earnings inequality.	Erling Barth, Alex Bryson, James C. Davis, et al.
9	2018	Ranking Firms Using Revealed Preference* ↗ This paper is highly relevant as it directly investigates the structure of firm wage premiums and worker-firm assortative matching using matched employer-employee data, a central theme of the project. It provides critical insights into the economic interpretation of firm fixed effects by quantifying compensating differentials and their role in explaining wage variance, which aligns with the equilibrium and variance decomposition aspects of the research. This article estimates workers' preferences for firms by studying the structure of employer-to-employer transitions in U.S. administrative data. The article uses a tool from numerical linear algebra to measure the central tendency of worker flows, which is closely related to the ranking of firms revealed by workers' choices. There is evidence for compensating differentials when workers systematically move to lower-paying firms in a way that cannot be accounted for by layoffs or differences in recruiting intensity. The estimates suggest that compensating differentials account for over half of the firm component of the variance of earnings.	Isaac Sorkin
9	2020	Monopsony in Labor Markets: A Review ↗ This paper directly addresses the project's focus on the equilibrium interpretation of firm fixed effects by reviewing monopsony power as a core mechanism for generating firm wage premiums. It explicitly connects these theoretical frameworks to the estimation of earnings determinants in matched employer-employee datasets, which is central to the AKM methodology. Researchers’ interest in monopsony has increased in recent years. This article reviews the accumulating evidence that employers have considerable monopsony power. It summarizes the application of this idea to explaining the impact of minimum wages and immigration, in anti-trust, and in understanding how to model the determinants of earnings in matched employer–employee data sets and the implications for inequality and the labor share.	Alan Manning
9	1996	Wage Inequality and Segregation by Skill ↗ The paper directly addresses the project's theme of assortative matching between workers and firms by providing empirical evidence of skill-based segregation across firms. This finding is central to understanding how sorting contributes to wage inequality and the variance decomposition of wages into worker, firm, and matching components. Evidence from the United States, Britain, and France suggests that recent growth in wage inequality has been accompanied by greater segregation of high-and low-skill workers into separate firms.	Michael Kremer, Eric Maskin
9	2005	On‐the‐Job Search and the Wage Distribution ↗ This paper directly addresses the equilibrium interpretation of firm fixed effects through search-and-matching theory, a core dimension of the research project. It empirically validates how on-the-job search and wage bargaining mechanisms generate and sustain firm wage premiums, which is central to understanding the AKM framework's equilibrium foundations. The article structually estimates an on‐the‐job search model of job separations. Given each employer pays observably equivalent workers the same but wages are dispersed across employers, an employer's separation flow is the sum of an exogenous outflow unrelated to the wage and a job‐to‐job flow that decreases with the employer's wage. Using data from the Danish Integrated Database for Labour Market Research, the empirical results imply, as predicted by theory, that search effort declines with the wage. Furthermore, the estimates explain the employment effect, defined as the horizontal difference between the distribution of wages earned and the wage offer distribution.	Bent Jesper Christensen, Rasmus Lentz, Dale T. Mortensen, et al.
9	2012	Match Quality, Worker Productivity, and Worker Mobility: Direct Evidence from Teachers ↗ This paper directly addresses the estimation of worker-firm match quality and the decomposition of worker versus firm effects, which is central to the project's focus on the AKM framework and variance decomposition. It provides empirical evidence on how mobility affects productivity and the relative importance of match quality compared to invariant worker or firm characteristics. Abstract I investigate the importance of the match between teachers and schools for student achievement. I show that teacher effectiveness increases after a move to a different school and estimate teacher-school match effects. Match quality explains away a quarter of and has two-thirds the explanatory power of teacher quality. Match quality is negatively correlated with school switching, is unrelated to exit, and increases with experience. This paper provides the first estimates of worker-firm match quality using output data, as opposed to inferring productivity from wages or employment durations. The results suggest that workers seek high-quality matches for reasons other than higher pay.	C. Kirabo Jackson
9	2003	Wage Dispersion ↗ This work is highly relevant as it establishes the theoretical underpinnings of wage dispersion, emphasizing firm-level wage policies and bilateral bargaining that are central to the AKM framework's equilibrium interpretations. By analyzing matched employer-employee data to distinguish between search frictions and firm effects, it directly addresses the project's focus on identifying worker and firm contributions to wage inequality. Why are workers with identical skills found in both "good" jobs and "bad" jobs? Why are workers who do similar jobs paid differently, contrary to standard competitive theory? Observable differences in workers doing the same job account for only 30 percent of wage variation. In Wage Dispersion, Dale Mortensen examines the reasons for pay differentials in the other 70 percent. He finds that these differentials, or wage dispersion, are largely the result of job search friction (which arises when workers do not know the wages offered by all employers) and cross-firm differences in wage policy and productivity. Mortensen examines previous theoretical explanations for wage dispersion, testing...	Dale T. Mortensen
9	1967	Pay Differentials by Size of Establishment ↗ [Title only] This title directly addresses the core AKM theme of firm (establishment) effects on wages, which is fundamental to the project's focus on decomposing wage inequality. It likely provides empirical evidence on how firm size acts as a determinant of the firm wage premium, a key component in understanding rent-sharing and sorting mechanisms. No abstract available.	Richard A. Lester
9	2009	Rent‐sharing and Collective Bargaining Coverage: Evidence from Linked Employer–Employee Data ↗ This paper directly addresses the project's theme of rent-sharing by analyzing how firm-specific profitability translates into higher wages using linked employer-employee data. It provides crucial institutional context on how collective bargaining mechanisms modulate this relationship, which is central to understanding the determinants of firm wage premiums in the AKM framework. Abstract Using a linked employer–employee dataset, this paper analyses the relationship between firm profitability and wages. Particular emphasis is given to the question of whether the sensitivity of wages to firm‐specific rents varies with collective bargaining coverage. To address this issue, we distinguish sector‐ and firm‐specific wage agreements and wage determination without any bargaining coverage. Our findings indicate that individual wages are positively related to firm‐specific quasi‐rents in the non‐union sector and under firm‐specific contracts. Industry‐wide wage contracts, however, are associated with a significantly lower responsiveness of wages to firm‐level profitability.	Nicole Guertzgen
9	2015	Directed search over the life cycle ↗ This paper directly addresses the project's third dimension by providing an equilibrium search-and-matching framework that explains worker-firm assignment and wage dynamics over the life cycle. It complements the AKM decomposition by endogenizing mobility and match quality, offering a theoretical basis for the observed worker and firm effects in matched employer-employee data. We develop a life-cycle model of the labor market in which different worker-firm matches have different quality and the assignment of the right workers to the right firms is time consuming because of search and learning frictions. The rate at which workers move between unemployment, employment and across different firms is endogenous because search is directed and, hence, workers can choose whether to seek low-wage jobs that are easy to find or high-wage jobs that are hard to find. We calibrate our theory using data on labor market transitions aggregated across workers of different ages. We validate our theory by showing that it predicts quite well the pattern of labor market transitions...	Guido Menzio, Irina A. Telyukova, Ludo Visschers
9	2022	Who Set Your Wage? ↗ This paper directly addresses the equilibrium interpretation of firm fixed effects by discussing monopsonistic wage setting and firm-specific labor supply elasticity, which are central to understanding how firm wage premiums are generated. It provides key theoretical and empirical context for the project's focus on search-and-matching theory and wage bargaining mechanisms. I discuss the recent literature that has led to new interest in the idea of monopsonistic wage setting. Building on advances in search theory and in models of differentiated products, researchers have used a number of different strategies to identify the elasticity of firm-specific labor supply. A growing consensus is that firms have some wage-setting power, though many questions remain about the sources of that power. (JEL B21, D21, D24, D43, J22, J31, J42)	David Card
9	2017	Firm Wage Differentials and Labor Market Sorting: Reconciling Theory and Evidence ↗ This paper directly addresses the core AKM theme of assortative matching and the identification of worker-firm sorting by reconciling theoretical models with empirical evidence on coworker segregation. It provides a methodological correction for bias in measuring sorting, which is essential for accurately decomposing wage variance into worker and firm effects. Why do firms pay different wages? Empirical evidence suggests the presence of substantial differences in firm pay controlling for worker skill. Moreover, these differences are uncorrelated with skills, indicating the absence of sorting. I show that the face value interpretation is inconsistent with evidence on coworker segregation. I interpret the evidence by applying a sorting model and show that the correlation is biased. I identify nonmonotonicities in wages as the reason for this bias and show that a measure of worker-coworker sorting is more accurate. By calibrating the model to US data, I confirm that the model matches many job market characteristics.	Rafael Lopes de Melo
9	2014	It's Where You Work: Increases in Earnings Dispersion across Establishments and Individuals in the U.S. ↗ This paper directly addresses the project's core theme of decomposing wage inequality into worker and firm (establishment) components using matched employer-employee data. It provides foundational empirical evidence on the role of firm-level pay setting and establishment dispersion in driving overall earnings inequality, which is central to the AKM framework and variance decomposition methods studied. This paper links data on establishments and individuals to analyze the role of establishments in the increase in inequality that has become a central topic in economic analysis and policy debate. It decomposes changes in the variance of ln earnings among individuals into the part due to changes in earnings among establishments and the part due to changes in earnings within-establishments and finds that much of the 1970s-2010s increase in earnings inequality results from increased dispersion of the earnings among the establishments where individuals work. It also shows that the divergence of establishment earnings occurred within and across industries and was associated with increased...	Erling Barth, Alex Bryson, James C. Davis, et al.
9	2007	The Evolution of Inequality in Productivity and Wages: Panel Data Evidence ↗ This paper directly addresses the project's core theme of decomposing wage inequality into worker and firm components, providing key empirical evidence on the role of firm-level productivity dispersion. It complements the AKM framework by linking firm wage premiums to productivity shocks and technological changes, which is central to understanding the equilibrium and dynamic aspects of the firm effects. There has been a remarkable increase in wage inequality in the US, UK and many other countries over the past three decades. A significant part of this appears to be within observable groups (such as age-gender-skill cells). A generally untested implication of many theories rationalizing the growth of within-group inequality is that firm-level productivity dispersion should also have increased. The relevant data for the US is problematic, so we utilize a UK panel dataset covering the manufacturing and non-manufacturing sectors since the early 1980s. We find evidence that productivity inequality has increased. Existing studies have underestimated this increased dispersion because they use...	Giulia Faggio, Kjell G. Salvanes, John Van Reenen
9	2022	Exports and Wage Premiums: Evidence from Mexican Employer-Employee Data ↗ This paper directly addresses the project's fourth dimension by investigating how export expansions transmit to firm-level wage premiums using matched employer-employee data. It aligns with the core AKM framework by decomposing wages into skill composition and firm-specific premium components, providing empirical evidence on the international trade mechanisms central to the research. Abstract This paper draws on employer-employee and longitudinal plant data from Mexico to investigate the impact of exports on wage premiums, defined as wages above what workers would receive elsewhere in the labor market. We decompose plant-level average wages into a component reflecting skill composition and a component reflecting wage premiums. Using the late-1994 peso devaluation interacted with initial export propensity as a source of exogenous changes in exports, we find that exports have a significant positive effect on wage premiums and that the effect on wage premiums accounts for essentially all of the medium-term effect of exporting on plant-average wages.	Judith Frías, David S. Kaplan, Eric Verhoogen, et al.
9	1999	The analysis of labor markets using matched employer-employee data This paper serves as a foundational overview of the matched employer-employee data infrastructure and methodological framework central to the AKM decomposition and subsequent extensions discussed in the project. It directly reviews the statistical models and empirical results regarding wage decomposition, worker-firm sorting, and mobility that define the core themes of the research agenda. Matched employer-employee data contain information collected from households and individuals as well as information collected from businesses or establishments. Both administrative and sample survey sources are considered. Both longitudinal and cross-sectional applications are discussed. We review studies from 17 different countries using 38 different systems for creating the linked data. We provide a detailed discussion of the methods used to create the linked datasets, the statistical and economic models used to analyze these data, and a comprehensive set of results from the different countries. We consider compensation structure, wage and employment mobility, and the relation between...	John M. Abowd, Françis Kramarz
9	2018	Assortative Matching With Large Firms ↗ This paper directly addresses the project's focus on assortative matching and the determination of worker-firm sorting patterns through a theoretical model. It provides a foundational framework for understanding how firm size and management constraints interact with worker quality, which is central to interpreting firm fixed effects and wage decomposition. Two cornerstones of empirical and policy analysis of firms, in macro, labor and industrial organization, are the determinants of the firm size distribution and the determinants of sorting between workers and firms. We propose a unifying theory of production where management resolves a tradeoff between hiring more versus better workers. The span of control or size is therefore intimately intertwined with the sorting pattern. We provide a condition for sorting that captures this tradeoff between the quantity and quality of workers and that generalizes Becker's sorting condition. A system of differential equations determines the equilibrium allocation, the firm size, and wages, and allows us...	Jan Eeckhout, Philipp Kircher
9	2021	Assortative Matching or Exclusionary Hiring? The Impact of Employment and Pay Policies on Racial Wage Differences in Brazil ↗ This paper directly addresses the project's themes of firm fixed effects, worker-firm sorting, and labor market discrimination within an AKM-like framework. It provides empirical evidence on how exclusionary hiring and differential pay policies contribute to racial wage gaps, aligning with the project's focus on assortative matching and rent-sharing mechanisms. We measure the effects of firm policies on racial pay differences in Brazil. Non-Whites are less likely to be hired by high-wage firms, explaining about 20 percent of the racial wage gap for both genders. Firm-specific pay premiums for non-Whites are also compressed relative to Whites, contributing another 5 percent for that gap. A counterfactual analysis reveals that about two-thirds of the underrepresentation of non-Whites at higher-wage firms is explained by race-neutral skill-based sorting. Non-skill-based sorting and differential wage setting are largest for college-educated workers, suggesting that the allocative costs of discriminatory hiring and pay policies may be relatively large...	François Gérard, Lorenzo Lagos, Edson Severnini, et al.
9	2011	HUMAN CAPITAL ACCUMULATION AND LABOR MARKET EQUILIBRIUM* ↗ This paper directly addresses the project's core AKM framework by modeling the endogenous determination of firm fixed effects within an equilibrium labor market that includes on-the-job search. It specifically integrates the theme of human capital accumulation through learning-by-doing and explains how worker mobility and sorting dynamics impact wage inequality. We analyze an equilibrium labor market with on-the-job search and experience effects (as workers learn by doing). The analysis yields a Mincer wage equation with worker fixed effects and endogenously determined firm fixed effects. Equilibrium sorting—where over time more experienced workers also tend to move to better paid employment—has a significant impact on wage inequality.	Kenneth Burdett, Carlos Carrillo‐Tudela, Melvyn Coles
9	2022	Matching in Cities ↗ This paper directly addresses the project's focus on assortative matching by empirically demonstrating how worker-firm sorting magnifies wage inequality in large cities. It provides crucial evidence on the interaction between worker and firm quality, a core theme in AKM-based wage decomposition studies. Abstract Using administrative German data, we show that large cities allow for a more efficient matching between workers and firms and this has important consequences for geographical inequality. Specifically, the match between high-quality workers and high-quality plants is significantly tighter in large cities relative to small cities. Wages in large cities are higher not only because of the higher worker quality but also because of a stronger assortative matching. Strong assortative matching in large cities magnifies wage differences caused by worker sorting, and is a key factor in explaining the growth of geographical wage disparities over the last three decades.	Wolfgang Dauth, Sebastian Findeisen, Enrico Moretti, et al.
9	2022	It ain’t where you’re from, it’s where you’re at: Hiring origins, firm heterogeneity, and wages ↗ This paper directly addresses the core AKM framework by extending the standard two-way fixed effects model to include origin firm effects, thereby refining the identification of worker and firm contributions to wages. It empirically decomposes wage variance and analyzes sorting and wage inequality, which are central themes of the researcher's project. Sequential auction models of labor market competition predict that the wages required to successfully poach a worker from a rival employer will depend on the productivities of both the poached and poaching firms. We develop a theoretically grounded extension of the two-way fixed effects model of Abowd et al. (1999) in which log hiring wages are comprised of a worker fixed effect, a fixed effect for the ‘‘destination’’ firm hiring the worker, and a fixed effect for the ‘‘origin’’ firm, or labor market state, from which the worker was hired. This specification is shown to nest the reduced form for hiring wages delivered by semi-parametric formulations of the canonical sequential auction model...	Sabrina Di Addario, Patrick Kline, Raffaele Saggio, et al.
9	2010	Rent-sharing, Holdup, and Wages: Evidence from Matched Panel Data ↗ This paper directly addresses the project's core theme of rent-sharing by estimating worker and firm fixed effects using matched employer-employee panel data, a central component of the AKM framework. It provides empirical evidence on how firm-specific wage premiums relate to productivity and bargaining, aligning closely with the project's focus on the equilibrium interpretation and determinants of firm wage premiums. When wage contracts are relatively short-lived, rent sharing may reduce the incentives for investment since some of the returns to sunk capital are captured by workers. In this paper we use a matched worker-firm data set from the Veneto region of Italy that combines Social Security earnings records for employees with detailed financial information for employers to measure the degree of rent sharing and test for holdup. We estimate wage models with job match effects, allowing us to control for any permanent differences in productivity across workers, firms, and job matches. We also compare OLS and instrumental variables specifications that use sales of firms in other regions of the country...	David Card, Francesco Devicienti, Agata Maida
9	2010	An empirical assessment of assortative matching in the labor market ↗ This paper directly addresses the project's theme of assortative matching between workers and firms by quantifying firm-specific productivity and its correlation with worker skill distributions. It provides essential empirical evidence on positive assortative matching using matched employer-employee data, which is central to understanding the structural decomposition of wages. In labor markets with worker and firm heterogeneity, the matching between firms and workers may be assortative, meaning that the most productive workers and firms team up. We investigate this with longitudinal population-wide matched employer-employee data from Portugal. Using panel data methods, we quantify a firm-specific productivity term for each firm, and we relate this to the skill distribution of workers in the firm. We find that there is positive assortative matching, in particular among long-lived firms. Using skill-specific estimates of an index of search frictions, we find that the results can only to a small extent be explained by heterogeneity of search frictions across worker...	M. Lindeboom, R. Mendes, G.J. van den Berg
9	2011	Rent Sharing Before and After the Wage Bill ↗ This paper directly addresses rent sharing, a core application of the AKM framework, by using matched employer-employee data to estimate the wage premium associated with firm profits. It rigorously tackles key methodological challenges such as limited mobility bias and endogeneity in firm performance measures, providing robust evidence on how firm-level rents translate into worker wages. Abstract\n Many biases plague the analysis of whether employers share rents with their employees, unlike what is predicted by the competitive labour market model. Using a Portuguese matched employer-employee panel, this paper is one of the first to address these biases 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...
9	2001	The Relative Importance of Employer and Employee Effects on Compensation: A Comparison of France and the United States ↗ [Title only] This paper directly addresses the core AKM framework by decomposing wages into employer and employee effects, making it highly relevant to the project's primary focus. Its comparative design across two major labor markets provides valuable context for understanding the variance decomposition and potential differences in firm-level pay policies and sorting. No abstract available.	John M. Abowd, Françis Kramarz, David Margolis, et al.
9	2010	Job Search, Bargaining, and Wage Dynamics ↗ This paper directly addresses the project's third dimension by modeling the equilibrium interpretation of wage dynamics through on-the-job search and bargaining. It provides a theoretical foundation for how outside options and competition drive wage growth, which is central to understanding the mechanisms behind firm wage premiums in search-and-matching frameworks. This article constructs and estimates a model of wage bargaining with on‐the‐job search to explore three different components of wages: general human capital, match‐specific capital, and outside options. As the workers find better job opportunities, the current employer has to compete with outside firms to retain them. This between‐firm competition results in wage growth even when productivity remains the same. The model is estimated by a simulated minimum distance estimator and data from the 1979 National Longitudinal Study of Youth. The results indicate that the improved value of the outside option raises wages by 14%–16% in the first 5 years.	Shintaro Yamaguchi
9	2012	Exporters and the rise in wage inequality: Evidence from German linked employer–employee data ↗ This paper directly addresses the project's fourth dimension by examining how international trade shocks transmit to wage premiums and influence wage inequality using matched employer-employee data. It provides empirical evidence on the decomposition of wage dispersion, linking exporter premiums to broader patterns of wage inequality, which is central to the AKM framework's application in trade contexts. Using a linked employer-employee data set of the German manufacturing sector, this paper analyses the role of exporting establishments in explaining rising wage dispersion both within and between skill groups in the time period 1996 to 2007. A decomposition analysis shows that the strong increase in the exporter wage gap, conditional on workers' skill levels, contributed to the growth in wage inequality, whereas the increase in the exporters' share in total employment worked towards a reduction in wage dispersion. The resulting net contribution is positive (inequality-increasing) but moderate. These findings are consistent with recent heterogeneous-firm trade models that feature an exporter...	Daniel Baumgarten
9	2005	Is There Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data ↗ [Title only] This paper directly addresses the project's focus on international trade shocks and their transmission to firm wage premiums using matched employer-employee data. It investigates foreign ownership effects, which are closely related to the themes of firm-level pay policies and the decomposition of wage inequality in an open economy context. No abstract available.	Fredrik Heyman, Fredrik Sjöholm, Patrik Gustavsson Tingvall
9	2018	The Disappearing Large-Firm Wage Premium ↗ This paper directly addresses the project's core AKM framework by using worker and firm fixed effects to decompose wage inequality and identify the large-firm wage premium. It specifically investigates the time-variation in firm-level pay policies, which is a key theme of the research project. Large firms have paid significantly higher wages for over a century. Based on administrative data we document that the large-firm wage premium (LFWP) has declined steadily over the last 30 years. Decomposing pay into worker and firm fixed effects, we then document that the LFWP can be largely explained by a rise in firm effects with firm size. The dramatic decline is due a reduction in these firm effects at large firms. These changes have been concentrated at very large employers. In contrast, worker composition has changed little. We also find the majority of the change occurs within industries.	Nicholas Bloom, Fatih Guvenen, Benjamin S. Smith, et al.
9	2017	Earnings Inequality and Mobility Trends in the United States: Nationally Representative Estimates from Longitudinally Linked Employer-Employee Data ↗ This paper directly addresses the project's core theme by using longitudinal employer-employee data to decompose earnings inequality into worker and firm components. It provides empirical evidence on how firm wage premiums influence mobility and wage distribution, which aligns with the project's focus on variance decomposition and the role of firms in wage dynamics. Decomposing the year-to-year changes in the earnings distribution from 2004 to 2013, we analyze the role of the employer in explaining earnings inequality in the United States. Movements between the bottom, middle, and top involve 20.5 million workers each year. Another 19.9 million move between employment and nonemployment. There are large gains from working at a top-paying firm for all skill types. Working for a high-paying firm produces benefits today, through higher earnings, that persist through an increase in the probability of upward mobility. High-paying firms facilitate moving workers to the top of the distribution and keeping them there.	John M. Abowd, Kevin L. McKinney, Nellie Zhao
9	2014	Globalization and imperfect labor market sorting ↗ This paper directly addresses the project's themes of worker-firm sorting, automation, and offshoring shocks by integrating search frictions into the analysis of labor market outcomes. It provides a theoretical and empirical framework for understanding how these shocks alter assortative matching, which is central to the project's inquiry into the equilibrium interpretation of firm fixed effects and the transmission of trade/technology shocks to wage decomposition. We show, theoretically and empirically, that the effects of technological change associated with automation and offshoring on the labor market can substantially deviate from standard neoclassical conclusions when search frictions hinder efficient assortative matching between firms with heterogeneous tasks and workers with heterogeneous skills. Our key hypothesis is that better matches enjoy a comparative advantage in exploiting automation and a comparative disadvantage in exploiting offshoring. It implies that automation (offshoring) may reduce (raise) employment by lengthening (shortening) unemployment duration due to higher (lower) match selectivity. We find empirical support for this...	Carl Davidson, Fredrik Heyman, Steven J. Matusz, et al.
9	2013	Exporting, skills and wage inequality ↗ This paper directly addresses the project's interest in how international trade shocks transmit to firm wage premiums and alter worker-firm wage decomposition. It utilizes matched employer-employee data to quantify the impact of export activity on wage inequality and skill-specific wage premiums within firms. International trade has been cited as a source of widening wage inequality in industrial nations. Most previous empirical evidence supports this claim by showing an effect in which increasing exports tilt demand towards firms which export and employ a relatively large proportion of higher-skilled workers from the group of firms which do not export. We find that, in addition to this, there is also an effect whereby, among exporting firms, there is a significant wage premium for high-skilled workers and a wage discount for low-skilled workers. These estimates are based on a matched employer-employee data set of western German manufacturing firms over the period 1993-2007. Our estimates...	Michael W. Klein, Christoph Moser, Dieter Urban
9	2022	What Firms Do: Gender Inequality in Linked Employer-Employee Data ↗ This paper directly applies the linked employer-employee AKM framework to decompose gender wage inequality into worker, firm, and sorting components, aligning perfectly with the project's core themes. It further addresses the project's interest in discrimination by analyzing how firm wage premiums and mobility patterns contribute to gender disparities over time. We study the extent to which employer heterogeneity affects gender gaps in earnings across the distribution, over time, and over the life cycle, accounting for cohort effects. Using a linked employer-employee dataset for Italy, we show that the gender gap in firm pay premia explains 34% of the mean gender pay gap, mainly due to between-firm components. Within-firm differences are more important at the top of the distribution and have become more relevant over time. Gender differences in mobility toward firms with higher pay premia and within-firm gender inequality partly explain the gender gap in firm pay premia.	Alessandra Casarico, Salvatore Lattanzio
9	2021	Employer policies and the immigrant–native earnings gap ↗ This paper directly applies the AKM framework to decompose wage inequality, explicitly finding that firm-specific wage premiums contribute to the immigrant-native earnings gap. It aligns with the project's focus on worker-firm decomposition methods and their application to labor market outcomes like discrimination and earnings differences. We use longitudinal data from the income tax system to study the impacts of firms' employment and wage-setting policies on the level and change in immigrant-native wage differences in Canada. We focus on immigrants who arrived in the early 2000s, distinguishing between those with and without a college degree from two broad groups of countries – the U.S., the U.K. and Northern Europe, and the rest of the world. Consistent with a growing literature based on the two-way fixed effects model of Abowd, Kramarz, and Margolis (1999), we find that firm-specific wage premiums explain a significant share of earnings inequality in Canada and contribute to the average earnings gap between immigrants and...	Benoît Dostie, Jiang Li, David Card, et al.
9	1998	The Impact Of New Technologies On Wages: Lessons From Matching Panels On Employees And On Their Firms<sup>†</sup> ↗ This paper directly addresses the project's core AKM framework by utilizing matched employer-employee panel data to decompose wage effects using individual fixed effects. It specifically investigates the interaction between worker skills, on-the-job learning, and technology adoption, which aligns with the project's focus on time-varying worker components and how firm-level pay policies respond to technological shocks. We study the impact on New Technologies (NT) on wages using a panel that matches data on individuals and on their firms. In his article on the same topic, Krueger (1993) did not give a definitive answer to the following question: if workers who use NT are better paid, is it because they are abler or because NT increases their productivity. We try to provide an answer to this question. Comparing cross-section estimates and individual fixed-effect estimates, we show that computer-based new technologies are used by abler workers. These workers learn and become more productive when they get more experienced with these NT. In terns of wage differentials, the introduction of computer-based NT...	Horst Entorf, Françis Kramarz
9	2010	Labor Market Models of Worker and Firm Heterogeneity ↗ This paper directly addresses the core AKM framework by analyzing the identification and consequences of worker and firm heterogeneity in matched employer-employee data. It explicitly covers key project themes including wage decomposition, the role of sorting, and the empirical correlations between firm productivity and wages. Microeconomic data on individual firms and employer-employee matches reveal substantial and persistent dispersion in firm size, productivity, and average wage paid and a positive correlation between each pair. To the extent that intrinsic differences in firm productivity explain these facts, there are several important consequences. First, the reallocation of employment from less to more productive firms will yield efficiency gains. Second, workers will find it in their interest to seek out higher-paying employers. Recent research has provided support for both hypotheses. Third, the existence of worker and employer heterogeneity offers possible gains from sorting. However, because the...	Rasmus Lentz, Dale T. Mortensen
9	2012	Persistent inter‐industry wage differences: rent sharing and opportunity costs ↗ This paper directly addresses the project's core theme of decomposing wage inequality into worker and firm effects using matched employer-employee data. It further explores the economic drivers of these effects, specifically linking firm premiums to product market quasi-rents, which aligns with the project's interest in rent-sharing and the equilibrium interpretation of firm wage premiums. Abstract Abstract We reconsider the potential for explaining inter‐industry wage differences by decomposing those differences into parts due to individual and employer heterogeneity, respectively. Using longitudinally linked employer‐employee data, we estimate the model for the United States and France. The part arising from individual heterogeneity can be theoretically and empirically related to the worker’s opportunity wage rate. The part arising from employer heterogeneity can similarly be related to product market quasi‐rents and relative bargaining power. We find that these two variables are highly correlated with both parts of the differential in France. Although the U.S...	John M. Abowd, Françis Kramarz, Paul Lengermann, et al.
9	2015	Why are American Workers getting Poorer? China, Trade and Offshoring ↗ This paper directly addresses the project's focus on international trade by analyzing how import competition and offshoring shocks transmit to worker wages. It provides empirical evidence on the decline in wages resulting from globalization, aligning with the theme of how trade alters worker-firm wage dynamics and inequality. We suggest that the impact of globalization on wages has been missed because its effects must be captured by analyzing occupational exposure to globalization. In this paper, we extend our previous work to include recent years (2003)(2004)(2005)(2006)(2007)(2008), a period of increasing import penetration, China's entry into the WTO, and growing US multinational employment abroad. We find significant effects of globalization, with offshoring to low wage countries and imports both associated with wage declines for US workers. We present evidence that globalization has led to the reallocation of workers away from high wage manufacturing jobs into other sectors and other occupations, with large...	Avraham Ebenstein, Ann Harrison, Margaret McMillan
9	2003	Wage Dispersion: Why Are Similar Workers Paid Differently? This paper directly addresses the core AKM framework by investigating the sources of wage dispersion into worker and firm components using matched employer-employee data. It specifically contributes to the project's themes on firm wage premiums, wage bargaining mechanisms, and the equilibrium search-and-matching interpretations of why similar workers earn different wages. Why are workers with identical skills found in both "good" jobs and "bad" jobs? Why are workers who do similar jobs paid differently, contrary to standard competitive theory? Observable differences in workers doing the same job account for only 30 percent of wage variation. In Wage Dispersion, Dale Mortensen examines the reasons for pay differentials in the other 70 percent. He finds that these differentials, or wage dispersion, are largely the result of job search friction (which arises when workers do not know the wages offered by all employers) and cross-firm differences in wage policy and productivity. Mortensen examines previous theoretical explanations for wage dispersion, testing...	Dale T. Mortensen
9	2021	Explaining Wage Losses After Job Displacement: Employer Size and Lost Firm Wage Premiums ↗ This paper directly addresses the project's core AKM framework by decomposing wage losses into firm wage premiums and worker components using two-way fixed effects. It empirically investigates the persistence and determinants of firm effects, specifically linking employer size to wage premiums, which aligns with themes of rent-sharing and wage inequality. Abstract This paper investigates whether wage losses after job displacement are driven by lost firm wage premiums or worker productivity depreciations. We estimate losses in wages and firm wage premiums, the latter being measured as firm effects from a two-way fixed-effects wage decomposition. Using new German administrative data on displacements from small and large employers, we find that wage losses are to a large extent explained by losses in firm wage premiums and that premium losses are largely permanent. We show that losses strongly increase with pre-displacement employer size. This provides an explanation for large and persistent wage losses reported in previous displacement studies...	Daniel Fackler, Steffen Mueller, Jens Stegmaier
9	2013	Gender Wage Gaps Reconsidered: A Structural Approach Using Matched Employer-Employee Data ↗ This paper directly addresses the project's focus on the equilibrium interpretation of firm fixed effects by employing a structural search-and-matching model with matched employer-employee data. It specifically investigates labor market discrimination and gender wage gaps through the lenses of rent-sharing, on-the-job search, and worker-firm assignment, which are central themes of the research project. In this paper I propose and estimate an equilibrium search model using matched employer-employee data to study the extent to which wage dierentials between men and women can be explained by differences in productivity, disparities in friction patterns, segregation or wage discrimination. The availability of matched employer-employee data is essential to empirically disentangle dierences in workers productivity across groups from dierences in wage policies toward those groups. The model features rent splitting, on-the-job search and twosided heterogeneity in productivity. It is estimated using German microdata. I nd that female workers are less productive and more mobile than males. Female...	Cristian Bartolucci
9	1996	Compensation Structure and Product Market Competition ↗ This paper is authored by Jean Abowd, one of the primary developers of the AKM framework, and directly investigates the relationship between compensation structures and product market competition. It addresses the core theme of how firm-level wage premiums respond to external shocks and market conditions, providing foundational context for the project's focus on firm pay policies and their equilibrium determinants. John M. Abowd, Laurence Allain, Compensation Structure and Product Market Competition, Annales d'Économie et de Statistique, No. 41/42, La microéconométrie de la gestion des ressources humaines: Etudes internationales des pratiques d'entreprises / The Microeconometrics of Human-Resource Management: Multinational Studies of Firm Practices (Jan. - Jun., 1996), pp. 207-217	Abowd, Allain
9	2017	Modeling Endogenous Mobility in Earnings Determination ↗ This paper directly addresses the project's core AKM framework by rigorously evaluating and correcting for limited mobility bias, a key methodological concern in identifying worker and firm effects. It proposes novel diagnostic tests and a Bayesian latent-type model to account for endogenous mobility, thereby refining the decomposition of wage inequality into worker, firm, and match components. We evaluate the bias from endogenous job mobility in fixed-effects estimates of worker- and firm-specific earnings heterogeneity using longitudinally linked employer-employee data from the LEHD infrastructure file system of the U.S. Census Bureau. First, we propose two new residual diagnostic tests of the assumption that mobility is exogenous to unmodeled determinants of earnings. Both tests reject exogenous mobility. We relax exogenous mobility by modeling the matched data as an evolving bipartite graph using a Bayesian latent-type framework. Our results suggest that allowing endogenous mobility increases the variation in earnings explained by individual heterogeneity and reduces the...	John M. Abowd, Kevin L. McKinney, Ian M. Schmutte
9	2016	Firms and Labor Market Inequality: Evidence and Some Theory ↗ This paper is a core survey that directly addresses the project's central AKM framework by synthesizing evidence on firm wage premiums and their contribution to wage inequality. It explicitly discusses the identification via worker mobility and provides a theoretical model interpreting these fixed effects, making it highly relevant to the project's methodology and themes. We survey two growing bodies of research on firm-level drivers of labor market inequality. The first examines how wages are affected by differences in employer productivity. Studies that focus on firm-specific productivity shocks and control for the non-random sorting of workers to firms typically find that a 10% increase in value-added per worker leads to somewhere between a 0.5% and 1.5% increase in wages. Given the wide variation in firm-specific productivity, elasticities of this size suggest that a significant fraction of wage inequality is tied to firm performance. A second literature estimates two-way fixed effects models that rely on the wage changes of people who move between firms...	David Card, Ana Rute Cardoso, Jörg Heining, et al.
9	1996	Wage Inequalities and Firm-Specific Compensation Policies in France ↗ This paper is a foundational work by Francis Kramarz, one of the co-developers of the AKM framework, directly addressing the decomposition of wage inequalities into worker and firm components. It establishes the empirical methodology and theoretical underpinnings for identifying firm-specific compensation policies using matched employer-employee data in France. Francis Kramarz, Stéfan Lollivier, Louis-Paul Pelé, Wage Inequalities and Firm-Specific Compensation Policies in France, Annales d'Économie et de Statistique, No. 41/42, La microéconométrie de la gestion des ressources humaines: Etudes internationales des pratiques d'entreprises / The Microeconometrics of Human-Resource Management: Multinational Studies of Firm Practices (Jan. - Jun., 1996), pp. 369-386	Kramarz, Lollivier, Pelé
9	2014	International Trade and Collective Bargaining Outcomes: Evidence from German Employer–Employee Data ↗ This paper directly addresses the project's dimension on international trade by examining how export expansions transmit to firm wage premiums and alter worker-firm wage decomposition. It specifically investigates the rent-sharing mechanism and its interaction with collective bargaining, aligning with the project's focus on the equilibrium interpretation of firm effects and the role of trade shocks. Abstract In theoretical trade models with variable mark‐ups and collective wage bargaining, exposure to international markets might reduce the exporter wage premium. We test this prediction using linked German employer–employee data covering the years 1996–2007. To separate the rent‐sharing mechanism from assortative matching, we exploit individual worker information to construct profitability measures that are free of skill composition. Our results show that rent‐sharing is less pronounced in more export‐intensive firms or in more open industries. The exporter wage premium is highest for low‐productivity firms. In line with theory, these findings are unique to the subsample of plants...	Gabriel Felbermayr, Andreas Hauptmann, Hans‐Jörg Schmerer
9	2015	Firming Up Inequality ↗ This paper directly addresses the core AKM framework by decomposing wage inequality into between-firm and within-firm components using matched employer-employee data. It provides key empirical evidence that rising wage dispersion is driven by increasing firm wage premiums rather than internal pay differences, which is central to understanding firm effects on wages. Earnings inequality in the United States has increased rapidly over the last three decades, but little is known about the role of firms in this trend. For example, how much of the rise in earnings inequality can be attributed to rising dispersion between firms in the average wages they pay, and how much is due to rising wage dispersion among workers within firms? Similarly, how did rising inequality affect the wage earnings of different types of workers working for the same employer-men vs. women, young vs. old, new hires vs. senior employees, and so on? To address questions like these, we begin by constructing a matched employer-employee data set for the United States using administrative...	Jae Song, David J. Price, Fatih Guvenen, et al.
9	2020	Workforce Composition, Productivity and Pay: The Role of Firms in Wage Inequality ↗ This paper directly addresses the project's core theme of decomposing wage inequality into worker and firm effects using matched employer-employee data. It empirically quantifies the contribution of firm wage premia to overall wage inequality, aligning perfectly with the AKM framework's variance decomposition goals. IZA DP No. 13212 MAY 2020 Workforce Composition, Productivity and Pay: The Role of Firms in Wage Inequality In many OECD countries, low productivity growth has coincided with rising inequality. Widening wage and productivity gaps between firms may have contributed to both developments. This paper uses a new harmonised cross-country linked employer-employee dataset for 14 OECD countries to analyse the role of firms in wage inequality. The main finding is that, on average across countries, changes in the dispersion of average wages between firms explain about half of the changes in overall wage inequality. Two thirds of these changes in between-firm wage inequality are accounted for by...	Chiara Criscuolo, Alexander Hijzen, Cyrille Schwellnus, et al.
9	1997	Workers or Employers: Who is Shaping Wage Inequality? ↗ This paper directly applies the variance decomposition framework central to the AKM model to quantify the contributions of worker and firm attributes to wage inequality. It provides key empirical insights into the relative importance of firm effects versus worker effects and discusses how institutional contexts influence these dynamics, aligning closely with the project's core themes. An extensive micro data set matching firms, establishments and their employees, is used to study the determinants of earnings inequality in Portugal and its evolution from 1983 to 1992, with the Theil index, its decomposition, and the decomposition of its change as tools of analysis. The relevance of both worker and employer attributes in shaping earnings inequality and its trend is quantified. The impact of the firm on wage inequality in a European country is compared to the situation in the USA, and the results suggest that a more regulated and centralized European bargaining system might reduce the scope for firm action. A profile of an economy undergoing modernization, where rising...	Ana Rute Cardoso
9	—	An Empirical Model of Wage Dispersion with Sorting This paper directly addresses the core AKM framework by investigating the identification of sorting, a key theme in understanding wage inequality and worker-firm matching. It critically analyzes the limitations of the standard AKM decomposition regarding sorting, which is central to the project's focus on variance decomposition and the interpretation of fixed effects. (negative) sorting results if the match production function is supermodular (submodular). If the production function is modular, no sorting obtains. We propose an identification strategy that allows identification of not only the presence of sorting in matching, but also the type of sorting, negative or positive. Like Eeckhout and Kircher (2008) we find that the commonly used wage decomposition in Abowd, Kramarz, and Margolis (1999) does not in itself identify sorting, although the mechanisms that lead to lack of identification in our model differ from that of the partnership model studied in Eeckhout and Kircher (2008).	Rasmus Lentz, Jesper Bagger
9	2023	The Labor Market Effects of Legal Restrictions on Worker Mobility ↗ This paper directly addresses the identification of worker effects in the AKM framework by treating noncompete enforceability as a key determinant of worker mobility, which is the primary source of identification for firm fixed effects. It further connects these mechanisms to wage inequality and bargaining power, aligning with the project's focus on limited mobility bias and the equilibrium interpretation of firm premiums through search-and-matching theory. We analyze how the legal enforceability of noncompete agreements (NCAs) affects labor markets.Using newly-constructed panel data, we find that higher NCA enforceability diminishes workers' earnings and job mobility, with larger effects among workers most likely to sign NCAs.These effects are far-reaching: changes in enforceability impose externalities on workers across state borders, suggesting that enforceability broadly affects labor market dynamism.We provide evidence that NCA enforceability primarily affects wages through its effect on workers' outside options; moreover, workers facing high enforceability are unable to leverage tight labor markets to increase earnings.We motivate these...	Matthew S. Johnson, Kurt Lavetti, Michael Lipsitz
9	2020	Monopsony in Movers: The Elasticity of Labor Supply to Firm Wage Policies ↗ [Title only] This paper directly addresses the project's focus on monopsony power and firm wage policies by estimating labor supply elasticities using worker mobility data. Its emphasis on 'movers' aligns with the core AKM identification strategy via worker-firm switches and the equilibrium interpretation of firm premiums through search-and-matching frameworks. No abstract available.	Ihsaan Bassier, Arindrajit Dubé, Suresh Naidu
9	2020	Firms as Learning Environments: Implications for Earnings Dynamics and Job Search ↗ This paper directly addresses the project's focus on time-varying worker components by modeling how firms' learning environments drive human capital accumulation and earnings dynamics. It provides a structural framework linking firm heterogeneity to life-cycle wage growth, aligning with the project's interest in mechanisms beyond static fixed effects. This paper demonstrates that heterogeneity in firms’ promotion of human capital accumulation is an important determinant of life-cycle earnings inequality. I use administrative micro data from Germany to show that different establishments offer systematically different earnings growth rates for their workers. This observation suggests that that the increase in inequality over the life cycle reflects not only inherent worker variation, but also differences in the firms that workers happen to match with over their lifetimes. To quantify this channel, I develop a life-cycle search model with heterogeneous workers and firms. In the model, a worker’s earnings can grow through both human capital...	Victoria Gregory
9	2012	Exports and Wages: Rent Sharing, Workforce Composition or Returns to Skills? ↗ This paper directly addresses the project's theme of international trade's impact on firm wage premiums by analyzing rent-sharing and workforce composition effects following an export shock. It utilizes matched employer-employee data to decompose wage dynamics, aligning closely with the core AKM framework and the specific focus on how trade shocks transmit to firm-level pay policies. We use linked employer-employee data from Italy to explore the relationship between exports and wages. Exploiting the 1992 devaluation of the lira, we show that exporting firms both pay a wage premium above what their workers would earn in the outside labor market (the “rent-sharing” effect) and employ workers whose skills command a higher price after the devaluation (the “skill composition” effect). The latter only emerges once we allow for the value of workers’ skills to differ in the pre- and post-devaluation periods. We also document that the export wage premium is larger for workers with more export-related experience.	Mario Macis, Fabiano Schivardi
9	2020	Productivity Shocks, Long-Term Contracts and Earnings Dynamics ↗ This paper directly addresses the project's focus on identifying and estimating worker and firm effects by modeling how productivity shocks transmit to earnings in an equilibrium search framework. It provides structural estimates of firm absorption of shocks and the variance decomposition of earnings, offering key insights into the mechanisms underlying AKM-style wage decomposition and rent-sharing. This paper examines how employer-and worker-specific productivity shocks transmit to earnings and employment in an economy with search frictions and firm commitment. We develop an equilibrium search model with worker and firm shocks and characterize the optimal contract offered by competing firms to attract and retain workers. In equilibrium, risk-neutral firms provide only partial insurance against shocks to risk-averse workers and offer contingent contracts, where payments are backloaded in good times and frontloaded in bad times. We prove that there exists a unique spot target wage, which serves as an attraction point for smooth wage adjustments. The structural model is estimated on...	Neele Balke, Thibaut Lamadon
9	2023	How Responsive Are Wages to Firm-Specific Changes in Labour Demand? Evidence from Idiosyncratic Export Demand Shocks ↗ This paper directly addresses the project's focus on how firm-level wage premiums respond to productivity and demand shocks, utilizing a rigorous identification strategy with idiosyncratic export shocks. It provides key empirical evidence on rent-sharing mechanisms and the role of labor market competitiveness in wage determination, which aligns with the equilibrium and firm pay policy dimensions of the research. Abstract Do firms adjust wages in response to changes in their own demand level or to changes in competitive pressure from rival employers? We study how exporters adjust wages in response to unexpected product demand shocks during the 2008–9 Great Recession. Using rich data on Portuguese firms’ pre-recession export shipments, we measure firm-level shocks to export demand during the Recession. We show that shocks constructed at the firm level are not necessarily firm-specific and can be decomposed into a common component affecting all producers in a product market and an idiosyncratic component affecting individual firms within markets based on the locations of their pre-recession customers...	Andrew Garin, Filipe Silvério
9	2017	Augmenting the Human Capital Earnings Equation with Measures of Where People Work ↗ This paper provides foundational empirical evidence for the AKM framework by decomposing wage variance into individual and employer components using panel data. It directly addresses core themes of the project, including the role of firm effects in wage determination, worker-firm sorting, and the contribution of employer characteristics to wage inequality. We augment standard log earnings equations for workers in US manufacturing with variables reflecting measured and unmeasured attributes of their employer. Using panel employee-establishment data, we find that establishment-level employment, education of coworkers, capital equipment per worker, and firm-level R&D intensity affects earnings substantially. Unobserved characteristics of employers captured by employer fixed effects also contribute to the variance of log earnings, although less than unobserved characteristics of individuals captured by individual fixed effects. The observed and unobserved measures of employers mediate the effects of individual characteristics on earnings and...	Erling Barth, James C. Davis, Richard B. Freeman
9	2018	Firm Dynamics and Residual Inequality in Open Economies ↗ This paper directly addresses the project's focus on international trade shocks and their impact on wage decomposition by incorporating firm heterogeneity into a dynamic search-and-matching model. It provides crucial empirical evidence on how trade and product market reforms drive wage dispersion through changes in firm-level wage premiums and worker-firm sorting. Wage inequality between similar workers has been on the rise in many rich countries. Recent empirical research suggests that heterogeneity in firm characteristics is crucial to understand wage dispersion. Lower trade costs as well as labor and product market reforms are considered critical drivers of inequality dynamics. We ask how these factors affect wage dispersion and how much of their effect on inequality is attributable to changes in wage dispersion between and within firms. To tackle these questions, we incorporate directed job search into a dynamic model of international trade where wage inequality results from the interplay of convex adjustment costs with firms’ different hiring...	Gabriel Felbermayr, Giammario Impullitti, Julien Prat
9	2019	What Firms Do: Gender Inequality in Linked Employer-Employee Data ↗ This paper directly applies the linked employer-employee data framework to decompose gender wage inequality into firm pay policies, sorting, and bargaining components, aligning with the project's focus on variance decomposition and rent-sharing. It further extends the analysis by examining time-varying firm effects and limited mobility bias regarding gender, which are core themes of the research project. This paper investigates the contribution of firms to the gender gap in earnings on average, at different quantiles of the earnings distribution, and over time to shed light on the role of firm pay policies in hindering or reinforcing the gender wage gap and to identify how their impact comes about. Using a linked employer-employee dataset for Italy, we show that the gap in firm pay policies explains on average 30% of the gender pay gap in the period 1995-2015. Sorting of women in low pay firms explains a larger fraction of the gender pay gap than differences in bargaining, on average and at the bottom of the distribution, whereas the latter dominates at the top. Moreover, differences in...	Alessandra Casarico, Salvatore Lattanzio
9	2014	An Empirical Model of Wage Dispersion with Sorting ↗ This paper directly addresses the project's core themes by using Danish matched employer-employee data to decompose wage variance into worker, firm, friction, and sorting components. It specifically investigates assortative matching and its impact on wage dispersion within an equilibrium on-the-job-search framework, aligning closely with the project's focus on AKM extensions, sorting, and equilibrium interpretations. This paper studies wage dispersion in an equilibrium on-the-job-search model with endogenous search intensity. Workers differ in their permanent skill level and firms differ with respect to productivity. Positive (negative) sorting results if the match production function is supermodular (submodular). The model is estimated on Danish matched employer-employee data. We find evidence of positive assortative matching. In the estimated equilibrium match distribution, the correlation between worker skill and firm productivity is 0.12. The assortative matching has a substantial impact on wage dispersion. We decompose wage variation into four sources: Worker heterogeneity, firm heterogeneity...	Jesper Bagger, Rasmus Lentz
9	2015	Integrated sectors - diversified earnings: the (missing) impact of offshoring on wages and wage convergence in the EU27 ↗ This paper directly addresses the project's dimension on the role of international trade, specifically examining how offshoring shocks transmit to wages and affect wage inequality across skill groups. It provides empirical evidence on the distributional impacts of outsourcing, which is central to understanding how global supply chain integration alters wage dynamics and firm-level pay structures. This paper assesses the impact of international outsourcing/offshoring practices on the process of wage equalization across manufacturing sectors in a sample of EU27 economies (1995–2009). We discriminate between heterogeneous wage effects on different skill categories of workers (low, medium and high skill). The main focus is on the labour market outcomes of vertical integration, so we augment a model of conditional wage convergence through the inclusion of sector-specific broad and narrow outsourcing/offshoring indices based on input-output data (World Input Output Database, April 2012 release). Two-way relations between trade and wages are addressed through the use of a gravity-based...	Aleksandra Parteka, Joanna Wolszczak‐Derlacz
9	2009	Human Capital Accumulation and Labour Market Equilibrium ↗ This paper directly addresses the project's core AKM framework by deriving worker and firm fixed effects from an equilibrium model incorporating human capital accumulation and on-the-job search. It explicitly links these micro-founded mechanisms to wage dispersion, sorting, and the statistical structure of wages, aligning perfectly with the project's focus on identification, equilibrium interpretation, and wage dynamics. We analyse an equilibrium labour market with on-the-job search and experience effects (where workers learn-by-doing). The analysis yields a standard Mincer wage equation with worker fixed effects and endogenously determined firm fixed effects. It shows that learning-by-doing increases equilibrium wage dispersion consistent with the data. Equilibrium sorting - where over time more experienced workers also tend to find and quit to better paid employment - has a significant impact on wage inequality. As the model yields a cross section distribution of wages paid with the 'right' structure (the density of wages paid is single peaked with a 'fat' Pareto right tail) and yields the 'right' time...	Ken Burdett, Carlos Carrillo‐Tudela, Melvyn Coles
9	2019	Imperfect Competition, Compensating Differentials and Rent Sharing in the U.S. Labor Market ↗ This paper directly addresses the project's core themes by utilizing matched employer-employee data to quantify rent-sharing and firm wage premiums. It explicitly models imperfect competition and assortative matching between workers and firms, providing an equilibrium interpretation of firm effects that aligns with the research scope. We quantify the importance of imperfect competition in the US labor market by estimating the size of labor market rents earned by American firms and workers. We construct a matched employer-employee panel dataset by combining the universe of US business and worker tax records for the period 2001–2015. Using this panel data, we identify and estimate an equilibrium model of the labor market with two-sided heterogeneity where workers view firms as imperfect substitutes because of heterogeneous preferences over nonwage job characteristics. The model allows us to draw inference about imperfect competition, worker sorting, compensating differentials, and rent sharing. (JEL D24, H24, H25, J22...	Thibaut Lamadon, Magne Mogstad, Bradley Setzler
9	2018	The sources of wage variation and the direction of assortative matching: Evidence from a three-way high-dimensional fixed effects regression model ↗ This paper directly addresses the AKM framework by decomposing wage variance into worker, firm, and job title effects, while explicitly estimating the sign and strength of assortative matching. It provides core empirical evidence on how high-productivity workers sort into high-productivity firms, which is a central theme of the researcher's project. This paper estimates a wage equation with three high-dimensional fixed effects, using a longitudinal matched employer-employee dataset covering virtually all Portuguese private sector wage earners over a 26-year interval. First, the variation in log real hourly wages is decomposed into three components reflecting worker, firm, and job title characteristics and a residual element. It is found that worker permanent heterogeneity is the most important source of wage variation accounting for one third of the wage variance, while firm permanent effects contribute one fourth. Job title fixed effects still explain a considerable one fifth of wage variance. Second, having established that high-wage...	Sònia Torres, Pedro Portugal, John T. Addison, et al.
9	2008	Dispersion in wage premiums and firm performance ↗ This paper directly addresses the AKM framework by using matched employer-employee data to decompose wages and estimate firm-specific premiums while controlling for worker heterogeneity. It contributes to the project's core themes by linking these estimated firm wage premiums to firm performance, thereby informing the identification and interpretation of firm effects in wage inequality research. Using matched employer-employee panel data, we estimate measures of pay dispersion per firm-year that take into account both firm and worker unobserved heterogeneity. Unlike research that controls only for differences in observables, we find that within-firm pay inequality is significantly associated to lower firm performance. © 2008 Elsevier B.V. All rights reserved.	Pedro S. Martins
9	2010	Exporters and the Rise in Wage Inequality – Evidence from German Linked Employer-Employee Data ↗ [Title only] This paper directly addresses the project's fourth dimension regarding the role of international trade, specifically how export expansions transmit to firm wage premiums. It utilizes German linked employer-employee data to analyze the decomposition of wage inequality, aligning closely with the core AKM framework and themes of rent-sharing and worker-firm matching. No abstract available.	Daniel Baumgarten
9	2020	Trade, technology, and the channels of wage inequality ↗ This paper directly addresses the project's interest in international trade shocks and their transmission to wage inequality using the AKM framework to decompose wages. It explicitly analyzes the impact of trade on worker and firm components, offering empirical evidence on wage inequality channels and assortative matching that aligns with the project's core themes. Abstract We use a large sample of German workers to analyse whether low-wage competition with China and Eastern Europe (the East) affects the wage structure within German manufacturing industries. In order to identify the channels through which trade and technology affect wage inequality, we decompose wages into firm and worker components. We find that the rise of market access and the competitiveness of the East has a substantial impact on inequality via the worker-wage component. While we find no large effect of the firm effect and assortative matching on overall inequality we find that trade induced matching is relevant for high-tech industries. We also account for exposure to...	Linda Borrs, Florian Knauth
9	2021	Outsourcing, Inequality and Aggregate Output ↗ This paper directly addresses the project's themes of firm-level pay policies, wage inequality, and the equity-efficiency trade-offs of firm organizational choices like outsourcing. It utilizes matched employer-employee data to analyze wage penalties, rent-sharing, and sorting effects, which are central to the AKM framework and its extensions regarding firm wage premiums and worker-firm assignments. Outsourced workers experience large wage declines, yet domestic outsourcing may raise aggregate productivity. To study this equity-efficiency trade-off, we contribute a framework in which multi-worker firms either hire imperfectly substitutable worker types in-house along a wage ladder, or rent labor services from contractors who hire in the same frictional labor markets. Three implications arise. First, selection into outsourcing: more productive firms are more likely to outsource to save on labor costs and higher wage premia. Second, a productivity effect: outsourcing leads firms to raise output and labor demand. Third, an outsourcing wage penalty: contractor firms pay lower wages. We...	Adrien Bilal, Hugo Lhuillier
9	2013	The macro-dynamics of sorting between workers and firms ↗ This paper directly addresses the equilibrium interpretation of worker-firm sorting through a search-and-matching model that captures dynamic worker mobility and matching frictions. Its focus on the stochastic evolution of worker-firm matches and cyclicality of mismatch aligns perfectly with the project's core themes of identification via mobility and the macro-dynamics of wage decomposition. We develop an equilibrium model of on-the-job search with ex-ante heterogeneous workers and firms, aggregate uncertainty and vacancy creation. The model produces rich dynamics in which the distributions of unemployed workers, vacancies and worker-firm matches evolve stochastically over time. We prove that the surplus function, which fully characterises the match value and the mobility decision of workers, does not depend on these distributions. We estimate the model on US labour market data from 1951-2007 and predict the fit for 2008-12. We use the model to measure the cyclicality of mismatch between workers and jobs.	Jeremy Lise, Jean‐Marc Robin
9	2018	Matching in Cities ↗ This paper directly addresses the project's focus on the AKM framework by rigorously measuring and analyzing assortative matching between workers and firms using matched employer-employee data. It specifically investigates how this matching mechanism contributes to wage inequality and spatial wage disparities, which are core themes in the researcher's project regarding variance decomposition and labor market sorting. In most countries, average wages tend to be higher in larger cities. In this paper, we focus on the role played by the matching of workers to firms in explaining geographical wage differences. Using rich administrative German data for 1985-2014, we show that wages in large cities are higher not only because large cities attract more high-quality workers, but also because highquality workers are significantly more likely to be matched to high-quality plants. In particular, we find that assortative matching-measured by the correlation of worker fixed effects and plant fixed effects-is significantly stronger in large cities. The elasticity of assortative matching with respect to population has...	Wolfgang Dauth, Sebastian Findeisen, Enrico Moretti, et al.
9	2006	Worker-Firm Heterogeneity and Matching: An Analysis Using Worker and Firm Fixed Effects Estimated from LEED ↗ [Title only] This paper directly addresses the core AKM framework and the theme of worker-firm matching using matched employer-employee data, which is central to the researcher's project. The use of LEED data and focus on heterogeneity aligns perfectly with the identification and variance decomposition components of the study. No abstract available.	David C. Maré, Dean Hyslop
9	2012	Liberalized Trade and Worker-Firm Matching ↗ This paper directly addresses the project's theme on international trade by examining how export costs and import competition affect assortative matching between workers and firms. It utilizes matched employer-employee data to empirically test theoretical predictions regarding the transmission of trade shocks to worker-firm assignment, which is central to the specified equilibrium interpretation of firm fixed effects. Recent theoretical analysis suggests that a reduction in the cost of exporting increases the degree of assortative matching between workers and firms in export-oriented industries. Changes that reduce the cost of imports have an ambiguous impact on matching. We combine detailed Swedish matched worker-firm data from 1995-2005 with tariff data to test these hypotheses. The data cover 94 sectors subject to international competition and include all firms with at least 20 employees. Our findings strongly support the theoretical predictions.	Carl Davidson, Fredrik Heyman, Steven J. Matusz, et al.
9	2021	Monopsonistic labor markets and international trade ↗ This paper directly addresses the project's focus on international trade by analyzing how trade liberalization impacts wage inequality within a framework incorporating monopsonistic firm power. It aligns with the equilibrium interpretation of firm fixed effects by modeling wage-setting power and firm heterogeneity to explain the transmission of trade shocks to worker-firm wage outcomes. This paper introduces a framework to study the impact of trade liberalization on wage inequality and welfare in the presence of monopsonistic labor markets. The interaction of firm heterogeneity in productivity with idiosyncratic preferences of workers for working at different firms generates between-firm wage inequality for workers with identical skills. The degree of monopsony power is captured by the elasticity of firm-level labor supply, with a lower elasticity implying more wage-setting power by the firm. With more productive firms paying higher wages, monopsony power dampens the impact of firm heterogeneity on the allocation of market shares and allows lower productivity firms to...	Priyaranjan Jha, Antonio Rodriguez‐Lopez
9	2004	Are Good Workers Employed by Good Firms? A Simple Test of Positive Assortative Matching Models This paper directly addresses the core AKM framework by estimating worker and firm fixed effects and explicitly testing for positive assortative matching, a key theme of the project. It also critically examines the limited mobility bias, providing essential context for the identification and interpretation of firm wage premiums in matched employer-employee data. In this article, we test a simple version of Becker's (1973) marriage model for wage setting. This model predicts positive assortative matching. We estimate this model using linked employer--employee data for the France and the United States. We reject the simple version for both countries. The zero or negative correlation between person and firm effects is not explained by estimation biases due to a lack of mobility in the data. Several other potential explanations are proposed, including Shimer (2001) style coordination friction models. We focus on direct evidence that good workers are employed by good firms. This provides a direct empirical test of the simplest version of the Becker...	John M. Abowd, Françis Kramarz
9	2017	Firms and the Decline in Earnings Inequality in Brazil ↗ [Title only] This paper directly addresses the core theme of decomposing wage inequality into worker and firm components using employer-employee data, a central focus of the AKM framework. It specifically investigates the role of firm wage premiums in driving aggregate earnings inequality, which aligns with the project's interest in variance decomposition and the economic implications of firm effects. No abstract available.	Jorge Álvarez, Felipe Benguria, Niklas Engbom, et al.
9	2011	Trade Liberalization, Firm Heterogneity, and Wages: New Evidence from Matched Employer-Employee Data ↗ This paper directly applies matched employer-employee data to decompose wage effects using worker and firm fixed effects, addressing core themes of sorting and limited mobility bias in the context of trade liberalization. It provides empirical evidence on how export status affects firm wage premiums and worker composition, which is central to the project's focus on rent-sharing, discrimination, and the equilibrium interpretation of firm effects. In this paper, the authors use a linked \n employer-employee database from Brazil to examine the impact \n of trade reform on the wages of workers employed at \n heterogeneous firms. The analysis of the data at the \n firm-level confirms earlier findings of a differential \n positive effect of trade liberalization on the average wages \n at exporting firms relative to non-exporting firms. However, \n this analysis of average firm-level wages is incomplete \n along several dimensions. First, it cannot fully account for \n the impact of a change in trade barriers on workforce \n composition especially in terms of unobservable \n (time-invariant) characteristics of workers (innate ability) \n...	Pravin Krishna, Jennifer P. Poole, Mine Zeynep Senses
9	2009	A Formal Test of Assortative Matching in the Labor Market ↗ [Title only] This paper directly addresses the key theme of assortative matching between workers and firms, a central component of the researcher's project on wage decomposition. It likely employs or critiques methods for identifying how worker and firm characteristics sort together, which is essential for understanding the variance components in AKM-style models. No abstract available.	John M. Abowd, Françis Kramarz, Sébastien Pérez-Duarte, et al.
9	2005	On-the-Job Search and Sorting ↗ [Title only] This title directly aligns with the project's third dimension on the equilibrium interpretation of firm fixed effects through search-and-matching theory. It addresses the core mechanisms of on-the-job search and worker-firm assignment that generate and sustain firm wage premiums. No abstract available.	Pieter A. Gautier, Coen N. Teulings, Aico van Vuuren
9	2021	It Ain’t Where You’re From, It’s Where You’re At: Hiring Origins, Firm Heterogeneity, and Wages. ↗ This paper directly addresses the AKM framework by extending two-way fixed effects models with theoretically grounded origin and destination effects, aligning with the project's core focus on worker and firm wage decomposition. It provides relevant empirical evidence on variance decomposition and sorting, specifically analyzing how current firm effects (destination) dominate prior firm effects (origin) in determining wages, which informs discussions on limited mobility bias and firm wage premiums. Sequential auction models of labor market competition predict that the wages required to successfully poach a worker from a rival employer will depend on the productivities of both the poached and poaching firms. We develop a theoretically grounded extension of the two-way fixed effects model of This specification is shown to nest the reduced form for hiring wages delivered by semi-parametric formulations of the canonical sequential auction model of Postel-Vinay and Robin (2002b) and its generalization in Fitting the model to Italian social security records, origin effects are found to explain only 0.7% of the variance of hiring wages among job movers, while destination effects explain more...	Sabrina Lucia Di Addario, Patrick Kline, Raffaele Saggio, et al.
9	2018	On Worker and Firm Heterogeneity in Wages and Employment Mobility: Evidence from Danish Register Data This paper directly addresses the project's core theme of decomposing wages into worker and firm effects while explicitly modeling the identification and estimation of assortative matching. It provides key empirical evidence on sorting dynamics using Danish panel data, which is central to understanding variance decomposition and the interaction between worker-firm matching and wage inequality. In this paper, we develop a model of wage dynamics and employment mobility with unrestricted interactions between worker and firm unobserved characteristics in both wages and employment mobility. We adopt the finite mixture approach of Bonhomme et al. (2017). The model is estimated on Danish matched employer-employee data for the period 1985â€“2013. The estimation includes gender, education, age, tenure and time controls. We find significant sorting on wages and it is stable over the period. Sorting is established early in careers, increasing during the first decade after which it declines steadily. Job-to-job mobility displays a â€œmean-revertingâ€ pattern that maintains correlations...	Rasmus Lentz, Suphanit Piyapromdee, Jean‐Marc Robin
9	2015	Cyclical Reallocation of Workers Across Employers by Firm Size and Firm Wage ↗ [Title only] This paper directly addresses the core AKM theme of worker mobility across employers, which is fundamental for identifying worker and firm fixed effects. It further links mobility patterns to firm characteristics like size and wage premiums, providing insights into limited mobility bias and the dynamics of wage inequality decomposition. No abstract available.	John Haltiwanger, Henry R. Hyatt, Erika McEntarfer
9	2017	A Distributional Framework for Matched Employer Employee Data ↗ This paper directly extends the core AKM framework by introducing nonlinearities and dynamic mobility into matched employer-employee data analysis. It addresses key project themes including worker-firm sorting, identification in short panels, and the decomposition of wage dispersion, while explicitly testing the additivity assumption central to standard fixed effects models. We propose a framework to identify and estimate earnings distributions and worker composition on matched panel data, allowing for two‐sided worker‐firm unobserved heterogeneity and complementarities in earnings. We introduce two models: a static model that allows for nonlinear interactions between workers and firms, and a dynamic model that allows, in addition, for Markovian earnings dynamics and endogenous mobility. We show that this framework nests a number of structural models of wages and worker mobility. We establish identification in short panels, and develop tractable two‐step estimators where firms are classified in a first step. Applying our method to Swedish administrative data...	Stéphane Bonhomme, Thibaut Lamadon, Elena Manresa
9	2016	Firms and Labor Market Inequality: Evidence and Some Theory ↗ This paper directly addresses the core AKM framework by synthesizing rent-sharing evidence with worker and firm fixed effects estimates, which is central to the project's focus on wage decomposition. It provides a theoretical foundation linking firm wage premiums to worker tastes, thereby illuminating the mechanisms behind firm-specific effects and wage inequality. We synthesize two related literatures on firm-level drivers of wage inequality. Studies of rent sharing that use matched worker-firm data find elasticities of wages with respect to value added per worker in the range of 0.05–0.15. Studies of wage determination with worker and firm fixed effects typically find that firm-specific premiums explain 20% of overall wage variation. To interpret these findings, we develop a model of wage setting in which workers have idiosyncratic tastes for different workplaces. Simple versions of this model can rationalize standard fixed effects specifications and also match the typical rent-sharing elasticities in the literature.	David Card, Ana Rute Cardoso, Jörg Heining, et al.
9	2016	Estimation of a Roy/Search/Compensating Differential Model of the Labor Market ↗ This paper is highly relevant as it explicitly models and estimates the interaction between search frictions and compensating differentials, which aligns with the project's focus on the equilibrium interpretation of firm fixed effects through search-and-matching theory. It also addresses key themes of the project by decomposing wage inequality and examining worker-firm assignment mechanisms beyond static AKM frameworks. In this paper we develop a model capturing key features of the Roy model, a search model, compensating differentials, and human capital accumulation on-the-job. We establish which features of the model can be non-parametrically identified and which can not. We estimate the model and use it to asses the relative contribution of the different factors for overall wage inequality. We find that Roy model inequality is the most important component accounting for the majority of wage variation. We also demonstrate that there is substantial interaction between the other features -most notably the importance of the job match obtained by search frictions varies from around 9% to around 29% depending...	Christopher Taber, Rune Vejlin
9	2019	Reassessing the foreign ownership wage premium in Germany ↗ This paper directly addresses the project's theme of how firm-level ownership shocks, such as foreign takeovers, transmit to worker wages and alter the firm wage premium. It provides empirical evidence on the dynamics of wage changes following specific firm events, aligning closely with the study of non-stationary firm effects and rent-sharing mechanisms. Abstract This paper evaluates the effect of foreign takeover on wages of workers in German establishments, using rich linked employer–employee data from 2003 to 2014. To identify a causal effect of foreign takeover, we combine propensity‐score matching with a difference‐in‐difference estimator. We find that a takeover by a foreign investor leads to a wage premium of 4.0 log points in the year after ownership change, which further increases to 6.3 log points 3 years after acquisition. The wage premium is largest for high‐skilled workers, which is consistent with three theoretical arguments, namely rent appropriation by managers , technology protection and training on new technology . We also...	Hartmut Egger, Elke J. Jahn, Stefan Kornitzky
9	2019	Foreign direct investment and wage dispersion: Evidence from French employer-employee data ↗ This paper directly addresses the project's fourth dimension on international trade by analyzing how outward FDI shocks transmit to firm wage premiums and alter wage dispersion. It utilizes matched employer-employee data to decompose wage effects, aligning with the core AKM framework's focus on worker-firm interactions and wage inequality. Abstract This article investigates to what extent outward foreign direct investment (FDI) affects domestic wages. Results reveal that multinational companies pay a wage premium to their employees and the wage premium is increasing within the wage distribution. In a second step, we use a fixed effect and match effect model to analyze the effect of outward FDI within job spells. Results suggest that outward FDI raises manager wages by 0.077% and reduces wages for workers performing offshorable tasks by 0.34%. The positive effect of FDI on manager wages is mainly driven by the intensive margin of outward FDI. This result is observed even after controlling for endogenous worker mobility...	Catherine Laffineur, Alexandre Gazaniol
9	2016	Adjusting to Globalization - Evidence from Worker-Establishment Matches in Germany This paper directly addresses the project's fourth dimension by examining how import competition shocks transmit to individual earnings using matched employer-employee data. It utilizes high-dimensional fixed effects, a methodological cousin to AKM models, to analyze worker mobility and wage dynamics in response to international trade, aligning closely with the project's focus on the intersection of trade and wage decomposition. This paper addresses the impact of rising international trade exposure on individual earnings profiles in heterogeneous worker-establishment matches. We exploit rich panel data on job biographies of manufacturing workers in Germany, and apply a high-dimensional fixed effects approach to analyze endogenous mobility between plants, industries, and regions in response to trade shocks. Rising import penetration reduces earnings within job spells, and it induces workers to leave the exposed industries. Intra-industry mobility to other firms or regions are far less common adjustments. This induced industry mobility mitigates the adverse impacts of import shocks in the workers' subsequent careers...	Wolfgang Dauth, Sebastian Findeisen, Jens Suedekum
9	2009	The Importance of Worker, Firm and Match Fixed Effects in the Formation of Wages ↗ [Title only] This title explicitly mentions the three core components of the AKM framework (worker, firm, and match fixed effects), indicating a direct relevance to the project's foundational methodology. The focus on their role in wage formation aligns perfectly with the project's interest in decomposing wage inequality and identifying firm effects. No abstract available.	Torben Soerensen, Rune Vejlin
9	2023	Making Their Own Weather? Estimating Employer Labour-Market Power and Its Wage Effects ↗ This paper directly addresses the equilibrium interpretation of firm wage premiums through the lens of employer labor-market power and monopsony, a core theme of the project. It utilizes matched employer-employee data to estimate how market power affects wages, providing essential context for understanding the structural forces behind the firm fixed effects central to the AKM framework. The subdued wage growth observed over the last years in many countries has spurred renewed interest in monopsony views of the labour market. This paper is the first to measure the extent and robustness of employer labour-market power and its wage implications exploiting comprehensive matched employer-employee data. We find average (employment-weighted) Herfindhal indices of 800 to 1,100; and that less than 9% of workers are exposed to concentration levels thought to raise market power concerns. However, these figures can increase significantly with different methodological choices. Finally, when holding worker composition constant and instrumenting concentration, wages are found to be...	Pedro S. Martins, António Melo
9	2017	Performance pay, trade and inequality ↗ This paper directly addresses the project's focus on the worker-firm wage decomposition by modeling within-firm wage dispersion and its connection to trade. It integrates the equilibrium interpretation of firm effects with international trade shocks, aligning with the project's themes on rent-sharing, wage inequality, and trade impacts on wage structures. This paper introduces moral hazard into a general equilibrium model with heterogeneous firms to study wage inequality between homogeneous workers. Optimal performance pay contracts yield non-degenerate wage distributions among co-workers, enabling the analysis of two conceptually distinct and empirically relevant dimensions of wage dispersion: between-firm and within-firm inequality. The latter remains virtually unexplored in the literature. As an application, I characterize analytically the impact of trade liberalization on within-firm inequality, highlighting a new channel through which international trade can contribute to residual wage dispersion. To motivate the theory, I show that the...	Germán Pupato
9	2018	Comparing micro-evidence on rent sharing from two different econometric models ↗ This paper directly addresses rent-sharing, a core theme of the project, by comparing methods for estimating firm wage premiums using matched employer-employee data. It specifically highlights the importance of controlling for unobserved worker ability, which aligns with the AKM framework's decomposition of wages into worker and firm effects. The extent to which employers share rents with their employees is typically assessed by estimating the responsiveness of workers’ wages on firms’ ability to pay. This paper compares rent-sharing estimates using such a wage determination regression with estimates based on a productivity regression that relies on standard firm-level input and output data. Using a large matched firm-worker panel data sample for French manufacturing, we find that the respective industry distributions of the rent-sharing estimates are correlated and slightly overlap, but are significantly different on average. Precisely, if we only rely on the firm-level information, we obtain an average rent-sharing estimate of...	Sabien Dobbelaere, Jacques Mairesse
9	2014	Workers Beneath the Floodgates: The Impact of Removing Trade Quotas for China on Danish Workers ↗ [Title only] This paper directly addresses the project's fourth dimension by investigating how international trade shocks (removing trade quotas for China) transmit to firm wage premiums and worker outcomes in Denmark. It likely employs matched employer-employee data to assess changes in the worker-firm wage decomposition, aligning closely with the specified interest in trade impacts on labor markets. No abstract available.	Hâle Utar
9	2005	Ownership Change, Productivity, and Human Capital: New Evidence from Matched Employer-Employee Data in Swedish Manufacturing This paper directly addresses the project's focus on how firm-level pay policies respond to ownership changes by providing empirical evidence on wage increases and human capital dynamics. It utilizes matched employer-employee data to analyze event-study designs around firm shocks, which is a key methodological component of the research agenda. Empirical studies of the impact of changes in ownership of manufacturing plants on productivity (e.g., Lichtenberg and Siegel (1987, 1990a, 1990b), McGuckin and Nguyen (1995, 2001), and Maksimovic and Phillips (2001)) have provided limited evidence on how such transactions affect investment in human capital and have been based strictly on U.S. and U.K. data. We attempt to fill these gaps, based on an analysis of matched employer-employee data from over 19,000 Swedish manufacturing plants for the years 1985-1998. The sample covers virtually the entire population of manufacturing plants with 20 or more employees and a probability-based sample of smaller plants. We assess whether there are...	Donald S. Siegel, Kenneth L. Simons, Tomas Lindström
9	2018	Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany ↗ [Title only] This title directly addresses the core AKM theme of firm wage premiums and rent-sharing, while focusing on the German context which is a key empirical setting for studying industrial relations and their impact on wage decomposition. The mention of industrial relations suggests a likely exploration of how institutional factors interact with firm fixed effects, aligning with the project's interest in the determinants and equilibrium interpretations of firm-level pay policies. No abstract available.	Boris Hirsch, Steffen Mueller
9	2013	Mismatch, Sorting and Wage Dynamics ↗ This paper directly addresses the project's core theme by integrating equilibrium search-and-matching theory with microeconometric identification to analyze wage dynamics and sorting. It explicitly models assortative matching and on-the-job search, which are central to the researcher's interest in the equilibrium interpretation of firm fixed effects and worker-firm assignment. We develop an empirical search-matching model which is suitable for analyzing the wage, employment and welfare impact of regulation in a labor market with heterogeneous workers and jobs. To achieve this we develop an equilibrium model of wage determination and employment which extends the current literature on equilibrium wage determination with matching and provides a bridge between some of the most prominent macro models and microeconometric research. The model incorporates productivity shocks, long-term contracts, on-the-job search and counter-offers. Importantly, the model allows for the possibility of assortative matching between workers and jobs due to complementarities between worker...	Jeremy Lise, Costas Meghir, Jean‐Marc Robin
9	2016	Establishment heterogeneity, rent sharing and the rise of wage inequality in Germany ↗ This paper directly applies the AKM framework to German linked employer-employee data to decompose wage inequality into worker and establishment components, addressing core themes of rent-sharing and firm fixed effects. It quantifies how establishment heterogeneity contributes to the rise in wage inequality, aligning with the project's focus on variance decomposition and the equilibrium interpretation of firm premiums. Purpose – The purpose of this paper is to examine the role wage dispersion across establishments has played in recent increases in total wage inequality in Germany and compares it to inequality changes at the individual level. It is queried whether the contribution of establishment heterogeneity to the rise of wage inequality stems from changes of institutional settings or from structures such as establishment size and the composition of the workforce. Design/methodology/approach – Applying regression-based decompositions of variance to German linked employer-employee panel data for the years 2000-2010 it is analysed to what extent changes associated to firm structures contribute to the...	Clemens Ohlert
9	2012	Better Workers Move to Better Firms: A Simple Test to Identify Sorting ↗ This paper directly addresses the project's core theme of assortative matching between workers and firms within the AKM framework. It provides a specific methodological contribution to identifying sorting effects, which is central to understanding wage decomposition and inequality in matched employer-employee data. We propose a simple test that uses information on workers' mobility, wages and firms' profits to identify the sign and strength of assortative matching. The basic intuition underlying our empirical strategy is that, in the presence of positive (negative) assortative matching, good workers are more (less) likely to move to better firms than bad workers. Assuming that agents' payoffs are increasing in their own types, our test exploits within-firm variation on wages to rank workers by their types and firm profits to rank firms. We use a panel data set that combines social security earnings records for workers in the Veneto region of Italy with detailed balance-sheet data for firms. We find...	Cristian Bartolucci, Francesco Devicienti
9	2007	Sorting in a General Equilibrium On-the-Job Search Model ↗ [Title only] This title directly addresses the project's interest in the equilibrium interpretation of firm fixed effects via search-and-matching theory, specifically focusing on how on-the-job search drives worker-firm assignment. It likely provides the theoretical foundation for understanding assortative matching and the generation of firm wage premiums, which are core components of the research agenda. No abstract available.	Rasmus Lentz
9	2018	Assortative Matching or Exclusionary Hiring? The Impact of Firm Policies on Racial Wage Differences in Brazil ↗ This paper directly applies the AKM framework and variance decomposition techniques to analyze racial wage disparities through the lens of assortative matching and firm fixed effects in Brazil. It provides a key empirical application of the project's themes by quantifying how worker-firm sorting and exclusionary hiring policies contribute to wage inequality, aligning closely with the research on discrimination and labor market assignment. A growing body of research shows that firms' employment and wage-setting policies contribute to wage inequality and pay disparities between groups. We measure the effects of these policies on racial pay differences in Brazil. We find that nonwhites are less likely to work at establishments that pay more to all race groups, a pattern that explains about 20% of the white-nonwhite wage gap for both genders. The pay premiums offered by different employers are also compressed for nonwhites relative to whites, contributing another 5% of the overall gap. We then ask how much of the under-representation of nonwhites at higher-paying workplaces is due to the selective skill mix at these...	François Gérard, Lorenzo Lagos, Edson Severnini, et al.
9	2008	Industry Dynamics and Search in the Labor Market This paper directly addresses the project's third dimension by developing an equilibrium search-and-matching model that explains how firm wage premiums arise from productivity differences and worker-firm assignment. It provides the theoretical foundation for understanding on-the-job search, wage bargaining via directed search, and the resulting job ladder that sustains firm-specific wage effects. The paper proposes a model of on- and off-the-job search that combines convex hiring costs and directed search. Firms permanently differ in productivity levels, their production function features constant or decreasing returns to scale, and search costs are convex in search intensity. Wages are determined in a competitive manner, as firms advertise wage contracts (expected discounted incomes) so as to balance wage costs and search costs (queue length). An important assumption is that a firm is able to sort out its coordination problems with their employees in such a way that the on-the-job search behavior of workers maximizes the match surplus. Our model has several interesting features...	Espen R. Moen
9	2024	An Empirical Framework For Matching With Imperfect Competition ↗ This paper directly addresses the project's focus on estimating worker and firm effects using matched employer-employee data, specifically leveraging the Danish registry system common in AKM literature. It aligns closely with the equilibrium interpretation dimension by modeling strategic wage setting and two-sided heterogeneity to decompose wage inequality. This paper builds, identifies and estimates a model of the labor market that features strategic interactions in wage setting and two-sided heterogeneity in order to shed light on the sources of wage inequality. We provide a tractable characterization of the model equilibrium and demonstrate its existence and uniqueness. This characterization of the equilibrium allows us to derive a rich set of comparative statics and to gauge the relative contributions of worker skill, preference for amenities and strategic interactions to equilibrium wage inequality. Using instrumental variables, we establish identification of labor demand and supply parameters and estimate them using matched...	Mons Chan, Kory Kroft, Elena Mattana, et al.
9	2010	Micro-Evidence on Rent Sharing from Different Perspectives ↗ This paper directly addresses rent sharing, a central theme of the project, by empirically validating its presence and magnitude using matched employer-employee data. It provides crucial methodological context for interpreting firm fixed effects in AKM frameworks by linking them to underlying bargaining models. This article provides evidence of rent sharing from orthogonal directions by exploiting different dimensions in the same data. Taking advantage of a rich matched employer-employee dataset for France over the period 1984-2001, we consistently compare across-industry heterogeneity in rent-sharing parameters derived from three different approaches. The accounting approach and the standard labor economics approach are compatible with distinct labor bargaining settings (right-to-manage, efficient bargaining, labor hoarding) whereas the productivity approach hinges on the assumption of efficient bargaining. Across the different approaches, we evidently find differences in dispersion of the...	Sabien Dobbelaere, Jacques Mairesse
9	2005	Foreign Takeovers and Wages: Theory and Evidence from Hungary ↗ [Title only] This paper directly addresses the project's focus on international trade by examining how foreign ownership shocks transmit to firm wage premiums, a key mechanism in the AKM framework. It provides empirical evidence on how ownership changes alter the worker-firm wage decomposition, aligning with themes of firm-level pay policies and labor market adjustments to trade shocks. No abstract available.	Sándor Csengődi, Dieter Urban, Rolf Jungnickel
9	2023	Worker Skills or Firm Wage-Setting Practices? Decomposing Wage Inequality Across 20 OECD Countries ↗ [Title only] This paper directly addresses the core project theme of decomposing wage inequality into worker and firm components using AKM-style methods across multiple countries. It extends the standard framework to an international context, providing insights into how relative importance of worker skills versus firm wage-setting practices varies by country, which is highly relevant for understanding cross-country heterogeneity in wage determination. No abstract available.	Chiara Criscuolo, Alexander Hijzen, Cyrille Schwellnus, et al.
9	2015	Wage Formation: Towards Isolating Search and Bargaining Effects from the Marginal Product ↗ This paper directly addresses the project's goal of linking wage decomposition to search-and-matching theory by isolating bargaining effects from productivity. It employs identification strategies using worker mobility and administrative data that align with the core AKM framework and the project's interest in equilibrium interpretations of firm wage premiums. This article estimates the importance of workers’ outside options in wage determination. The article uses the predictions of search and bargaining theory and proposes novel identification strategies to separate the respective effects of outside options from those of unobserved productivity. Using an administrative panel database for Germany, this study exploits differences in both the employment composition across cities of Germany and mobility across jobs as sources of variation for identification. The main finding of the article is that a 10% increase in the outside options of a worker generates a 7% wage increase.	Jeanne Tschopp
9	2023	Supply, Demand, Institutions, and Firms: A Theory of Labor Market Sorting and the Wage Distribution ↗ This paper directly addresses the project's core themes by using a general equilibrium framework with firm and worker heterogeneity to analyze wage distribution and sorting. It explicitly quantifies how sorting of high-wage workers to high-wage firms contributes to wage inequality, aligning closely with the AKM framework's focus on variance decomposition and assortative matching. This paper builds a general equilibrium framework with firm and worker heterogeneity, monopsony power, and task-based production to quantify the long-run effects of education, biased demand shocks, and minimum wage.I take it to Brazilian data for 1998 and 2012 and find that (i) supply and demand shocks increase sorting of high-wage workers to high-wage firms, (ii) increased entry of high-wage firms boosts the effect of rising schooling attainment on mean log wages by 25%, and (iii) the minimum wage reduces formal wage inequality but also causes wage loss for mid-productivity workers and disemployment for those at the very bottom.	Daniel Haanwinckel
9	2013	Mismatch, Sorting and Wage Dynamics ↗ [Title only] The title directly addresses key themes of the project, specifically worker-firm sorting and the dynamic nature of wages, which are central to the AKM framework and its extensions. It likely explores how mobility and assignment mechanisms drive wage inequality, aligning closely with the researcher's interest in variance decomposition and limited mobility bias. No abstract available.	Jeremy Lise, Costas Meghir, Jean‐Marc Robin
9	2019	Rent Sharing in China: Magnitude, Heterogeneity and Drivers ↗ This paper directly addresses the project's core theme of rent-sharing by estimating firm wage premiums and their magnitude using a large matched employer-employee dataset. It employs identification strategies relevant to the AKM framework, such as leveraging firm-specific shocks, to analyze how wages respond to firm profitability and market conditions. Do firms in China share rents with their workers? We address this question by examining firm-level panel data covering virtually all manufacturing firms over the period 2000-2007, representing an average of 200,000 firms and 54 million workers per year. We find robust evidence of rent sharing (RS): workers that would move from low- to high-profit firms would see their wages increase by about 45%. The results are based on multiple instrumental variables, including firm-specific international trade shocks. We also present a number of complementary findings that allow us to understand better the nature of RS in the country: RS is weaker in firms with more women and less educated workers; RS...	Wenjing Duan, Pedro S. Martins
9	2001	Jobs, Workers and Changes in Earnings Dispersion This paper directly addresses the variance decomposition of wage inequality into worker and firm components by explicitly modeling the importance of worker-firm assignment and mobility rates. It provides a foundational framework for understanding how sorting and reallocation processes impact earnings dispersion, which is central to the AKM identification strategy and the project's focus on variance decomposition. The ''fractal'' nature of the rise in earnings dispersion is one of its key features and remains a puzzle. In this paper, we offer a new perspective on the causes of changes in earnings dispersion, focusing on the role of labour reallocation. Once we drop the assumption that all firms pay a given worker the same, the allocation of workers to firms matters for the dispersion of earnings. This perspective highlights two new factors that can affect the dispersion of earnings: rates of job and worker reallocation, and the nature of the process allocating workers to jobs. We set out a framework capturing this idea and quantify the impact of reallocation on earnings dispersion, using a dataset...	Simon Burgess, Julia Lane, David W. Stevens
9	2012	Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation ↗ This paper directly addresses the project's core themes of variance decomposition, worker-firm sorting, and the role of reallocation in earnings inequality using matched employer-employee data. It provides essential empirical context for understanding how worker and firm mobility contributes to wage dynamics beyond static fixed effects. This study exploits longitudinal employer–employee matched data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in earnings inequality within and across industries between 1992 and 2003. We find that factors that cannot be measured using standard cross‐sectional data, including the entry and exit of firms and the sorting of workers across firms, are important sources of changes in earnings distributions over time. Our results also suggest that the dynamics driving changes in earnings inequality are heterogeneous across industries.	Fredrik Andersson, Elizabeth E. Davis, Matthew Freedman, et al.
9	2023	The Power of Proximity to Coworkers: Training for Tomorrow or Productivity Today? ↗ [Title only] This paper directly addresses the project's theme of coworker learning spillovers and their impact on wage dynamics, which is a key component of the time-varying worker effects dimension. By investigating whether proximity leads to training (human capital) or immediate productivity, it aligns with the investigation of team production models and non-static worker contributions. No abstract available.	Natalia Emanuel, Emma Harrington, Amanda Pallais
9	2023	An Anatomy of Monopsony: Search Frictions, Amenities and Bargaining in Concentrated Markets ↗ This paper directly addresses the equilibrium interpretation of firm wage premiums through search frictions and bargaining, which is a key dimension of the project. It quantifies the wedge between wages and marginal product, providing a structural foundation for understanding how firm-level pay policies and market concentration generate the fixed effects estimated in AKM-style models. We contribute a theory in which three channels interact to determine the degree of monopsony power and therefore the wedge between a worker's spot wage and her marginal product (henceforth, the wage markdown): (1) heterogeneity in worker-firm-specific preferences (nonwage amenities), (2) firm granularity, and (3) off-and on-the-job search frictions.We use Norwegian data to discipline each channel and then reproduce novel reduced-form empirical relationships between market concentration, job flows, wages and wage inequality.Our main exercise quantifies the contribution of each channel to income inequality and wage markdowns.The markdowns are 21 percent in our baseline estimation.Removing...	David Berger, Kyle Herkenhoff, Andreas Kostøl, et al.
9	2021	Offshoring and working hours adjustments in a within-firm labor market ↗ This paper directly addresses the project's focus on how international trade shocks, specifically offshoring, transmit to firm wage premiums and alter the worker-firm wage decomposition. It utilizes matched employer-employee panel data to analyze within-firm labor market adjustments, aligning with the project's interest in trade's impact on wage inequality and pay structures. Although a growing body of literature identifies the within-firm redistribution effects of trade, research on the adjustment processes in within-firm labor markets remains scarce. This study analyzes the within-firm adjustment of working hours and wages by considering workers’ educational background and gender in response to a change in offshoring. Matched worker–firm panel data in the Japanese manufacturing sector covering 1998 to 2014 are used. The analysis leads to the following three observations. First, offshoring does not significantly alter the skill premium and gender gap in terms of scheduled monthly salaries and scheduled hourly wages. Second, offshoring decreases skill premium in...	Masahiro Endoh
9	2020	The exporter wage premium when firms and workers are heterogeneous ↗ This paper directly addresses the project's dimension on international trade by analyzing how export shocks transmit to firm wage premiums using matched employer-employee data. It provides a structural estimation framework that decomposes the exporter wage premium by worker skill and ability, offering core insights into how firm heterogeneity and worker sorting interact in equilibrium. We set up a trade model with heterogeneous firms and a worker population that is heterogeneous in two dimensions: workers are either skilled or unskilled, and within each skill category there is a continuum of abilities. Workers with high abilities, both skilled and unskilled, are matched to firms with high productivities, and this leads to wage differentials within each skill category across firms. Self-selection of the most productive firms into exporting generates an exporter wage premium, and our framework with skilled and unskilled workers allows us to decompose this premium into its skill-specific components. We employ linked employer-employee data from Germany to structurally...	Hartmut Egger, Peter Egger, Udo Kreickemeier, et al.
9	2009	Inter-industry Wage Differentials: How Much Does Rent Sharing Matter? ↗ [Title only] This title directly addresses the core theme of rent-sharing and its contribution to wage inequality, which is central to the AKM framework and variance decomposition. It likely evaluates the magnitude of firm-specific wage premiums, a key component of the researcher's interest in identifying and estimating firm effects on wages. No abstract available.	Philip Du Caju, François Rycx, Ilan Tojerow
9	2007	Unobserved Individual and Firm Heterogeneity in Wage and Tenure Functions: Evidence from German Linked Employer-Employee Data ↗ This paper directly applies the AKM framework to German linked employer-employee data to decompose wage variance into worker and firm fixed effects, which is the core methodology of the project. It provides essential empirical evidence on worker-firm sorting patterns and the trade-off between wages and job stability, directly informing the project's themes on variance decomposition and assortative matching. Unobserved Individual and Firm Heterogeneity in Wage and Tenure Functions: Evidence from German Linked Employer-Employee Data We estimate wage and job tenure functions that include individual and firm effects capturing time-invariant unobserved worker and firm heterogeneity using German linked employeremployee data (LIAB data set). We find that both types of heterogeneity are correlated to the observed characteristics and that it is therefore warranted to include individual and firm fixed effects in both the wage and the job tenure equation. We look into the correlation of the unobserved heterogeneity components with each other. We find that high-wage workers tend to be low-tenure workers...	Thomas Cornelißen, Olaf Hübler
9	2023	The Decline in Rent Sharing ↗ This paper directly addresses rent-sharing, a central theme of the project, by analyzing how firm-level productivity shocks transmit to wages over time. It provides empirical evidence on the dynamics of the firm wage premium, which is fundamental to understanding the equilibrium interpretation of firm fixed effects in the AKM framework. The evolution of rent sharing is studied. Based on a panel of the top 300 publicly quoted British companies over 35 years and using excess stock market returns to patenting activity as an instrument for economic rents, the paper reports evidence of a significant fall over time in the pass-through from rents to wages. It confirms that wages do respond to firm-level shocks to economic rents, but by significantly less after 2000 than during the 1980s and 1990s. The evidence of decline is robust, corroborated with alternative instruments and industry-level analysis for the United States and the European Union.	Brian Bell, Paweł Bukowski, Stephen Machin
9	2012	"Better Workers Move to Better Firms: A Simple Test to Identify Sorting", Carlo Alberto Notebooks, No. 259, 2012. [Title only] The title explicitly addresses the core AKM theme of identifying worker-firm sorting, which is fundamental to understanding variance decomposition in wage inequality. It likely presents a methodological test or identification strategy related to assortative matching, directly aligning with the project's focus on estimation methods and limited mobility bias. No abstract available.	Francesco Devicienti, Cristian Bartolucci
9	2023	Polarizing Corporations: Does Talent Flow to “Good” Firms? ↗ [Title only] The title directly addresses the core theme of assortative matching between workers and firms by investigating whether high-talent workers sort into higher-paying or more productive firms. This aligns perfectly with the project's focus on variance decomposition and the dynamics of worker-firm assignment in wage decomposition models. No abstract available.	Emanuele Colonnelli, Timothy McQuade, Gabriel Lobato Ramos, et al.
9	2022	Eclipse of Rent-Sharing: The Effects of Managers’ Business Education on Wages and the Labor Share in the US and Denmark ↗ This paper directly addresses the project's theme of rent-sharing by empirically demonstrating how managerial practices causally affect firm-level wage premiums and labor shares. It utilizes event-study designs and instrumental variables to analyze the transmission of productivity and trade shocks through firm pay policies, aligning closely with the project's focus on firm wage determinants and their decomposition. This paper provides evidence from the US and Denmark that managers with a business degree (“business managers”) reduce their employees’ wages. Within ﬁve years of the appointment of a business manager, wages decline by 6% and the labor share by 5 percentage points in the US, and by 3% and 3 percentage points in Denmark. Firms appointing business managers are not on diﬀerential trends and do not enjoy higher output, investment, or employment growth thereafter. Using manager retirements and deaths and an IV strategy based on the diﬀusion of the practice of appointing business managers within industry, region and size quartile cells, we provide additional evidence that these are causal eﬀects...	Daron Acemoğlu, Alex Xi He, Daniel le Maire
9	2005	On-The-Job Search and Sorting ↗ [Title only] This title directly addresses the project's third dimension regarding the equilibrium interpretation of firm fixed effects through search-and-matching theory and worker-firm assignment. It is highly relevant as it likely covers the mechanisms of on-the-job search and sorting that generate and sustain the firm wage premiums central to the research agenda. No abstract available.	Pieter A. Gautier, Coen N. Teulings, Aico van Vuuren
9	2018	The Effect of Import Competition on Wages in the Japanese Manufacturing Sector ↗ This paper directly addresses the project's focus on the role of international trade, specifically import competition, in transmitting shocks to firm wage premiums and altering worker-firm wage decomposition. It utilizes matched employer-employee panel data to analyze how these trade shocks affect wages, aligning closely with the project's fourth dimension on trade impacts. This study estimates the effect of import competition in the final goods market on workers’ wages in the Japanese manufacturing sector by constructing a panel of matched worker–firm data for 1998–2013 wages. The baseline results show that import competition does not decrease unskilled workers’ wages and increases the skill premia of workers with college degrees or those in managerial and professional positions. Large firms and firms with low productivity also increased their wage premia through import competition, but the degree of increase due to firm-level factors is much smaller than that due to factors related to workers’ skill.	Masahiro Endoh
9	2016	The Skill Structure of Export Wage Premium: Evidence from Chinese Matched Employer–Employee Data ↗ This paper directly addresses the project's fourth dimension by examining how international trade shocks transmit to firm wage premiums across different worker skill groups. It utilizes matched employer-employee data to decompose wage inequality, providing empirical evidence on the interaction between export activities and the skill structure of wages, which is central to the AKM framework's application in trade contexts. Abstract We study how the wage gap between exporting and non‐exporting firms (export wage premium) differs across skill groups, using unique matched employer–employee data from China. We find robust evidence that exporters pay relatively higher wages than non‐exporters to more educated workers. The differences in export wage premium across education groups are sizable. Further investigations show that the positive correlation between export wage premium and education is more pronounced in sectors with higher scope for quality differentiation. This is consistent with the theory that exporters produce relatively higher quality goods which require relatively higher quality skilled workers.	Mi Dai, Jianwei Xu
9	2008	Labor Matching Behavior in Open Economies and Trade Adjustment This paper directly addresses the project's focus on international trade by modeling how export expansions and trade liberalization affect firm wage premiums through worker-firm matching and rent-sharing. It integrates the AKM themes of worker-firm assignment and wage decomposition by explicitly analyzing the impact of open economies on skill composition and wage dynamics within firms. This paper develops a model of costly trade and team production to examine the matching behavior of skilled workers in an open economy. Trade liberalization leads to a redistribution of rents across firms that differ in export status. When heterogeneous workers can bargain effectively and capture these rents, trade liberalization changes the supply of skilled production teams available for hire. Trade is shown to rationalize the matching behavior of workers, causing skill-upgrading within firms and infra-marginal improvements to firm-level productivity. Gains in productivity via skill-upgrading are distinct, and complementary, to the gains realized as low productivity firms exit and high...	Nicholas Sly
9	2024	Assortative Matching and Wages: The Role of Selection ↗ [Title only] This title directly addresses the project's core theme of assortative matching between workers and firms, which is central to understanding how variance is decomposed in wage inequality studies. It likely explores the identification and estimation challenges associated with selection processes, a key component of the AKM framework and its extensions. No abstract available.	Kataŕına Borovičková, Robert Shimer
9	2014	Bargaining, Sorting and the Gender Wage Gap: The Role of Firms in the Relative Pay of Women This paper directly addresses the project's core theme of labor market discrimination by analyzing the gender wage gap through the lens of firm-specific effects and bargaining power. It provides critical insights into how firm-level pay policies and assortative matching contribute to wage inequality, aligning with the project's focus on AKM frameworks and discrimination applications. An earlier version of this paper circulated under the title “Bargaining and the Gender Wage Gap: A Direct \nAssessment"	David Card, Ana Rute Cardoso, Patrick Kline
9	2024	An Anatomy of Monopsony: Search Frictions, Amenities, and Bargaining in Concentrated Markets ↗ This paper provides a crucial equilibrium foundation for the project's third dimension by linking firm wage premiums to monopsony power, search frictions, and bargaining within concentrated labor markets. It directly addresses the theoretical mechanisms of wage determination and firm-worker assignment that underpin the interpretation of fixed effects in matched employer-employee data. We contribute a theory in which three channels interact to determine the degree of monopsony power and therefore the markdown of a worker ’ s spot wage relative to her marginal product: (1) heterogeneity in worker-ﬁ rm-speci ﬁ c preferences (nonwage amenities), (2) ﬁ rm granularity, and (3) off-and on-the-job search frictions. We use Norwegian data to discipline each channel and then reproduce new reduced-form empirical relationships between market concentration, job ﬂ ows, wages and wage inequality. In doing so we provide a novel method for clustering occupations into local labor markets. Our main exercise quanti ﬁ es the contribution of each channel to income inequality and wage...	David Berger, Kyle Herkenhoff, Andreas Kostøl, et al.
9	2025	Firm Pay and Worker Search ↗ [Title only] The title directly addresses the equilibrium interpretation of firm fixed effects through search-and-matching theory, specifically focusing on how worker search behavior influences firm pay policies. This aligns perfectly with the project's third dimension regarding the theoretical underpinnings of wage premiums in equilibrium settings. No abstract available.	Sydnee Caldwell, Ingrid Haegele, Joerg Heining
9	2013	Service offshoring and wages: worker-level evidence from Italy This paper directly addresses the project's fourth dimension by examining how offshoring shocks transmit to wage dynamics and inequality using linked employer-employee data. It provides empirical evidence on how specific international trade mechanisms, namely service offshoring, alter wage outcomes and worker-level disparities, which is central to the study of firm wage premiums and wage decomposition. Il paper analizza gli effetti dell'offshoring di servizi sui salari dei lavoratori italiani. L'analisi si basa su un nuovo dataset costruito combinando due differenti fonti di informazioni: dati amministrativi rilasciati dall'Istituto Nazionale di Previdenza Sociale (INPS), che permettono di collegare i lavoratori ai rispettivi datori di lavoro (linked employer-employee data), e indicatori settoriali di offhsoring derivati dalle matrici Input-Output pubblicate dall'Istituto Nazionale di Statistica (ISTAT). L'analisi empirica si propone di valutare l'effetto dell'offshoring di servizi sui salari dei lavoratori italiani, controllando opportunamente per le caratteristiche rilevanti dei...	Elisa Borghi, Rosario Crinò
9	2013	Trade and wage inequality [Title only] This title directly addresses the project's fourth dimension concerning the role of international trade, specifically focusing on export expansions, import competition, and their transmission to firm wage premiums. It is highly relevant as it likely discusses how these shocks alter the worker-firm wage decomposition and contribute to wage inequality. No abstract available.	Luca David Opromolla
9	2005	Theory and Evidence on the Glass Ceiling Effect Using Matched Worker-firm Data ↗ [Title only] The paper directly addresses the labor market discrimination theme central to the researcher's project by utilizing matched employer-employee data to estimate the glass ceiling effect. It likely employs the AKM framework or related fixed-effect methodologies to decompose wage disparities and identify gender-based differences in worker or firm effects, aligning closely with the project's interest in discrimination and wage decomposition. No abstract available.	Mohamed Jellal, Christophe Jalil Nordman, Francois-Charles Wolff
9	2023	Exporting, Wage Profiles, and Human Capital: Evidence from Brazil ↗ This paper directly addresses the project's fourth dimension by analyzing how export shocks transmit to worker wage profiles and human capital accumulation. It integrates equilibrium wage bargaining and worker-firm assignment mechanisms, providing crucial empirical evidence on the interaction between international trade and the dynamics of the wage decomposition. Abstract Export activity shapes workers’ experience-wage profiles. Using employer-employee and customs data for Brazilian manufacturing, we document that workers’ experience-wage profiles are steeper at exporters than at non-exporters and, among exporters, steeper at exporters shipping to high-income destinations. We develop and quantify a model featuring worker-firm wage bargaining, export-market entry by multi-worker firms, and human capital accumulation by workers to interpret the data. Human capital growth can explain one-half of the differences in wage profiles between exporters and non-exporters. We show that increased human capital per worker can account for one-half of the overall...	Xiao Ma, Marc-Andreas Muendler, Alejandro Nakab
9	2020	How Much Should We Trust Estimates of Firm Effects and Worker Sorting? ↗ [Title only] This paper directly addresses the core AKM framework's limitations regarding identification and estimation reliability, specifically focusing on worker sorting and mobility bias. It is highly relevant to the project's themes of limited mobility bias, leave-out corrections, and the trustworthiness of standard variance decomposition methods. No abstract available.	Stéphane Bonhomme, Kerstin Holzheu, Thibaut Lamadon, et al.
9	2024	Differences in On-the-Job Learning Across Firms ↗ This paper directly addresses the project's focus on time-varying worker components by empirically demonstrating significant heterogeneity in on-the-job learning across firms. It utilizes methods consistent with the project's interest in firm fixed effects and clustering (e.g., BLM-style classification) to decompose wage dynamics into portable skill acquisition, aligning with themes of human capital accumulation and firm-specific effects. IZA DP No. 14473 JUNE 2021 Differences in On-the-Job Learning across Firms We present evidence consistent with large disparities across firms in the on-the-job learning their young employees experience, using administrative datasets from Brazil and Italy. We categorize firms into discrete “classes” using a clustering methodology which groups together firms with similar distributions of unexplained earnings growth. Equipped with this categorization of firms—which our conceptual framework interprets as skill-learning classes—we document three main results. First, Mincerian returns to experience vary substantially across experiences acquired in different firm classes, and the magnitude of this...	Jaime Arellano-Bover, Fernando Saltiel
9	2024	The Incidence and Distributional Effects of the Corporate Income Tax: The Role of Rent Sharing ↗ This paper directly addresses the core AKM theme of rent-sharing by quantifying how firm-specific wage premiums are distributed across workers and how this alters the incidence of corporate taxation. It aligns perfectly with the project's focus on the distributional consequences of firm wage premiums and the interaction between firm-level pay policies and broader economic outcomes. Standard analysis of corporate income taxation assumes shareholders bear the burden of taxes on rents. But recent research finds that firms share rents with workers, implying that workers bear some of the burden. Using the Urban-Brookings Tax Policy Center microsimulation model, we show that rent sharing has significant implications for understanding corporate taxes. Allowing for rent sharing shifts the incidence of the tax, placing more burden on labor, but the progressivity implications depend crucially on which workers obtain rents. In the United States, where rents are shared disproportionately with high-income workers, the tax remains approximately as progressive as under standard...	William G. Gale, Samuel I. Thorpe
9	2017	Sources of Displaced Workers' Long-Term Earnings Losses ↗ This paper directly addresses the estimation of firm wage premiums using matched employer-employee panel data, a core methodological component of the project. It specifically quantifies the long-term impact of job displacement on earnings by isolating lost employer-specific fixed effects, which aligns with the project's focus on the AKM framework and the decomposition of wage inequality. We estimate the earnings losses of a cohort of workers displaced during the Great Recession and decompose those long-term losses into components attributable to fewer work hours and to reduced hourly wage rates. We also examine the extent to which the reduced earnings, work hours, and wages of these displaced workers can be attributed to factors specific to pre- and post-displacement employers; that is, to employer-specific fixed effects. The analysis is based on employer-employee linked panel data from Washington State assembled from 2002-2014 administrative wage and unemployment insurance (UI) records. Three main findings emerge from the empirical work. First, five years after job loss...	Marta Lachowska, Alexandre Mas, Stephen A. Woodbury
9	2011	Wage Effects of Trade Reform with Endogenous Worker Mobility ↗ This paper directly addresses the project's focus on the role of international trade by analyzing how trade reform transmits to firm wage premiums using matched employer-employee data. It specifically tackles the critical issue of limited mobility bias and endogenous sorting, demonstrating that failing to account for these factors leads to incorrect estimates of worker-firm wage decompositions. In this paper, we use a linked employer-employee database from Brazil to evaluate the wage effects of trade reform. With an aggregate (firm-level) analysis of this question, we find that a decline in trade protection is associated with an increase in average wages in exporting firms relative to domestic firms, consistent with earlier studies. However, using disaggregated, employer-employee level data, and allowing for the endogenous assignment of workers to firms due to match-specific productivity, we find that the premium paid to workers at exporting firms is economically and statistically insignificant, as is the differential impact of trade openness on the wages of workers at exporting...	Pravin Krishna, Jennifer P. Poole, Mine Zeynep Senses
9	2017	How Does Firm Performance Affect Wages? Evidence from Idiosyncratic Export Shocks This paper directly addresses how firm-level productivity and demand shocks transmit to worker wages, a core component of the project's investigation into firm wage premiums and rent-sharing. By employing an instrumental variable strategy using idiosyncratic export shocks, it provides causal evidence on the dynamic response of wages to firm performance, aligning closely with the project's focus on time-varying firm effects and equilibrium labor market mechanisms. In the canonical competitive labor market model, firms are wage-takers and idiosyncratic shocks to individual firms do not affect wages. However, when labor markets are frictional, wages may directly depend on firm-specific factors. We test how sensitive wages are to firm-level labor demand by estimating the incidence of idiosyncratic export demand shocks on the wages of incumbent workers in Portugal during the Great Recession (2008-2010). Using detailed export records, we construct measures of firm exposure to unanticipated shocks to the demands of different countries for specific products. The shocks predict changes in output and payroll at affected firms, but not at other similar firms...	Andrew Garin, Filipe Silvério
9	2024	What Lies behind the Returns to Schooling: The Role of Labor Market Sorting and Worker Heterogeneity ↗ This paper directly employs the AKM framework to decompose wage returns to schooling using linked employer-employee data, aligning perfectly with the project's core methodology. It explicitly quantifies the role of sorting into high-paying firms, which is a central theme in understanding wage inequality and the variance decomposition components studied in the project. Abstract Do more educated workers earn higher wages partly because they have access to high-paying firms and occupations? We rely on linked employer-employee data to combine the estimation of AKM models with the decomposition of the returns to schooling. We exploit exogenous variation in education driven by changes in compulsory education. We show that education provides access to better-paying workplaces and occupations: 30 percent of the overall return to education operates through the workplace channel and 12 percent through the occupation channel. The remainder is associated exclusively with the individual. Match quality plays a modest role in the returns to education.	Pedro Portugal, Hugo Reis, Paulo Guimarães, et al.
9	2014	Firm Dynamics and Assortative Matching This paper directly addresses the project's theme of assortative matching between workers and firms, a core component of the wage decomposition framework. It provides empirical evidence and a theoretical model linking firm dynamics to worker quality, which is essential for understanding sorting and wage inequality within the AKM context. I study the relationship between firm growth and the characteristics of newly hired workers. Using Census microdata I obtain a novel empirical result: when a given firm grows faster it hires workers with higher past wages. These results suggest that productive, fast-growing firms tend to hire more productive workers, a form of positive assortative matching. This contrasts with prior research that has found negligible or negative sorting between workers and firms. I present evidence that this difference arises because previous studies have focused on cross-sectional comparisons across firms and industries, while my results condition on firm characteristics (e.g. size, industry, or firm fixed...	Leland D. Crane
9	2009	Human Capital Accumulation and Labour Market Equilibrium This paper directly addresses the project's core themes by modeling human capital accumulation through on-the-job learning and linking it to the AKM framework's worker and firm fixed effects. It provides a theoretical equilibrium foundation for wage decomposition and sorting, which are central to the researcher's investigation of worker-firm dynamics and wage inequality. We analyse an equilibrium labour market with on-the-job search and experience effects (where workers learn-by-doing). The analysis yields a standard Mincer wage equation with worker fixed effects and endogenously determined firm fixed effects. It shows that learning-by-doing increases equilibrium wage dispersion consistent with the data. Equilibrium sorting - where over time more experienced workers also tend to find and quit to better paid employment - has a significant impact on wage inequality. As the model yields a cross section distribution of wages paid with the 'right' structure (the density of wages paid is single peaked with a 'fat' Pareto right tail) and yields the 'right' time...	Kenneth Burdett, Carlos Carrillo‐Tudela, Melvyn Coles
9	2025	Firms and the Intergenerational Transmission of Labor Market Advantage ↗ This paper directly addresses the project's core AKM framework by decomposing intergenerational earnings into stable worker effects and firm pay premiums. It further explores key themes of worker-firm sorting and variance decomposition, providing critical insights into how firm-level pay policies sustain wage inequality across generations. Recent research finds that pay inequality stems both from firm pay-setting and from workers’ individual characteristics. Yet, intergenerational mobility research remains focused on transmission of individual traits, and has failed to test how firms shape the inheritance of inequality. We study this question using three decades of Swedish population register data, and decompose the intergenerational earnings correlation into firm pay premiums and stable worker effects. One quarter of the intergenerational earnings correlation at midlife is explained by sorting between firms with unequal pay. Employer or industry inheritance account for a surprisingly small share of this firm-based earnings...	Per Engzell, Nathan Wilmers
9	2022	Do firm effects drift? Evidence from Washington administrative data ↗ This paper directly addresses the project's core theme of time-varying firm effects by proposing and testing rolling and time-varying extensions of the standard AKM model. It provides crucial empirical evidence on the persistence of firm effects and the dynamic behavior of wage decomposition components, which is central to the researcher's interest in how firm wage premiums vary over time. We study the time-series properties of firm effects in the two-way fixed effects models popularized by Abowd, Kramarz, and Margolis (1999) (AKM) using two approaches. The first—the rolling AKM approach (R-AKM)—estimates AKM models separately for successive two-year intervals. The second—the time-varying AKM approach (TV-AKM)—is an extension of the original AKM model that allows for unrestricted interactions of year and firm indicators. We apply to both approaches the leave-one-out methodology of Kline, Saggio and Solvsten (2019) to correct for biases in the resulting variance components. Using administrative wage records from Washington State, we find, first, that firm effects for hourly...	Marta Lachowska, Alexandre Mas, Raffaele Saggio, et al.
9	2024	Coworker Sorting, Learning, and Inequality ↗ This paper directly addresses the project's theme of time-varying worker components by explicitly modeling coworker learning spillovers and peer effects on wages. It complements the core AKM framework by incorporating team production and social interactions into the wage decomposition, providing essential context for understanding wage dynamics beyond static worker and firm fixed effects. Social interaction with coworkers is common in the workplace. This paper explores how coworkers affect inequality through labor market sorting and on-thejob learning. Using matched employer-employee data from Italy, I first document two sets of empirical evidence by estimating an econometric model that incorporates coworkers in a wage regression with a novel estimation method. I find two main mechanisms through which coworkers affect wages: production complementarity and learning from coworkers. I also show that coworkers explain a substantial fraction of wage inequality, similar to that firm heterogeneity explains. To account for wage dynamics induced by these two channels and the...	Long Hong
9	2024	Firms and the Intergenerational Transmission of Labor Market Advantage ↗ This paper directly applies the AKM framework to decompose intergenerational earnings mobility into firm and worker components, addressing the project's core methodological focus on variance decomposition. It specifically investigates the sorting component of wage inequality and the equilibrium implications of firm pay-setting on class-based advantages, which aligns with the project's themes on assortative matching and the interpretation of firm fixed effects. Recent research finds that pay inequality stems both from firm pay-setting and from workers’ individual characteristics. Yet, intergenerational mobility research remains focused on transmission of individual traits, and has failed to test how firms shape the inheritance of inequality. We study this question using three decades of Swedish population register data, and decompose the intergenerational earnings correlation into firm pay premiums and stable worker effects. One quarter of the intergenerational earnings correlation at midlife is explained by sorting between firms with unequal pay. Employer or industry inheritance account for a surprisingly small share of this firm-based earnings...	Nathan Wilmers, Per Engzell
9	2012	Directed Search over the Life Cycle ↗ This paper directly addresses the equilibrium interpretation of firm fixed effects by modeling directed search and worker-firm assignment over the life cycle, which are central themes of the project. It provides a theoretical foundation for how search frictions and learning generate wage dynamics and match quality, aligning with the project's focus on life-cycle human capital and equilibrium search-and-matching theory. We develop a life-cycle model of the labor market in which different worker-firm matches have different quality and the assignment of the right workers to the right firms is time consuming because of search and learning frictions. The rate at which workers move between unemployment, employment and across different firms is endogenous because search is directed and, hence, workers can choose whether to seek low-wage jobs that are easy to find or high-wage jobs that are hard to find. We calibrate our theory using data on labor market transitions aggregated across workers of different ages. We validate our theory by showing that it correctly predicts the pattern of labor market transitions for...	Guido Menzio, Irina A. Telyukova, Ludo Visschers
9	2015	CHINESE IMPORTS COMPETITION’S IMPACT ON EMPLOYMENT AND THE WAGE DISTRIBUTION: EVIDENCE FROM FRENCH LOCAL LABOR MARKETS This paper directly addresses the project's theme on the role of international trade by analyzing how import competition shocks transmit to wage distribution and employment in local labor markets. It provides empirical evidence on how external trade pressures alter worker-firm dynamics and wage outcomes, fitting the research focus on trade impacts on labor markets. If cited or quoted, reference should be made to the full name of the author(s), editor(s), the title, the	Clément Malgouyres
9	2008	Rent-Sharing and the Cyclicality of Wage Differentials ↗ This paper directly addresses the project's core theme of rent-sharing and its contribution to wage inequality by estimating the elasticity between wages and firm profitability using matched employer-employee data. It provides empirical evidence on how firm-specific pay policies, driven by profits, generate persistent inter-industry wage differentials, which aligns with the study of AKM firm fixed effects and wage decomposition. Rent-Sharing and the Cyclicality of Wage Differentials This paper investigates inter-industry wage differentials in Belgium, taking advantage of access to a unique matched employer-employee data set covering all the years from 1999 to 2005. Findings show the existence of large wage differentials among workers with the same observed characteristics and working conditions, employed in different sectors. These differentials are persistent and no particular downward or upward trend is observed. However, the dispersion of inter-industry wage differentials appears to show a cyclical pattern over time. Further results indicate that ceteris paribus, workers earn significantly higher wages when...	Philip Du Caju, François Rycx, Ilan Tojerow
9	2006	The Effects of Rent-Sharing on the Gender Wage Gap in the Israeli Manufacturing Sector ↗ This paper directly addresses the rent-sharing component of the worker-firm wage decomposition, a central theme of the project. It empirically demonstrates how firm-level profit shocks transmit to wages and contributes to understanding wage inequality and sorting between workers and firms. This paper analyzes the impact of workplace characteristics on individual wages based on a unique cross-section matched employer-employee dataset for the Israeli private manufacturing sector in 1995; especially, we examine the effects of the interaction between rent-sharing and wages on the gender wage gap. The empirical findings show that individual compensation is significantly and positively related to firms' profits-per-employee even when controlling for group effects in the residuals, individual and firms' characteristics, industry wage differentials and endogeneity of profits. Wage-profit elasticity is found to be 14 percent and it is insignificantly different between genders. With...	Guy Navon, Ilan Tojerow
9	2021	Do workers share in firm success? Pass-through estimates for New Zealand ↗ This paper directly addresses the core theme of rent-sharing by estimating the pass-through of firm success to worker wages, a key component of firm wage premiums. It utilizes matched employer-employee data and decomposes wage effects into sorting and rent-sharing components, aligning closely with the project's focus on wage inequality decomposition and AKM-related methodologies. We study the extent to which firm financial performance is passed on to workers in the form of higher wages and the degree to which this pass-through has changed over the period 2002- 2018. We use both value added per worker and a measure of quasi-rents as measures of financial performance. Value added per worker is the standard measure used internationally. Quasi-rents better approximate the resources available to be shared between workers and firms as it takes into account the rental cost of capital as well as the reservation wages of workers. We estimate the reservation wage bill for each firm using estimates from a two-way fixed-effect model. We estimate models similar to those...	Corey Allan, David C. Maré
9	2012	Job Search, Human Capital and Wage Inequality ↗ This paper directly addresses the project's core themes by providing a quantitative equilibrium search model that decomposes wage variance into worker and firm components. It explicitly models on-the-job search and human capital accumulation, offering theoretical grounding for the AKM framework's identification assumptions and wage dynamics. The objective of this paper is to construct and quantitatively assess an equilibrium search model with on-the-job search and general human capital accumulation. In the model workers enter the labour market with different abilities and firms differ in their productivities. Wages are dispersed because of search frictions and workers' productivity differentials. The model generates a simple (log) wage variance decomposition that is used to measure the importance of firm and worker productivity differentials, frictional wage dispersion and workers' sorting dynamics. I calibrate the model using a sample of young workers for the UK. I show that wage inequality among low skilled workers is mostly...	Carlos Carrillo‐Tudela
9	2025	An Information-Based Theory of Monopsony Power ↗ This paper directly addresses the project's third dimension by providing a structural equilibrium interpretation of firm wage premiums through monopsony power and search frictions. It complements the AKM framework by theoretically explaining the mechanisms, such as sorting and information costs, that generate the firm fixed effects estimated in the core analysis. We develop a tractable model of monopsony power based on information frictions in job search. Workers and firms choose probabilistic search strategies, with information costs limiting how precisely they can target matches. Firms post wages strategically, anticipating application behavior and exploiting a first-mover advantage. The model nests both directed and random search as limiting cases and yields a closed-form wage equation that shows the effects on wage-setting power of search frictions, labor market tightness and sorting. Wage markdowns in equilibrium arise not only from limited labor supply elasticity but also from sorting patterns and demand-side frictions. In highly assortative...	Federal Reserve Bank of Dallas, Anton Cheremukhin, Paulina Restrepo-Echavarría, et al.
9	2018	Workers, Firms and Life-Cycle Wage Dynamics ↗ This paper directly addresses the project's core AKM framework by extending it to incorporate life-cycle dynamics and worker-firm sorting. It provides critical insights into how worker mobility and matching evolve over time, which is central to the project's themes of identification, variance decomposition, and assortative matching. Studies of individual wage dynamics typically ignore firm heterogeneity, whereas decompositions of earnings into worker and firm effects abstract from life-cycle considerations. We study firm effects in individual wage dynamics using administrative data on the population of Italian employers and employees. We propose a novel identification strategy for firm-related wage components exploiting the informative content of the wage covariance structure of coworkers. Wage inequality increases three-fold over the working life; firm effects are predominant while young, but sorting of workers into firms becomes increasingly important, explaining the largest share of lifetime inequality. Static...	Paul Bingley, Lorenzo Cappellari
9	2023	International Trade and Wage Inequality: Evidence from Brazil ↗ [Title only] This paper directly addresses the project's fourth dimension on the role of international trade and its transmission to wage inequality. It likely provides empirical evidence on how trade shocks affect wage distributions, which is foundational for understanding changes in the worker-firm wage decomposition. No abstract available.	Lucas Squarize Chagas, Vinicios Sant'Anna
9	2025	Places versus People: The Ins and Outs of Labor Market Adjustment to Globalization ↗ [Title only] This paper directly addresses the project's fourth dimension on the role of international trade by examining how globalization shocks affect labor market outcomes across different locations. It likely investigates the transmission of trade effects to firm wage premiums and worker-firm matching, which are central to the specified research themes. No abstract available.	David Autor, David Dorn, G. A. Hanson, et al.
9	2025	Do workers or firms drive the foreign acquisition wage gap? ↗ This paper directly addresses the project's core themes by using matched employer-employee data to decompose wage gaps into worker and firm components, specifically within the context of foreign acquisition shocks. It aligns with the project's focus on the equilibrium interpretation of firm fixed effects and the role of international trade in altering the worker-firm wage decomposition. Foreign-acquired firms pay higher wages. The wage gap may arise with worker composition (e.g., sorting of high-quality workers) or firm-level premia (e.g., productivity improvements). We propose a dynamic decomposition on The Netherlands’ universal employer–employee data to understand the drivers of the post-acquisition wage gap. The wage gap rises from 1% to 5% after the acquisition, and firm level premia account for roughly three-quarters of the gap. The contribution of the workforce composition is initially absent, but grows to one-fifth of the wage gap, driven solely by new hires. Firm-level premia associate with higher management pay, worker training, and firms’ internationalization...	Marcus Roesch, Michiel Gerritse, Bas Karreman, et al.
9	2023	Firm Heterogeneity in Skill Returns ↗ This paper directly extends the AKM framework by introducing firm heterogeneity in skill returns and modeling worker-firm complementarities, which are central to the project's focus on sorting and wage decomposition. It provides empirical evidence on how assortative matching and varying returns to cognitive and non-cognitive attributes influence the earnings distribution, aligning closely with the project's themes on identification via mobility and the equilibrium interpretation of firm effects. We quantify firm heterogeneity in skill returns and present direct evidence of worker–firm complementarities. Within a model of firms' demand for cognitive and noncognitive attributes we show that identification depends on the availability of skill measures. Linking administrative data to test scores we document worker sorting and convex earnings–skill relationships. We find that: (1) Both skills' returns vary substantially across employers and correlate weakly within-firm. (2) Workers with large endowments of a skill populate firms with higher returns to it. Sorting intensifies with the cross-sectional dispersion of returns. (3) Complementarities and sorting significantly influence the...	Michael J. Böhm, Khalil Esmkhani, Giovanni Gallipoli
9	2022	Firm Pay Dynamics ↗ This paper directly extends the seminal AKM framework by incorporating dynamic firm pay effects and linking them to firm productivity and capital accumulation. It addresses the project's focus on time-varying firm wage premiums and the drivers of wage inequality using matched employer-employee panel data. We study the nature of firm pay dynamics. To this end, we propose a statistical model that extends the seminal framework by Abowd, We estimate the model using linked employeremployee data for Sweden from 1985 to 2016. By drawing on detailed firm financials data, we show that firms that become more productive and accumulate capital raise pay, whereas firms lower pay as they add workers. A secular increase in firm-year pay dispersion in Sweden since 1985 is accounted for by greater persistence of firm pay among incumbent firms as well as greater dispersion in firm pay among entrant firms, as opposed to more volatile firm pay.	Niklas Engbom, Christian Moser, Jan Sauermann
9	2023	Polarizing Corporations: Does Talent Flow to “Good’’ Firms? ↗ [Title only] This title directly addresses the project's key theme of assortative matching between workers and firms, specifically investigating how high-talent workers sort into superior firms. It aligns with the AKM framework's focus on decomposing wage inequality and understanding the mechanisms behind firm wage premiums and talent allocation. No abstract available.	Emanuele Colonnelli, Timothy McQuade, Gabriel Ramos, et al.
9	2021	Data and Code for: Imperfect Competition, Compensating Differentials and Rent Sharing in the U.S. Labor Market ↗ This paper directly addresses the project's core themes by using matched employer-employee data to estimate firm wage premiums and decompose rents, aligning closely with the AKM framework. It further integrates the equilibrium interpretation of firm effects through imperfect competition and compensating differentials, which are key theoretical dimensions of the research project. We quantify the importance of imperfect competition in the U.S. labor market by estimating the size of labor market rents earned by American firms andworkers. We construct a matched employer-employee panel data set by combining the universe of U.S. business and worker tax records for the period 2001-2015. Using this panel data, we identify and estimate an equilibrium model of the labor market with two-sided heterogeneity where workers view firms as imperfect substitutes because of heterogeneous preferences over non-wage job characteristics. The model allows us to draw inference about imperfect competition, worker sorting, compensating differentials, and rent sharing.<br>	Thibaut Lamadon, Magne Mogstad, Bradley Setzler
9	2022	Twisting the demand curve: Digitalization and the older workforce ↗ This paper directly employs and extends the AKM framework by incorporating time-varying firm effects and job-spell fixed effects, which are central to the project's methodological scope. It empirically investigates how firm-level technological shocks (software investment) alter wage premiums and inequality, aligning with the project's focus on non-stationary firm effects and the distributional consequences of technological change. This paper uses U.S. Census Bureau panel data that link firm software investment to worker earnings. We regress the log of earnings of workers by age group on the software investment by their employing firm. To unpack the potential causal factors for differential software effects by age group we extend the AKM framework by including job-spell fixed effects that allow for a correlation between the worker-firm match and age and by including time-varying firm effects that allow for a correlation between wage-enhancing productivity shocks and software investments. Within job-spell, software capital raises earnings at a rate that declines post age 50 to about zero after age 65. By contrast, the...	Erling Barth, James C. Davis, Richard B. Freeman, et al.
9	2020	Firm Pay Dynamics ↗ [Title only] The title directly addresses the project's core interest in how firm wage premiums and pay policies evolve over time. It aligns perfectly with the themes of time-varying firm effects, response to shocks, and the dynamics of firm-level pay structures. No abstract available.	Niklas Engbom, Christian Moser
9	—	Workplace Heterogeneity and the Returns to Versatility ↗ This paper directly addresses the core AKM theme of firm heterogeneity and worker mobility by modeling how firm productivity dispersion affects inter-firm mobility and returns to versatility. It provides a theoretical foundation for understanding the sorting mechanisms and rent-sharing dynamics that underpin the identification and estimation of firm wage premiums in matched employer-employee data. In the canonical random on-the-job search model with continuous firm heterogeneity, I show that a mean-preserving spread of the firm-productivity distribution raises the returns to mobility, i.e., the inter-firm mobility of workers as measured by the number of outside contacts per employment spell. Both sorting and rent-share mechanisms play a role. In a further contribution, I distinguish frictional and structural impediments to mobility in order to establish a link between mobility and skills via the concept of versatility. Versatility enhances a person’s mobility since a mismatch between job requirements and the person’s skill set is less likely to occur. I provide some statistics in...	Damir Stijepic
9	2018	Comments by Jan M. Podivinsky, on The Effect of Import Competition on Wages in the Japanese Manufacturing Sector ↗ The paper directly addresses the project's focus on the role of international trade, specifically import competition, in transmitting shocks to firm wage premiums and altering wage decompositions. By utilizing matched employer-employee panel data in Japan, it provides crucial empirical evidence on how external shocks affect wages, aligning with the project's investigation into trade impacts and firm-level pay policies. Jan M. Podivinsky: This paper is motivated by earlier research on the effect of increased import competition in final goods markets upon domestic employment and wages. Although much of this research points to negative effects of import competition on wages, there is some evidence of a positive effect upon firms’ productivity, potentially increasing wages for these firms’ workers. Much of this evidence is based on worker-level panel data, in a range of developed and developing countries. The notable exception is Japan, where such worker-level panel data do not exist because government surveys do not contain worker identification information.Endoh addresses this exception and provides a...
9	2022	When Immigrants Meet Exporters: A Reassessment of the Immigrant Wage Gap ↗ This paper directly addresses the project's dimension on international trade by examining how export expansions transmit to firm wage premiums and alter wage decomposition. It provides empirical evidence on how firm characteristics (export intensity) interact with worker attributes (immigrant status) to influence wages, aligning with the study of rent-sharing and labor market responses to trade shocks. We use French employer-employee data for the manufacturing sector from 2005 to 2015 to reassess the wage gap between native and foreign workers. In line with previous evidence, we ﬁnd that immigrants earn less than natives, white-collar workers earn more than blue-collar workers, and exporters pay higher wages. In a new contribution to this literature, we ﬁnd that the immigrant wage gap varies with the export intensity of the ﬁrm and the occupational group of the worker. We present a theoretical model with heterogeneous ﬁrms and workers to show that our ﬁndings are consistent with white-collar immigrant workers capturing an informational rent, as they provide exporters with valuable...	Léa Marchal, Guzmán Ourens, Giulia Sabbadini
9	2015	Comparing Micro-Evidence on Rent Sharing from Three Different Approaches ↗ This paper directly addresses the project's theme of rent-sharing by comparing empirical methods to estimate the responsiveness of wages to firm ability to pay. It utilizes matched employer-employee data and explicitly controls for unobserved worker ability, which aligns closely with the AKM framework and the project's focus on the worker-firm wage decomposition. Empirical labor economists have resorted to estimating the responsiveness of workers' wages on firms' ability to pay to assess the extent to which employers share rents with their employees. This paper compares this labor economics approach with two other approaches that rely on standard micro production data only: the productivity approach for which estimates of the output elasticities of labor and materials and data on the respective revenue shares are needed and the accounting approach which boils down to directly computing the extent of rent sharing from firm accounting information. Using matched employer-employee data on 60,294 employees working in 9,849 firms over the period 1984-2001...	Sabien Dobbelaere, Jacques Mairesse
9	2006	Industry Wage Differentials, Unobserved Ability, and Rent-Sharing: Evidence from Matched Worker-Firm Data, 1995-2002 ↗ [Title only] This paper directly addresses the core AKM framework by decomposing industry wage differentials into unobserved worker ability and rent-sharing components using matched employer-employee data. It aligns perfectly with the project's focus on variance decomposition, limited mobility bias corrections, and the specific application of rent-sharing mechanisms in wage inequality studies. No abstract available.	Robert Plasman, François Rycx, Ilan Tojerow
9	2003	The Effect of Search Frictions on Wages This paper directly addresses the equilibrium interpretation of firm fixed effects by investigating how search frictions and worker self-selection influence wages and positive assortative matching. It utilizes matched employer-employee data to empirically test theoretical predictions central to the project's focus on search-and-matching models and wage decomposition. Labor market theories allowing for search frictions make marked predictions on the effect of the degree of frictions on wages. Often, the effect is predicted to be negative. Despite the popularity of these theories, this has never been tested. We perform tests with matched worker-firm data. The worker data are informative on individual wages and labor market transitions, and this allows for estimation of the degree of search frictions. The firm data are\ninformative on labor productivity. The matched data provide the skill composition in different markets. Together this allows us to investigate how the mean difference between labor productivity and wages in a market depends on the degree of...	Gérard J. van den Berg, Aico van Vuuren
9	2015	Compensating wage differentials in stable job matching equilibrium ↗ This paper directly addresses the core theme of assortative matching between workers and firms within the AKM framework. It explicitly links firm wage premiums to worker productivity and sorting mechanisms, providing a theoretical foundation for the variance decomposition and identification issues central to the project. This paper studies implicit pricing of non-wage job characteristics in the labor market using a two-sided matching model. It departs from the previous literature by allowing worker heterogeneity in productivity, which gives rise to a double transaction problem in a hedonic model. Deriving sufficient conditions under which assortative matching is the unique stable job-worker matching, we show that observed wage differentials between jobs reflect not only compensating wage differentials, but also worker productivity gaps between the jobs. We find that the job-worker matching pattern determines the extent to which compensating wage differentials are confounded with the worker productivity gap...	Seungjin Han, Shintaro Yamaguchi
9	2019	Monopsonistic Labor Markets and International Trade This paper directly addresses the project's focus on international trade by analyzing how trade liberalization affects wage inequality through the lens of monopsonistic labor markets. It provides a crucial equilibrium interpretation of firm wage premiums, linking them to firm heterogeneity and wage-setting power, which aligns with the research theme on search-and-matching theory and the role of trade shocks in altering wage decompositions. This paper introduces a framework to study the impact of trade liberalization on wage inequality and welfare in the presence of monopsonistic labor markets. The interaction of firm heterogeneity in productivity with idiosyncratic preferences of workers for working at different firms generates between-firm wage inequality for workers with identical skills. The degree of monopsony power is captured by the elasticity of firm-level labor supply, with a lower elasticity implying more wage-setting power by the firm. With more productive firms paying higher wages, monopsony power dampens the impact of firm heterogeneity on the allocation of market shares and allows lower productivity firms to...	Priya Ranjan, Antonio Rodriguez‐Lopez
9	2018	Distinguishing Between Signal and Noise in the Measurement of the Firm Wage Premium ↗ [Title only] This paper directly addresses the critical issue of measurement error in estimating firm fixed effects, which is central to the validity of AKM-style wage decompositions. By distinguishing between true firm wage premiums and noise, it provides essential insights into the reliability of variance decomposition and the identification of assortative matching. No abstract available.	Nicolas Chanut
9	2024	Decomposing the exporter wage gap: Selection or differential returns? ↗ This paper directly addresses the project's core AKM framework by decomposing the exporter wage gap using worker and firm fixed effects while explicitly modeling match-specific heterogeneity. It aligns perfectly with the research themes of identifying worker and firm effects, analyzing assortative matching based on comparative advantage, and examining the impact of international trade on wage decomposition. We show that the exporter wage gap is driven by workers sorting on comparative advantage rather than firm selection. We start out with an AKM-style wage equation with worker, firm, and residual “match” fixed effects. We show that allowing worker and firm effects to depend on the export status of the firm changes how the exporter wage gap is decomposed. Our results suggest that workers in exporting firms have unobserved traits that are particularly valuable in exporting, resulting in higher wages for workers in those firms. Further, we show that workers make job transitions based on their differential returns. Thus, the exporter wage gap results from workers self-selecting into exporting and...	Jonas Bødker, Jonas Maibom, Rune Vejlin
9	2022	Job Ladder, Human Capital, and the Cost of Job Loss ↗ This paper directly addresses the project's core themes by modeling the joint dynamics of worker human capital accumulation, firm-specific effects, and on-the-job search within an equilibrium framework. It provides critical insights into the structural drivers of wage inequality and the costs of job loss, aligning with the research focus on wage decomposition, sorting, and search-and-matching theory. High-tenure workers who lose their jobs experience a large and prolonged fall in wages and earnings. To quantify the forces behind this empirical regularity, we propose a rich structural model of the labor market with heterogeneous firms, on-the-job search, and firm-specific and general human capital. By jointly matching moments of workers’ mobility and wages, the model can replicate the losses in earnings and wages observed in the data. The loss of a job with a more productive employer is the primary driver of the cumulated wage losses post-displacement (50 percent), followed by the loss of firm-specific human capital (30 percent).	Richard Audoly, Federica De Pace, Giulio Fella
9	2024	Assortative Matching and Wages: The Role of Selection ↗ [Title only] The title directly addresses the core project theme of assortative matching between workers and firms and its impact on wage decomposition. It aligns with the study of identification via worker mobility and variance components, which are central to the AKM framework. No abstract available.	Kataŕına Borovičková, Robert Shimer
9	2024	Assortative Matching and Wages: The Role of Selection ↗ [Title only] This title directly addresses the key theme of assortative matching between workers and firms, which is central to the project's focus on how sorting influences the worker-firm wage decomposition. It likely explores the identification and estimation of these selection effects within the AKM framework or related models. No abstract available.	Kataŕına Borovičková, Robert Shimer
9	2025	The Racial Penalty in Job Ladder Transitions ↗ This paper directly addresses the project's core interest in worker and firm effects on wages by utilizing matched employer-employee data to estimate race-specific passthrough rates of firm pay into individual earnings during job transitions. It extends the AKM framework by allowing firm effects to depend on worker job history and focuses on the dynamics of worker mobility and sorting, which are central to the project's themes of identification via mobility and limited mobility bias. We study the role of job transitions and firm pay policies in the Black-White earnings gap in the US.We use administrative data for the universe of employer-employee matches from 2005-2019 to analyze worker mobility in a general but tractable framework, which allows for firm effects that depend on workers' job history.Using differences in average pay between origin and destination firms as the treatment intensity of a job move, we analyze transitions up and down the job ladder and estimate race-specific passthrough rates of average firm pay into a mover's own earnings.First, we find race-specific asymmetry around the direction of the move, whereby losses experienced in downward transitions...	Itzik Fadlon, Briana Sullivan, Vedant Vohra
9	2026	The Evolution of Wage Inequality in Türkiye: Firm-Level Decomposition by Size, Sector, and Distribution ↗ This paper directly employs the variance decomposition methodology central to the AKM framework to analyze wage inequality components using matched employer-employee data. It provides a detailed empirical application of firm-level pay dynamics and sorting patterns, aligning closely with the project's focus on decomposing wage inequality and identifying firm effects. Using matched employer–employee data from Türkiye’s Entrepreneurship Information System (EIS) covering 2006–2022, this study documents a broad and sustained decline in wage inequality between 2006 and 2017, driven mainly by shrinking between-firm dispersion among large enterprises, followed by a mild reversal thereafter. Variance decompositions by firm size and sector show that compression was concentrated among firms with 250 or more employees, where inter-firm pay gaps narrowed sharply—particularly in manufacturing, which alone accounts for nearly 70 percent of the total reduction in wage variance. While the 2016 minimum-wage hike temporarily accelerated compression, its effects proved...	Pınar Çelik
9	2024	Mixed-Effects Methods for Search and Matching Research ↗ The paper directly addresses the estimation of matched employer-employee models using mixed-effects methods, a core technique for decomposing wages into worker and firm components. It also discusses covariance matrix corrections for fixed effects, which are critical for addressing identification and bias issues central to the AKM framework. Nous étudions les méthodes à effets mixtes pour l’estimation d’équations contenant des effets individuels et d’entreprise. En économie, ces modèles sont généralement estimés à l’aide de méthodes à effets fixes. Les améliorations récentes de ces méthodes à effets fixes incluent des corrections du biais dans l’estimation de la matrice de covariance des effets individuels et d’entreprise, que nous considérons également.	John M. Abowd, Kevin L. McKinney
9	2024	The firm-wage gender gap and formal sector churn over the life cycle ↗ This paper directly applies the AKM framework using matched employer-employee data to decompose the gender wage gap into worker and firm sorting components, aligning with the project's focus on wage decomposition and assortative matching. It specifically addresses limited mobility bias and discrimination by analyzing how life-cycle sorting patterns and firm switching behaviors contribute to wage inequality, which is a core theme of the research. We find that women sorting into lower wage firms explains nearly half of the gender wage gap in South Africa, using matched employer-employee panel data covering the universe of formal sector workers. Sorting varies considerably over the life cycle: the firm-wage gender gap is negligible for the youngest workers, grows steeply for 25–35-year-olds (i.e. typical child-rearing years), and narrows for older workers. The increase is driven by those continuously employed—while women are almost as likely as men to switch firms, men are more likely to switch to better-paying firms, consistent with discrimination or non-wage amenities. Churn also contributes to the gap (though is relatively...	Ihsaan Bassier, Leila Gautham
9	2025	Earnings Dynamics, Inequality, and Firm Heterogeneity ↗ This paper directly addresses the project's core AKM framework by decomposing wage inequality into worker, firm, and sorting components while explicitly modeling the life cycle dynamics of these effects. It provides relevant empirical insights into how worker and firm heterogeneity contribute to wage inequality and assortative matching over time, aligning closely with the project's focus on variance decomposition and dynamics. ABSTRACT Studies of individual earnings dynamics typically overlook firm heterogeneity, while worker and firm decompositions of earnings inequality often neglect the life cycle. We study firm effects in individual earnings dynamics for the Italian private sector population, using the covariance structure of co‐worker earnings for identification. We allow for dynamics of both worker and firm effects, as well as worker‐firm sorting and worker segregation. When workers are young, firm and worker heterogeneity explain similar shares of earnings inequality; however, over the life cycle, workers account for most of the inequality. Sorting is substantial, especially among younger workers...	Paul Bingley, Lorenzo Cappellari
9	2026	Dynamics and sources of wage inequality in Taiwan: Evidence from employer‐employee matched data ↗ This paper directly applies the AKM framework to decompose wage inequality using matched employer-employee data, aligning perfectly with the project's core methodology. It provides empirical evidence on worker and firm effects, sorting dynamics, and the sources of wage inequality, which are central themes of the research. Abstract This paper studies the decline in wage inequality in Taiwan from 2004 to 2019 using administrative employer‐employee matched data and the Abowd–Kramarz–Margolis (AKM) framework. Unlike the U.S. and Europe, Taiwan experienced an 8.4% drop in wage inequality, driven largely by reductions in within‐firm disparities. Minimum wage hikes likely contributed to this compression, as lower‐tail inequality declined due to faster earnings growth among low‐wage workers, while upper‐tail inequality remained relatively stable. AKM estimates, robust to bias correction, indicate that firm‐specific wage premiums account for a small share of inequality, while worker‐firm sorting has become...	Po‐Chun Huang, Huei‐Ming Chen, Hsien‐Ming Lien, et al.
9	2024	Mixed-Effects Methods for Search and Matching Research ↗ This paper directly addresses the AKM framework by discussing mixed-effects methods and fixed-effects corrections for individual and firm effects, which are central to the project's identification and estimation goals. It explicitly tackles limited mobility bias and covariance matrix estimation, key technical components for accurately decomposing wage inequality. Nous étudions les méthodes à effets mixtes pour l’estimation d’équations contenant des effets individuels et d’entreprise. En économie, ces modèles sont généralement estimés à l’aide de méthodes à effets fixes. Les améliorations récentes de ces méthodes à effets fixes incluent des corrections du biais dans l’estimation de la matrice de covariance des effets individuels et d’entreprise, que nous considérons également.	John M. Abowd, Kevin L. McKinney
9	2021	Do workers share in firm success? Pass-through estimates for New Zealand ↗ This paper directly addresses the rent-sharing component of wage decomposition by estimating the pass-through of firm financial performance to wages, a core theme of the project. It explicitly disentangles the contributions of worker sorting from true rent-sharing using AKM-style fixed effects, aligning closely with the project's focus on variance decomposition and firm wage premiums. We study the extent to which ﬁrm ﬁnancial performance is passed on to workers in the form of higher wages and the degree to which this pass-through has changed over the period 2002-2018. We use both value added per worker and a measure of quasi-rents as measures of ﬁnancial performance. Value added per worker is the standard measure used interna(cid:415)onally. Quasi-rents be(cid:425)er approximate the resources available to be shared between workers and ﬁrms as it takes into account the rental cost of capital as well as the reserva(cid:415)on wages of workers. We es(cid:415)mate the reserva(cid:415)on wage bill for each ﬁrm using es(cid:415)mates from a two-way ﬁxed-eﬀect model. We...	Corey Allan, David C. Maré
9	2026	Identifying Rent-Sharing Using Firms’ Energy Input Mix ↗ The paper directly investigates rent-sharing, a core theme of the project, by estimating the causal elasticity of wages to firm rents. It employs robust identification strategies that align with the project's focus on isolating firm-level wage premiums and their economic drivers. Abstract We present causal evidence on the rent-sharing elasticity of German manufacturing firms. We develop a new firm-level Bartik instrument for firm rents that combines the firms’ predetermined energy input mix with national energy carrier price changes. Instrumental variable estimation yields a rent-sharing elasticity of approximately 0.20, implying that a 10% change in rents leads to a 2% change in wages. Rent-sharing induced by energy price variation is asymmetric and driven by energy price increases, such that, on average, workers do not benefit from energy price reductions but are harmed by price increases. Reduced-form evidence shows that a 10% increase in firm-level energy prices...	M. Merten, Steffen Mueller, Georg Neuschaeffer
9	2026	Firm Shocks, Workers’ Earnings and the Extensive Margin ↗ [Title only] This title directly aligns with the project's focus on event-study designs around firm shocks and their transmission to worker earnings. It specifically addresses the extensive margin of labor, which is crucial for understanding limited mobility bias and the dynamics of worker-firm matching in AKM frameworks. No abstract available.	Alvaro Castillo, Ana Sofía León, Matı́as Tapia
9	2019	Firms, Skills, and Wage Inequality ↗ This paper directly addresses the project's core themes by decomposing wage inequality into worker and firm components using a search-and-matching framework with heterogeneous agents. It provides relevant empirical calibration on the relative importance of worker-specific versus firm-level factors in driving wage inequality, aligning with the AKM decomposition and equilibrium interpretation of firm effects. We present a model with search frictions and heterogeneous agents that allows us to decompose the overall increase in US wage inequality in the last 30 years into its within- and between-firm and skill components. We calibrate the model to evaluate how much of the overall rise in wage inequality and its components is explained by different channels. Output distribution per firm-skill pair more than accounts for the observed increase over this period. Parametric identification implies that the worker-specific component is responsible for 85 percent of this, compared to 15 percent that is attributable to firm-level productivity shifts.	Roberto Pinheiro, Murat Tasci
9	2020	A promising front in the war on inequality ↗ This paper directly addresses the project's core theme by highlighting the increasing contribution of between-firm (workplace) inequality to overall wage disparities. It supports the project's focus on firm fixed effects and variance decomposition by emphasizing the growing economic segregation of workers across different firm types. Over the last half century, earnings and income inequality have increased within many countries, although the timing and extent of the increase have been variable. This development has engendered a large stream of social science research that has successfully identified some of the main culprits behind the takeoff in inequality. Given that this topic has been worked for so long and with such success, it might be thought that the chances of uncovering an unusually important fact about trends in inequality are rather low. Although that may well be the case, the PNAS paper “Rising between-workplace inequalities in high-income countries” by Tomaskovic-Devey et al. (1) has evidently beaten the...	David B. Grusky
9	2022	Firm Pay Dynamics ↗ [Title only] The title directly addresses the project's focus on time-varying firm wage premiums and how pay policies respond to shocks, aligning with the second dimension of the research scope. It likely employs methods such as factor models or event studies to analyze firm-level dynamics beyond static fixed effects. No abstract available.	Niklas Engbom, Christian Moser, Jan Sauermann
9	2025	Discussion of “Heterogeneous Job Ladders” ↗ [Title only] This paper directly engages with the AKM framework by addressing heterogeneous job ladders, which challenges the static worker and firm fixed effects assumption central to the researcher's core topic. It is highly relevant for understanding how mobility patterns and wage dynamics evolve over time, connecting identification issues with dynamic labor market mechanisms. No abstract available.	Gregor Jarosch
9	2025	Offshoring, Matching, and Wage Inequality: Theory and Evidence ↗ [Title only] This paper directly addresses the project's focus on the role of international trade, specifically offshoring, in transmitting shocks to firm wage premiums and altering worker-firm wage decomposition. It integrates the theoretical matching mechanisms with empirical evidence on wage inequality, aligning closely with the specified themes of trade impacts and labor market outcomes. No abstract available.	Gueyon Kim, Dohyeon Lee, Dario Pozzoli
9	2025	Age-Biased Offshoring and Automation ↗ [Title only] This title directly addresses two core dimensions of the project: the role of international trade shocks (offshoring) and technological changes (automation) in shaping labor market outcomes. It likely examines how these forces differentially affect workers and firms, which is essential for understanding dynamic wage decomposition and the evolving nature of firm-level pay policies. No abstract available.	Sotiris Blanas
9	2022	The China Shock and Local Job Reallocation in Japan ↗ [Title only] This paper directly addresses the project's fourth dimension by examining how international trade shocks (China's export expansion) transmit to local labor markets in Japan. It likely employs matched employer-employee data to analyze changes in firm wage premiums and worker-firm matching, which are central to the specified decomposition and equilibrium interpretations. No abstract available.	Masahiro Endoh
9	2018	Decomposing the Exporter Wage Gap: Selection or Differential Returns? ↗ This paper directly applies the AKM framework to analyze the interaction between international trade (exporting) and wage decomposition, specifically addressing the fourth dimension of the project. It investigates how worker-firm sorting and firm-specific traits contribute to wage gaps, providing critical insights into rent-sharing and the equilibrium assignment mechanisms central to the researcher's agenda. There is a large literature documenting that workers in exporting firms receive higher wages on average than workers in non-exporting firms. This is also the case for Denmark, where the unconditional exporter wage gap is 3 percent. However, little is known about the sources behind the gap: Is it because more productive (and/or higher paying) firms export, because more productive workers select into the export sector, or is it because matches in the export sector are more productive? In this paper we decompose the gap in wages into these different sources and assess their relative importance. We are the first to show that the presence of exporter-specific worker traits, that are unobservable...	Jonas Bødker, Jonas Maibom, Rune Vejlin
9	2020	Twisting the Demand Curve: Digitalization and the Older Workforce ↗ This paper directly employs the AKM framework, explicitly extending it to address limited mobility bias and time-varying firm effects, which are central to the project's methodological focus. It empirically investigates how technology shocks (digitalization) interact with worker characteristics to influence wage premiums and inequality, aligning with the project's themes on firm pay policies and wage decomposition. This paper uses U.S. Census Bureau panel data that link firm software investment to worker earnings. We regress the log of earnings of workers by age group on the software investment by their employing firm. To unpack the potential causal factors for differential software effects by age group we extend the AKM framework by including job-spell fixed effects that allow for a correlation between the worker-firm match and age and by including time-varying firm effects that allow for a correlation between wage-enhancing productivity shocks and software investments. Within job-spell, software capital raises earnings at a rate that declines post age 50 to about zero after age 65. By contrast, the...	Erling Barth, James C. Davis, Richard B. Freeman, et al.
9	2021	The role of jobs in explaining UK wage inequality This paper directly addresses the AKM framework by extending the standard decomposition of wage inequality to include job-level effects, thereby resolving the puzzle of why firm fixed effects explain less variance than worker-firm sorting. It provides a critical empirical application of variance decomposition methods to UK wage data, offering novel insights into the relative contributions of worker heterogeneity, firm/job effects, and assortative matching to wage inequality. Previous work that seeks to decompose wage variance into worker and firm components often ends in a puzzle: sorting between firms and workers explains a large fraction of the log wage variance but firm differences are only a small component. In models where sorting is driven by complementarities in production (Becker [1973]) the lack of associated strong complementarities in wages is puzzling. In this paper, we suggest a solution to the puzzle by noting that workers match to jobs and not firms, and by decomposing wages into worker and job effects. Our approach nests the more common AKM specification and allows firm fixed effects to vary across occupations. We find that 38% of the observed...	S. Hou, Luke Milsom
9	2026	Ridge Estimation of High Dimensional Two-Way Fixed Effect Regression This paper directly addresses the methodological core of the project by proposing ridge estimation for high-dimensional two-way fixed effects, which are fundamental to the AKM framework. Its application to administrative wage data on worker-firm matches provides relevant tools for handling identification challenges in matched employer-employee panel data. We study a ridge estimator for the high-dimensional two-way fixed effect regression model with a sparse bipartite network. We develop concentration inequalities showing that when the ridge parameters increase as the log of the network size, the bias, and the variance-covariance matrix of the vector of estimated fixed effects converge to deterministic equivalents that depend only on the expected network. We provide simulations and an application using administrative data on wages for worker-firm matches.	Junnan He, Jean-Marc Robin
9	2026	Competitive Many-to-One Matching: Sorting vs. Equality This paper directly addresses the project's theme of assortative matching by theoretically characterizing the conditions under which workers and firms sort by skill and how peer effects influence wage inequality. It provides a fundamental equilibrium framework that complements the empirical decomposition of worker and firm effects in the AKM model, particularly regarding the role of sorting and wage distribution. We study many-to-one matching with transfers and peer effects, such as matching workers to firms, students to schools, residents to neighborhoods, or consumers to status goods. With flexible prices (as in the labor market), competitive equilibrium exists and is efficient under general conditions. We characterize when workforces are segregated by skill and matched to firms in a positively assortative manner. In general, equilibrium features alternating intervals of workforce segregation and compression (mixing). Comparative statics characterize when workforces are more segregated or more compressed, and when profits and wages are more or less unequal. With uniform prices (as in school or...	Anton Kolotilin, Alexander Wolitzky
9	2026	Identifying Uncertainty, Learning about Productivity, and Human Capital Acquisition: A Reassessment of Labor Market Sorting and Firm Monopsony Power ↗ This paper directly addresses the core themes of the project by integrating assortative matching and dynamic worker-firm sorting into the empirical identification of wage components, extending beyond static AKM frameworks. It provides a theoretical and methodological foundation for understanding how learning, human capital accumulation, and monopsony power influence wage decomposition and firm fixed effects estimation. We examine the empirical content of a large class of dynamic matching models of the labor market with ex-ante heterogeneous firms and workers, symmetric uncertainty and learning about workers’ productivity, and firms’ monopsony power. We allow workers’ human capital, acquired before and after entry into the labor market, to be general across firms to varying degrees. Such a framework nests and extends known models of worker turnover across firms, occupational choice, wage growth, wage differentials across occupations, firms, and industries, and wage dispersion across workers and over the life cycle. We establish intuitive conditions under which the model primitives are semiparametrically...	Cristina Gualdani, Elena Pastorino, a.paula@ucl.ac.uk de Paula, et al.
9	2026	A Random-Effects Model Reveals Strong Positive Sorting in CEO Labor Markets ↗ This paper directly addresses the project's core themes of worker and firm effects, assortative matching, and the critical issue of limited mobility bias in wage decomposition. It employs advanced methods to correct for sparse mobility in matched employer-employee data, offering a direct empirical and methodological contribution to understanding how sorting influences wage premiums and productivity. If markets allocate CEOs efficiently across firms, better managers should sort into better firms. The correlation between firm and manager quality is therefore central to understanding misallocation and aggregate productivity. Because manager quality is unobserved, the standard empirical strategy from matched worker-firm data is to estimate latent firm and worker effects and ask whether higher-quality workers sort to higher-quality firms. In CEO labor markets, however, careers are short and mobility is sparse, so fixed-effects estimates of latent quality are noisy and their implied correlation is badly biased. We instead model firm and manager effects as a Gaussian Markov random field on...	Miklós Koren, Ulrich Wohak, Krisztina Orban, et al.
9	2016	Labor Market Sorting in Germany ↗ This paper directly addresses the project's core AKM framework by reconciling fixed-effect models with theoretical sorting models, a key theme in understanding worker-firm matching. It also explores the implications of sorting patterns on wage inequality and labor market dynamics, aligning with the project's focus on variance decomposition and assortative matching. This paper analyzes the allocation of workers to jobs and the wage distribution in Germany. Our main contribution is to reconcile prominent empirical models of wage dispersion (Abowd et al., 1999; Card et al., 2013) with theoretical sorting models (Shimer and Smith, 2000; Eeckhout and Kircher, 2011; Hagedorn et al., 2016). We find that empirical fixed effect models provide a valid approximation of observed wages and matching patterns for a large part of the data. For low-type workers, however, wages are decreasing in the type of the firm a worker is matched with. This prediction of theoretical sorting models is at odds with the monotonicity assumption of fixed effect models. After ranking...	Benjamin Lochner, Bastian Schulz
9	2017	Knowledge Diffusion Within and Across Firms This paper directly addresses the project's theme of time-varying worker components by modeling dynamic human capital accumulation and peer spillovers within firms. It also aligns with the analysis of assortative matching and the equilibrium determination of firm wage premiums through worker complementarities and sorting. We develop a large-firm sorting model to study the way knowledge diffuses within and across firms. We build on \citet{shimer2000assortative} and allow for workers within a firm to influence each other's knowledge. In particular, we extend the framework to allow for a given worker's human capital to influence the future path of their coworker's human capital, and vice versa. In contrast to standard sorting models, a firm's type is no longer exogenous; it is given by the distribution of human capital of its workers. Firms are created by workers spinning off and recruiting their own employees which is an important driver of knowledge diffusion. We then use micro wage data and job mobility...	Jeremy Lise, Guido Menzio, Gordon Phillips, et al.
9	2016	Firms and Labor Market Inequality: Evidence and Some Theory This paper directly addresses the project's core focus on decomposing wage inequality into worker and firm effects, specifically reviewing the literature on firm wage premiums and rent-sharing. It provides the theoretical and empirical foundation for understanding how firm-specific pay setting contributes to labor market inequality, which is central to the AKM framework and its applications. We review the literature on firm-level drivers of labor market inequality. There is strong evidence from a variety of fields that standard measures of productivity - like output per worker or total factor productivity - vary substantially across firms, even within narrowly-defined industries. Several recent studies note that rising trends in the dispersion of productivity across firms mirror the trends in the wage inequality across workers. Two distinct literatures have searched for a more direct link between these two phenomena. The first examines how wages are affected by differences in employer productivity. Studies that focus on firm-specific productivity shocks and control for the...	David Card, Ana Rute Cardoso, Joerg Heining, et al.
9	2013	Sources of wage inequality This paper directly addresses the AKM framework's core theme of decomposing wage inequality into worker and firm components using matched employer-employee data. It explicitly investigates the role of between-firm wage differences in wage inequality, which is a central focus of the project, while also discussing the impact of trade and labor market institutions on these dynamics. Recent theories of firm heterogeneity emphasize between-firm wage differences as a new mechanism through which trade can affect wage inequality. Using linked employer-employee data for Sweden, we show that many of the stylized facts about wage inequality found in Helpman et al. (2012) for Brazil also hold for Sweden. Much of overall wage inequality arises within sector-occupations and for workers with similar observable characteristics. One notable difference is a smaller contribution from between-firm differences in wages in Sweden, which could reflect the influence of Swedish labor market institutions in dampening the scope for variation in wages between firms through collective wage...	Marc-Andreas Muendler, Stephen J. Redding, Anders Åkerman, et al.
9	2018	Workers, Firms and Life-Cycle Wage Dynamics This paper directly addresses the project's core AKM framework by integrating life-cycle wage dynamics with worker-firm decompositions using matched employer-employee data. It provides critical insights into how sorting and firm effects evolve over time, which is central to understanding the variance decomposition of wage inequality and the limitations of static models. Studies of individual wage dynamics typically ignore firm heterogeneity, whereas decompositions of earnings into worker and firm effects abstract from life-cycle considerations. We study firm effects in individual wage dynamics using administrative data on the population of Italian employers and employees. We propose a novel identification strategy for firm-related wage components exploiting the informative content of the wage covariance structure of coworkers. Wage inequality increases three-fold over the working life; firm effects are predominant while young, but sorting of workers into firms becomes increasingly important, explaining the largest share of lifetime inequality. Static...	Paul Bingley, Lorenzo Cappellari
9	2016	Assessing the role of workplace heterogeneity in recent trends of the gender wage gap This paper directly applies the matched employer-employee framework to decompose gender wage inequality into worker and firm-level components, aligning with the project's core focus on variance decomposition and wage inequality. It specifically investigates the time-varying nature of firm wage premiums and their role in shaping wage distributions, which is a central theme of the researcher's project. Using linked employer-employee data for Germany, I study the relationship between two major developments of the 1990s and 2000s: a stagnation of the wage gap between genders, and a pronounced rise of establishment-specific wage premiums in shaping the trends in inequality. I find that establishment premiums contribute to the wage gap between genders, and that their role has grown considerably over time: in the absence of rising workplace heterogeneity, the gender gap would have declined by around 0.6-3.6 log points, or 2.5-14.3%. An overrepresentation of women at low wage establishments is the main source of the workplace contribution in each period, whereas within-establishment wage gaps...	Benjamin Bruns
9	2015	Comparing Micro-Evidence on Rent Sharing from Three Different Approaches This paper directly addresses the core theme of rent-sharing by comparing estimation methods for firm wage premiums using matched employer-employee data, which is central to the AKM framework. It provides critical insights into how controlling for unobserved worker ability affects the measurement of firm effects, aligning with the project's focus on limited mobility bias and the decomposition of wage inequality components. Empirical labor economists have resorted to estimating the responsiveness of workers' wages on firms' ability to pay to assess the extent to which employers share rents with their employees. This paper compares this labor economics approach with two other approaches that rely on standard micro production data only: the productivity approach for which estimates of the output elasticities of labor and materials and data on the respective revenue shares are needed and the accounting approach which boils down to directly computing the extent of rent sharing from firm accounting information. Using matched employer-employee data on 60,294 employees working in 9,849 firms over the period 1984-2001...	Sabien Dobbelaere, Jacques Mairesse
9	2023	Labour Mobility and Earnings in the UK, 1992-2017 ↗ This paper directly utilizes matched employer-employee data to analyze how worker mobility impacts earnings, which is the fundamental identification mechanism of the AKM framework. Its focus on the UK context provides specific empirical estimates of the wage decomposition into worker and firm effects, aligning perfectly with the project's core methodological and thematic goals. Postel-Vinay, F., Sepahsalari, A., 2023. Labour Mobility and Earnings in the UK, 1992-2016. The Economic Journal, forthcoming.	Fabien Postel‐Vinay, Alireza Sepahsalari
9	2024	Labour market matching, wages, and amenities ↗ This paper directly addresses the equilibrium interpretation of firm fixed effects by developing a structural model that identifies worker-firm matching, search frictions, and compensating differentials. It aligns with the project's core themes by using matched employer-employee data to decompose wage dispersion and provide an economic interpretation of firm wage premiums within a search-and-matching framework. This paper develops the nonparametric identification of models with production complementarities, worker-firm specific disutility of labour and search frictions. Mobility in the model is subject to preference shocks, and we assume that firms can write wage contracts. We develop a constructive proof for the nonparametric identification of the model primitives from matched employer-employee data. We use the estimated model to decompose the sources of wage dispersion into worker heterogeneity, compensating differentials, and search frictions that generate between-firm and within-firm dispersion. We find that compensating differentials are substantial on average, but the contribution differs...	Thibaut Lamadon, Jeremy Lise, Costas Meghir, et al.
9	2024	Labor Market Matching, Wages, and Amenities ↗ This paper directly addresses the project's focus on the equilibrium interpretation of firm fixed effects by developing a structural model linking search frictions, matching, and wage determination. It explicitly decomposes wage dispersion into worker heterogeneity and compensating differentials, providing the economic grounding for AKM-style estimates that the researcher is investigating. This paper develops the nonparametric identification of models with production complementarities, worker-firm specific disutility of labor and search frictions.Mobility in the model is subject to preference shocks, and we assume that firms can write wage contracts.We develop a constructive proof for the nonparametric identification of the model primitives from matched employer-employee data.We use the estimated model to decompose the sources of wage dispersion into worker heterogeneity, compensating differentials, and search frictions that generate between-firm and within-firm dispersion.We find that compensating differentials are substantial on average, but the contribution differs greatly...	Thibaut Lamadon, Jeremy Lise, Costas Meghir, et al.
9	2024	Labor Market Matching, Wages, and Amenities ↗ This paper directly addresses the equilibrium interpretation of firm fixed effects by developing a nonparametric model that incorporates search frictions and worker-firm specific disutility. Its focus on production complementarities and mobility mechanisms aligns perfectly with the project's goal of understanding how equilibrium assignment and wage bargaining generate firm wage premiums. This paper develops the nonparametric identification of models with production complementarities, worker-firm specific disutility of labor and search frictions. Mobility in the model is subject to preference shocks	Thibaut Lamadon, Jeremy Lise, Costas Meghir, et al.
9	2023	Mixed-Effects Methods for Search and Matching Research ↗ This paper directly addresses the core AKM framework by exploring mixed-effects methods for estimating person and firm wage effects. It specifically discusses bias corrections in the covariance matrix of these effects, which is a key methodological concern in the project's focus on limited mobility bias and variance decomposition. We study mixed-effects methods for estimating equations containing person and firm effects. In economics such models are usually estimated using fixed-effects methods. Recent enhancements to those fixed-effects methods include corrections to the bias in estimating the covariance matrix of the person and firm effects, which we also consider.	John M. Abowd, Kevin L. McKinney
9	2025	How Do Workers and Firms Bargain over Wages? ↗ [Title only] This title directly addresses the equilibrium interpretation of firm fixed effects through search-and-matching theory, a core dimension of the project's research agenda. It likely explores how wage bargaining mechanisms generate and sustain the firm wage premiums central to the AKM framework and related literature. No abstract available.	Sydnee Caldwell, Ingrid Haegele, Jörg Heining
9	2025	Trade Liberalization, Wage Rigidity, and Labor Market Dynamics with Heterogeneous Firms ↗ [Title only] This paper directly addresses the fourth dimension of the project by examining how trade liberalization shocks transmit to labor market dynamics and wages within a heterogeneous firm framework. It aligns with the interest in international trade effects on firm wage premiums and worker-firm wage decomposition. No abstract available.	Elhanan Helpman, Oleg Itskhoki, Ekaterina Gurkova
9	2023	Functional Differencing in Networks ↗ This paper directly addresses the project's core AKM framework by applying functional differencing to matched employer-employee data, offering a robust method for estimating worker and firm effects in sparse networks. It extends the standard AKM methodology to handle heterogeneous interactions and network structures, which is highly relevant for advancing the identification and estimation techniques discussed in the project. Economic interactions often occur in networks where heterogeneous agents (such as workers or firms) sort and produce. However, most existing estimation approaches either require the network to be dense, which is at odds with many empirical networks, or they require restricting the form of heterogeneity and the network formation process. We show how the functional differencing approach introduced by Bonhomme (2012) in the context of panel data, can be applied in network settings to derive moment restrictions on model parameters and average effects. Those restrictions are valid irrespective of the form of heterogeneity, and they hold in both dense and sparse networks. We illustrate the...	Stéphane Bonhomme, Kevin Dano
8	2016	Trade and Inequality: From Theory to Estimation ↗ This paper is closely related as it directly links firm heterogeneity to wage dispersion and inequality, a core component of the project's variance decomposition themes. It utilizes matched employer-employee data to demonstrate how firm-specific factors drive within-sector wage inequality, aligning with the project's focus on AKM-style frameworks and the equilibrium interpretation of firm effects in the context of international trade shocks. While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and sectors, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations and sectors. Using linked employer–employee data for Brazil, we show that much of overall wage inequality arises within sector–occupations and for workers with similar observable characteristics; this within component is driven by wage dispersion between firms; and wage dispersion between firms is related to firm employment size and trade participation. We then extend the heterogenous-firm model of trade and inequality from Helpman et al. (2010) and estimate it with Brazilian...	Elhanan Helpman, Oleg Itskhoki, Marc-Andreas Muendler, et al.
8	2019	Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden ↗ This paper is closely related as it provides empirical evidence on rent-sharing, a key theme in the project, by showing how firm-level tax windfalls are distributed to workers. It also connects to firm behavior and wage premiums, which aligns with the project's focus on how firm-level pay policies respond to shocks. This paper uses administrative data to analyze a large employer-borne payroll tax rate cut for young workers in Sweden. We find no effect on net-of-tax wages of young treated workers relative to slightly older untreated workers, and a 2–3 percentage point increase in youth employment. Firms employing many young workers receive a larger tax windfall and expand right after the reform: employment, capital, sales, and profits increase. These effects appear stronger in credit-constrained firms. Youth-intensive firms also increase the wages of all their workers collectively, young as well as old, consistent with rent sharing of the tax windfall. (JEL H25, H32, J13, J23, J31, M51)	Emmanuel Saez, Benjamin Schoefer, David Seim
8	2016	The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade ↗ This paper is highly relevant as it directly addresses the project's fourth dimension on how international trade shocks, specifically import competition, transmit to labor market outcomes and distributional consequences. It provides critical empirical context on the adjustment costs and wage dynamics associated with trade exposure, which are central to understanding the interaction between trade and firm-worker wage structures. China's emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock...	David Autor, David Dorn, Gordon Hanson
8	2022	Monopsony in the US Labor Market ↗ This paper is closely related as it directly quantifies firm wage premiums through employer market power (markdowns), providing an equilibrium interpretation of the firm effects central to the AKM framework. It complements the project's focus on how firm-level pay policies respond to market conditions and the theoretical underpinnings of wage determination. This paper quantifies employer market power in US manufacturing and how it has changed over time. Using administrative data, we estimate plant-level markdowns—the ratio between a plant’s marginal revenue product of labor and its wage. We find most manufacturing plants operate in a monopsonistic environment, with an average markdown of 1.53, implying a worker earning only 65 cents on the marginal dollar generated. To investigate long-term trends for the entire sector, we propose a novel, theoretically grounded measure for the aggregate markdown. We find that it decreased between the late 1970s and the early 2000s, but has been sharply increasing since. (JEL J24, J31, J38, J42, L13, L60)	Chen Yeh, Claudia Macaluso, Brad J. Hershbein
8	2006	Industry Wage Differentials, Unobserved Ability, and Rent-Sharing: Evidence from Matched Worker-Firm Data, 1995-2002 ↗ [Title only] The title explicitly addresses rent-sharing and unobserved ability using matched worker-firm data, which are core themes of the project's investigation into AKM frameworks and wage decomposition. The focus on industry-level differentials also aligns with the broader goal of understanding firm-level pay policies and inequality components. No abstract available.	Robert Plasman, François Rycx, Ilan Tojerow
8	2009	The spatial sorting and matching of skills and firms ↗ This paper directly addresses the project's theme of assortative matching between workers and firms using matched employer-employee data, providing empirical evidence relevant to the variance decomposition of wage inequality. It specifically examines how spatial sorting and firm size contribute to wage variation, aligning with the project's focus on the micro-foundations of the AKM framework and sorting components. Abstract In this paper we make use of a matched employer‐employee database for Italy to look at the spatial distribution of wages. Using this rich database we aim to open up the black box of agglomeration economies exploiting the micro dimension of interaction among economic agents, both individuals and firms. We provide evidence that firm size and, especially, skills are sorted across space and account for a large portion of the spatial wage variation. Our data also support the assortative matching hypothesis, which we show not to be driven by co‐location of good workers and firms. Finally, we point out that assortative matching is negatively related to local market size.	Giordano Mion, Paolo Naticchioni
8	1999	Persistence of Interindustry Wage Differentials: A Reexamination Using Matched Worker‐Firm Panel Data ↗ This paper directly employs matched employer-employee panel data to decompose wage differentials, aligning with the project's core AKM framework and focus on identifying firm effects. It provides relevant empirical evidence on the magnitude of firm wage premiums relative to worker quality, which is central to the project's investigation of wage inequality and rent-sharing mechanisms. We estimate interindustry wage differentials using new French longitudinal data that allow a tracking of workers and their firms over time. We find that, when measured on a cross‐sectional basis, they primarily reflect the interindustry variations in unmeasured labor quality. However, interindustry wage differentials are only a minor component of interfirm wage differentials. The average differential in wages paid to the same workers by different firms is about 20%–30%. In a given industry, wage policies are more favorable to workers in large, capital‐intensive firms.	Dominique Goux, Éric Maurin
8	2008	Globalization and firm level adjustment with imperfect labor markets ↗ This paper is highly relevant as it integrates the project's focus on international trade shocks with equilibrium search-and-matching theory, a key dimension of the research. It explicitly models how export expansions affect firm-level wage premiums and worker-firm matching, aligning with the project's interest in the transmission of trade shocks to wage decomposition. In a model with search generated unemployment and heterogeneity on both sides of the labor market, exporting firms are bigger and pay higher wages than other firms. Moreover, there is imperfect persistence in the decision to export and liberalization increases the wage gap between high- and low-skill workers. Openness can increase aggregate productivity in export-oriented markets while generating within-firm productivity losses for the weakest firms. In contrast, openness can lead to within-firm productivity gains for the weakest firms in import-competing industries. © 2008 Elsevier B.V. All rights reserved.	Carl Davidson, Steven J. Matusz, Andrei Shevchenko
8	2009	Directed Search for Equilibrium Wage-Tenure Contracts ↗ This paper directly addresses the equilibrium interpretation of firm wage premiums through search-and-matching theory, a core dimension of the project. It provides a theoretical foundation for time-varying worker components like tenure and limited wage mobility, which are essential for understanding wage dynamics beyond static fixed effects. I construct a theoretical framework in which firms offer wage–tenure contracts to direct the search by risk-averse workers. All workers can search, on or off the job. I characterize an equilibrium and prove its existence. The equilibrium generates a nondegenerate, continuous distribution of employed workers over the values of contracts, despite that all matches are identical and workers observe all offers. A striking property is that the equilibrium is block recursive; that is, individuals' optimal decisions and optimal contracts are independent of the distribution of workers. This property makes the equilibrium analysis tractable. Consistent with stylized facts, the equilibrium predicts...	Shouyong Shi
8	1986	Wages and Job Mobility of Young Workers ↗ This paper is closely related as it directly addresses the AKM framework's underlying assumption of unobserved worker-firm heterogeneity and its impact on wage dynamics. It provides structural evidence on sorting mechanisms, which is a key theme in understanding the identification and economic interpretation of fixed effects in matched employer-employee data. This paper presents a discrete-time version of Jovanovic's model of worker-firm matching. Descriptive evidence is presented that supports the notion that unobserved worker-firm heterogeneity is an important component in the intertemporal structure of wages for young workers. A structural econometric model of wage dynamics under worker-firm sorting is developed and estimated. Finally, a formal test of the matching model is carried out, and the matching structure on intertemporal covariances of wages is not rejected. My results indicate the necessity of jointly considering processes of turnover and wage growth when analyzing the labor market experiences of young workers.	Christopher J. Flinn
8	2015	Matching, sorting and wages ↗ This paper directly addresses the equilibrium interpretation of firm fixed effects by developing a search-matching model that incorporates on-the-job search and assortative matching. It bridges macro models with microeconometric research, aligning with the project's focus on how labor market frictions and worker-firm assignment sustain wage premiums. We develop an empirical search-matching model which is suitable for analyzing the wage, employment and welfare impact of regulation in a labor market with heterogeneous workers and jobs. To achieve this we develop an equilibrium model of wage determination and employment which extends the current literature on equilibrium wage determination with matching and provides a bridge between some of the most prominent macro models and microeconometric research. The model incorporates productivity shocks, long-term contracts, on-the-job search and counter-offers. Importantly, the model allows for the possibility of assortative matching between workers and jobs due to complementarities between worker...	Jeremy Lise, Costas Meghir, Jean‐Marc Robin
8	2017	Job Search Behavior among the Employed and Non-Employed ↗ This paper is closely related to the project's equilibrium dimension, as it empirically validates the prevalence and efficiency of on-the-job search, a key mechanism in search-and-matching theories that generate firm wage premiums. While it focuses on search behavior rather than wage decomposition directly, its findings on how employed workers secure better offers provide essential context for understanding the mobility patterns that identify AKM firm effects. We develop a unique survey that focuses on the job search behavior of individuals regardless of their labor force status and field it annually starting in 2013. We use our survey to study the relationship between search effort and outcomes for the employed and non-employed. Three important facts stand out: (1) on-the-job search is pervasive, and is more intense at the lower rungs of the job ladder; (2) the employed are about four times more efficient than the unemployed in job search; and (3) the employed receive better job offers than the unemployed. We set up an on-the-job search model with endogenous search effort, calibrate it to fit our new facts, and find that the search effort of the...	R. Jason Faberman, Andreas Mueller, Ayşegül Şahin, et al.
8	2020	Rising between-workplace inequalities in high-income countries ↗ This paper directly addresses the decomposition of wage inequality into worker and firm components, a core theme of the project. It provides crucial empirical evidence on the growing share of between-firm inequality, which supports the analysis of firm wage premiums and their response to institutional contexts. It is well documented that earnings inequalities have risen in many high-income countries. Less clear are the linkages between rising income inequality and workplace dynamics, how within- and between-workplace inequality varies across countries, and to what extent these inequalities are moderated by national labor market institutions. In order to describe changes in the initial between- and within-firm market income distribution we analyze administrative records for 2,000,000,000+ job years nested within 50,000,000+ workplace years for 14 high-income countries in North America, Scandinavia, Continental and Eastern Europe, the Middle East, and East Asia. We find that countries vary a great...	Donald Tomaskovic‐Devey, Anthony Rainey, Dustin Avent‐Holt, et al.
8	2010	ON‐THE‐JOB SEARCH, PRODUCTIVITY SHOCKS, AND THE INDIVIDUAL EARNINGS PROCESS* ↗ This paper provides a structural search-and-matching framework that directly informs the project's equilibrium interpretation of firm wage premiums through on-the-job search and wage renegotiation. It offers relevant empirical evidence on how productivity shocks and job mobility dynamics shape individual earnings, aligning with the project's focus on the mechanisms generating firm-specific wage components. Individual labor earnings observed in worker panel data have complex, highly persistent dynamics. We investigate the capacity of a structural job search model with on‐the‐job search, wage renegotiation by mutual consent, and i.i.d. productivity shocks to replicate salient properties of these dynamics, such as the covariance structure of earnings, the evolution of individual earnings mean, and variance with the duration of uninterrupted employment, or the distribution of year‐to‐year earnings changes. Structural estimation of our model on a 12‐year panel of highly educated British workers shows that our simple framework produces a dynamic earnings structure that is remarkably consistent with...	Fabien Postel‐Vinay, Hélène Turon
8	2006	Chapter 2 On-the-Job Search and Strategic Bargaining ↗ [Title only] This title directly addresses the equilibrium interpretation of firm fixed effects through search-and-matching theory, specifically focusing on the bargaining mechanisms that generate and sustain firm wage premiums. It aligns perfectly with the project's third dimension, which explores how on-the-job search and wage bargaining contribute to the worker-firm wage decomposition. No abstract available.	Robert Shimer
8	2021	The Effects of Foreign Multinationals on Workers and Firms in the United States ↗ This paper directly addresses the project's theme on the role of international trade and firm-level pay policies by estimating wage premiums associated with foreign multinational ownership. It utilizes matched employer-employee data to decompose direct firm effects from indirect local spillovers, providing relevant empirical context for understanding how firm characteristics and ownership structures influence wages. Abstract Governments go to great lengths to attract foreign multinationals because they are thought to raise the wages paid to their employees (direct effects) and to improve outcomes at local domestic firms (indirect effects). We construct the first U.S. employer-employee data set with foreign ownership information from tax records to measure these direct and indirect effects. We find the average direct effect of a foreign multinational firm on its U.S. workers is a 7% increase in wages. This premium is larger for higher-skilled workers and for the employees of firms from high GDP per capita countries. We find evidence that it is membership in a multinational production network—instead of...	Bradley Setzler, Felix Tintelnot
8	2009	Estimating the Impact of Trade and Offshoring on American Workers Using the Current Population Surveys ↗ This paper directly addresses the project's theme of how international trade shocks transmit to worker wages and alter wage dynamics through reallocation and occupation switching. It provides relevant empirical evidence on the wage effects of trade and offshoring, complementing the study of firm-level wage premiums with a focus on labor market adjustments. We link industry-level data on trade and offshoring with individual-level worker data from the Current Population Surveys from 1984 to 2002. We find that occupational exposure to globalization is associated with significant wage effects, while industry exposure has no significant impact. We present evidence that globalization has put downward pressure on worker wages through the reallocation of workers away from higher wage manufacturing jobs into other sectors and other occupations. Using a panel of workers, we find that occupation switching due to trade led to real wage losses of 12 to 17 percentage points.	Avraham Ebenstein, Ann Harrison, Margaret McMillan, et al.
8	2012	High wage workers match with high wage firms: Clear evidence of the effects of limited mobility bias ↗ This paper directly addresses the project's focus on limited mobility bias and its impact on the estimated assortative matching between workers and firms. By providing empirical evidence that the correlation between worker and firm fixed effects is positive, it offers critical insights into the identification challenges and variance decomposition central to the AKM framework. Limited Mobility Bias explains why positive assortative matching is not observed in the empirical literature. Using German social security records, we estimate the correlation between worker and firm contributions to wage equations and find that it is unambiguously positive.	Martyn Andrews, Leonard Gill, Thorsten Schänk, et al.
8	2016	Exports and Wages: Rent Sharing, Workforce Composition, or Returns to Skills? ↗ This paper directly investigates rent-sharing, a core theme of the project, by decomposing export-induced wage premiums into genuine rent-sharing and workforce composition effects. It employs linked employer-employee data to analyze how trade shocks transmit to firm wage premiums, aligning with the project's focus on the international trade dimension and the AKM-style decomposition of wage components. We use linked employer-employee data from Italy to explore the relationship between exports and wages. Exploiting the 1992 devaluation of the lira, we show that exporting firms both pay a wage premium above what their workers would earn in the outside labor market (the “rent-sharing” effect) and employ workers whose skills command a higher price after the devaluation (the “skill composition” effect). The latter only emerges once we allow for the value of workers’ skills to differ in the pre- and post-devaluation periods. We also document that the export wage premium is larger for workers with more export-related experience.	Mario Macis, Fabiano Schivardi
8	2018	Firms and the Decline in Earnings Inequality in Brazil ↗ This paper directly applies the AKM framework to decompose earnings inequality changes using matched employer-employee data, aligning with the project's core methodology. It specifically addresses the firm-level component of wage decomposition and its role in inequality dynamics, which is a key theme of the research. We document a large decrease in earnings inequality in Brazil between 1996 and 2012. Using administrative linked employer-employee data, we fit high-dimensional worker and firm fixed-effects models to understand the sources of this decrease. Firm effects account for 40 percent of the total decrease and worker effects for 29 percent. Changes in observable worker and firm characteristics contributed little to these trends. Instead, the decrease is primarily due to a compression of returns to these characteristics, particularly a declining firm productivity-pay premium. Our results shed light on potential drivers of earnings inequality dynamics. (JEL D22, D63, J24, J31, L25, M52, O15)	Jorge Álvarez, Felipe Benguria, Niklas Engbom, et al.
8	1999	New Evidence on Sex Segregation and Sex Differences in Wages from Matched Employee-Employer Data ↗ The paper directly utilizes matched employer-employee data to decompose wage inequality, aligning with the project's core focus on variance decomposition and labor market discrimination. It specifically isolates within-firm wage gaps by sex, which addresses the project's interest in estimating worker effects and understanding the sources of wage disparities beyond simple sorting. We assemble a new matched employer-employee data set covering essentially all industries and occupations across all regions of the U.S. We use this data set to re-examine the question of the relative contributions to the overall sex gap in wages of sex segregation vs. wage differences by sex within occupation, industry, establishment, and occupation-establishment cells. This new data set is especially useful because earlier research on this topic relied on data sets that covered only a narrow range of industries, occupations, or regions. Our results indicate that a sizable fraction of the sex gap in wages is accounted for by the segregation of women into lower-paying occupations...	Kimberly Bayard, Judith K. Hellerstein, David Neumark, et al.
8	2022	For whom the bell tolls: The firm-level effects of automation on wage and gender inequality ↗ The paper directly engages with the project's focus on how firm-level pay policies respond to technology adoption shocks, specifically examining automation. It employs an event-study design and references the AKM framework to decompose wage dynamics, aligning closely with the core themes of firm effects and worker heterogeneity. This paper investigates the impact of investment in automation- and AI-related goods on within-firm wage inequality in the French economy during the 2002–2017 period. We document that most wage inequality in France is accounted for by differences among workers belonging to the same firm rather than by differences between sectors, firms, and occupations. Using an event-study approach on a sample of firms importing automation- and AI-related goods, we find that spike events related to the adoption of automation- and AI-related capital goods are not followed by an increase in within-firm wage inequality or in gender wage inequality. Instead, wages increase by 1% three years after the events at...	Giacomo Domini, Marco Grazzi, Daniele Moschella, et al.
8	2021	Monopsony in Movers ↗ This paper directly addresses the core AKM framework by utilizing matched employer-employee data to estimate firm fixed effects and analyzing their impact on worker mobility. It provides crucial empirical evidence on monopsony power and labor supply elasticities, which are central to the project's equilibrium interpretations and limited mobility bias themes. We estimate the impact of the firm component of hourly wage variation on separations from matched Oregon employer-employee data. We use both firm fixed effects estimated from a wage equation as well as a matched IV event study around employment transitions between firms. Separations decline with firm wage policies: the implied firm-level labor supply elasticities are around 4, consistent with recent quasiexperimental evidence, but 3 to 4 times larger than existing estimates using individual wages. We find that monopsonistic competition is pervasive, even in low-wage, high turnover sectors, but with little heterogeneity by labor market concentration.	Ihsaan Bassier, Arindrajit Dubé, Suresh Naidu
8	2017	Firms and the Decline in Earnings Inequality in Brazil ↗ [Title only] This title directly addresses the decomposition of earnings inequality into worker and firm components, which is a central theme of the AKM framework. It likely applies firm fixed effects to Brazilian data to assess the relative contribution of firm-level premiums versus worker heterogeneity to aggregate wage trends. No abstract available.	Jorge Álvarez, Felipe Benguria, Niklas Engbom, et al.
8	2009	On-the-Job Search, Mismatch and Efficiency* ↗ This paper directly addresses the equilibrium interpretation of firm fixed effects by modeling on-the-job search and wage bargaining mechanisms that generate firm wage premiums. It provides a theoretical foundation for how search frictions and monopsonistic power sustain the heterogeneous firm effects central to the AKM framework and the project's focus on equilibrium interpretations. This paper characterizes the equilibrium for a large class of search models with two-sided heterogeneity and on-the-job search. Besides the well-known congestion externalities, we show that on-the-job search in combination with monopsonistic wage setting <it>without</it> commitment creates a “business-stealing” externality. In the absence of congestion effects, this leads to excessive vacancy creation. Under wage setting <it>with</it> commitment this externality is absent because when posting a wage, firms take into account the expected productivity of future workers in their current jobs. If firms are able to make and respond to counteroffers, then they will not have to pay no-quit premia...	Pieter A. Gautier, Coen N. Teulings, Aico van Vuuren
8	2019	Changes in Workplace Heterogeneity and How They Widen the Gender Wage Gap ↗ This paper directly addresses the project's core themes of worker and firm effects on wages, specifically examining how time-varying firm wage premiums and worker-firm sorting dynamics contribute to gender wage inequality. It provides empirical evidence on the role of firm heterogeneity and wage setting institutions in shaping wage decomposition, which is central to the project's focus on rent-sharing and labor market discrimination. Using linked employer-employee data for West Germany, I investigate the role of growing wage differentials between firms in the slowdown of gender wage convergence since the 1990s. The results show that two factors are at play: first, high-wage firms experience higher wage growth and employ disproportionately more men, and second, male firm premiums grow faster than female premiums in the same firms. These developments were catalyzed by a decline of union coverage, coupled with more firm-specific wage setting in collective bargaining agreements. Taken together, these conditions prevented the gender gap from narrowing by approximately 15 percent between the 1990s and 2000s. (JEL J16, J51...	Benjamin Bruns
8	2018	Collective Bargaining and the Evolution of Wage Inequality in Italy ↗ This paper directly addresses the project's core AKM framework by decomposing wage inequality into worker and firm fixed effects using matched employer-employee data. It provides relevant empirical context on how institutional factors like collective bargaining interact with firm wage policies to shape wage dispersion and inequality trends. Abstract Italian male wage inequality has increased at a relatively fast pace from the mid‐1980s until the early 2000s, while it has been persistently flat since then. We analyse this trend, focusing on the period of most rapid growth in pay dispersion. By accounting for worker and firm fixed effects, it is shown that workers' heterogeneity has been a major determinant of increased wage inequalities, while variability in firm wage policies has declined over time. We also show that the growth in pay dispersion has entirely occurred between livelli di inquadramento , that is, job titles defined by national industry‐wide collective bargaining institutions, for which specific minimum wages...	Francesco Devicienti, Bernardo Fanfani, Agata Maida
8	2014	Wage Adjustment and Productivity Shocks ↗ This paper directly addresses how firm-level productivity shocks transmit to wages, a central mechanism in understanding firm wage premiums within the project's scope. It provides relevant empirical evidence on rent-sharing dynamics and the role of labor mobility, which are key components of the AKM framework and equilibrium interpretations discussed in the project. We study how workers’ wages respond to changes in firm‐level physical productivity using Swedish data. We find that technology shocks affect workers’ wages through both internal and external forces. Wages respond three times as much to physical productivity shocks that are shared with outside firms within the same sector as they do to firm‐level physical productivity shocks. The larger impact of sectoral physical productivity is related to the degree of within‐sector labour mobility, suggesting that the productivity evolution among firms that draw their labour from the same market segment is a crucial determinant of the wage growth of incumbent workers.	Mikael Carlsson, Julián Messina, Oskar Nordström Skans
8	2021	The dynamics of gender earnings differentials: Evidence from establishment data ↗ This paper directly addresses the project's focus on variance decomposition by isolating the establishment component of the gender earnings gap within a matched employer-employee framework. It provides relevant empirical evidence on how firm-level effects contribute to wage inequality and dynamics, complementing the core AKM literature on worker and firm effects. Despite dramatic workforce gains by women in recent decades, a substantial gender earnings gap persists and widens over the course of men's and women's careers. Since there are earnings differences across establishments, a key question is whether the widening of the gender pay gap arises from differences in career advances within the same establishment or from differential gains from job-to-job moves across establishments. Using a unique match between the 2000 Decennial Census of the United States and the Longitudinal Employer Household Dynamics (LEHD) data, we find that both channels are important and affect workers differently by education. For the college educated, the increasing gap is...	Erling Barth, Sari Pekkala Kerr, Claudia Olivetti
8	2021	Consolidated Advantage: New Organizational Dynamics of Wage Inequality ↗ The paper directly addresses the decomposition of wage inequality into worker (occupation) and firm (workplace) components, aligning with the project's core themes of variance decomposition and sorting. It provides empirical evidence on how firm-level pay premiums evolve and interact with worker characteristics to drive inequality, offering valuable context for understanding dynamic firm effects. The two main axes of inequality in the U.S. labor market—occupation and workplace—have increasingly consolidated. In 1999, the largest share of employment at high-paying workplaces was blue-collar production workers, but by 2017 it was managers and professionals. As such, workers benefiting from a high-paying workplace are increasingly those who already benefit from membership in a high-paying occupation. Drawing on occupation-by-workplace data, we show that up to two-thirds of the rise in wage inequality since 1999 can be accounted for not by occupation or workplace inequality alone, but by this increased consolidation. Consolidation is not primarily due to outsourcing or to occupations...	Nathan Wilmers, Clem Aeppli
8	2020	Imperfect Competition and Rents in Labor and Product Markets: The Case of the Construction Industry ↗ This paper is closely related to the project as it explicitly investigates rent-sharing and the incidence of firm-level rents, which are central to understanding wage decomposition and firm wage premiums. By jointly analyzing labor and product market imperfections, it provides a structural equilibrium framework that complements the AKM approach and enriches the interpretation of firm effects in the context of market power. Existing work on imperfect competition typically focuses on either the labor market or the product market in isolation.In contrast, we analyze imperfect competition in both markets jointly, showing theoretically and empirically that focusing on one market in isolation may result in a limited or misleading picture of the degree and impacts of market power.Our empirical setting is the US construction industry.We develop, identify and estimate a model where construction firms imperfectly compete with one another for workers in the labor market and for projects in both the private market and the government market, where government projects are procured through auctions.Our analyses combine the...	Kory Kroft, Yao Luo, Magne Mogstad, et al.
8	2020	Monopsony in Movers: The Elasticity of Labor Supply to Firm Wage Policies ↗ This paper directly employs the AKM framework to isolate firm wage premiums and uses them to estimate labor supply elasticities, addressing the equilibrium interpretation of firm effects via monopsony. It provides empirical evidence on how firms respond to wage policies, which aligns closely with the project's focus on the determinants of firm wage premiums and the equilibrium behavior of firms. We provide new estimates of the separations elasticity, a proximate determinant of the labor supply facing a firm with respect to hourly wage, using matched Oregon employer-employee data. Existing estimates using individual wage variation may be biased by mismeasured wages and use of wage variation unrelated to firm choices. We estimate the impact of the firm component of wage variation on separations using both firm fixed effects estimated from a wage equation as well as a matched IV event study around employment transitions between firms. Separations are a declining function of firm wage policies: we find that the implied firm-level labor supply elasticities generated are around 4...	Ihsaan Bassier, Arindrajit Dubé, Suresh Naidu
8	2018	Sources of Displaced Workers’ Long-Term Earnings Losses ↗ This paper is closely related as it utilizes linked employer-employee data to decompose displacement-driven wage losses into firm-specific and worker-specific components, directly engaging with AKM-style identification and mobility issues. It provides empirical evidence on the persistence of firm wage premiums and the role of match quality, which are central to the project's themes of identification, limited mobility bias, and wage inequality. We estimate the magnitudes of reduced earnings, work hours, and wage rates of workers displaced during the Great Recession using linked employer-employee panel data from Washington State. Displaced workers' earnings losses occurred mainly because hourly wage rates dropped at the time of displacement and recovered sluggishly. Lost employer-specific premiums explain only 17 percent of these losses. Fully 70 percent of displaced workers moved to employers paying the same or higher wage premiums than the displacing employers, but these workers nevertheless suffered substantial wage rate losses. Loss of valuable specific workeremployer matches explain more than half of the wage losses.	Marta Lachowska, Alexandre Mas, Stephen A. Woodbury
8	2016	International Trade and Job Polarization: Evidence at the Worker-Level ↗ This paper directly addresses the project's dimension on international trade, specifically analyzing how import competition shocks transmit to worker-level wage adjustments and polarization using matched employer-employee data. It provides empirical evidence on how trade alters the distribution of wages across workers with different skill profiles, contributing to the understanding of wage dynamics and worker-firm sorting mechanisms. This paper examines the role of international trade for job polarization-the decline in opportunities for mid-wage workers while those for high-and low-wage workers increase. With employer-employee matched data on virtually all workers and firms in Denmark between 1999 and 2009, we show that import competition has caused worker-level adjustments that lead to job polarization. When mid-wage workers adjust to the shock, highly educated and skilled workers end up in high-wage jobs whereas less educated workers end up in low-wage positions. We show that the specific tasks performed by a worker are central in determining trade's impact, and workers performing manual tasks are the ones most...	Wolfgang Keller, Hâle Utar
8	2020	Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany ↗ This paper directly addresses the estimation of firm wage premia using the two-way fixed effects decomposition central to the AKM framework. It provides relevant empirical context on rent-sharing mechanisms and institutional determinants of wage inequality within the specified labor market analysis. The authors use three distinct methods to investigate the influence of industrial relations on firm wage premia in Germany. First, ordinary least squares (OLS) regressions for the firm effects from a two-way fixed-effects decomposition of workers’ wages reveal that average premia are larger in firms bound by collective agreements and in firms with a works council, holding constant firm performance. Next, recentered influence function (RIF) regressions show that premia are less dispersed among covered firms but more dispersed among firms with a works council. Finally, in an Oaxaca–Blinder decomposition, the authors find that decreasing bargaining coverage is the only factor they consider...	Boris Hirsch, Steffen Mueller
8	2015	Firms and skills: the evolution of worker sorting This paper directly addresses the project's theme of assortative matching and variance decomposition by quantifying how worker sorting across firms drives between-firm wage dispersion. It provides key empirical evidence on the mechanisms (technology complementarities) behind the sorting patterns central to the AKM framework's interpretation of firm effects. We document a significant increase in the sorting of workers by cognitive and non-cognitive skills across Swedish firms between 1986 and 2008. The weight of the evidence suggests that the increase in sorting is due to stronger complementarities between worker skills and technology. In particular, a large fraction of the increase can be explained by the expansion of the ICT sector and a reallocation of engineers across firms. We also find evidence of increasing assortative matching, in the sense that workers who are particularly skilled in their respective educational groups are more likely to work in the same firms. Changes in sorting patterns and skill gradients can account for a about...	Christina Håkanson, Erik Lindqvist, Jonas Vlachos
8	2021	Firm Dynamics, On-the-Job Search, and Labor Market Fluctuations ↗ This paper develops a theoretical model directly linking on-the-job search, firm dynamics, and wage rent-sharing, which aligns with the project's focus on the equilibrium interpretation of firm fixed effects and worker-firm assignment. It provides the search-and-matching theoretical underpinnings necessary for understanding how firm wage premiums are sustained through bargaining and mobility. Abstract We devise a tractable model of firm dynamics with on-the-job search. The model admits analytical solutions for equilibrium outcomes, including quit, layoff, hiring, and vacancy-filling rates, as well as the distributions of job values, a fundamental challenge posed by the environment. Optimal labor demand takes a novel form whereby hiring firms allow their marginal product to diffuse over an interval. The evolution of the marginal product over this interval endogenously exhibits gradual mean reversion, evoking a notion of imperfect labor market competition. This in turn contributes to dispersion in marginal products, giving rise to endogenous misallocation. Quantitatively, the...	Michael Elsby, Axel Gottfries
8	2015	Trade, Wages and Collective Bargaining: Evidence from France ↗ This paper directly addresses the project's focus on the role of international trade in transmitting shocks to firm wage premiums and altering worker-firm wage dynamics. It provides relevant empirical evidence on how trade flows interact with institutional factors like collective bargaining to influence wage outcomes, aligning with the project's interest in firm-level pay policies and trade applications. We estimate the impact of international trade on wages using data for French manufacturing firms. We instrument firm-level trade flows with firm-specific instrumental variables based on world demand and supply shocks. Both export and offshoring shocks have a positive effect on wages. Exports increase wages for all occupational categories while offshoring has heterogeneous effects. The impact of trade on wages varies across bargaining regimes. In firms with collective bargaining, the elasticity of wages with respect to exports and offshoring is higher than in firms with no collective bargaining. Wage gains associated with collective bargaining are similar across worker categories.	Juan Carluccio, Denis Fougère, Erwan Gautier
8	2017	Who Moves Up the Job Ladder? ↗ This paper directly addresses the project's focus on worker-firm sorting and mobility by using linked employer-employee data to analyze how job-to-job moves reallocate workers across heterogeneous firms. It provides critical empirical evidence on the dynamics of assortative matching and cyclical labor market reallocation, which are central mechanisms for identifying and interpreting AKM-style firm and worker effects. In this paper, we use linked employer-employee data to study the reallocation of heterogeneous workers between heterogeneous firms. We build on recent evidence of a cyclical job ladder that reallocates workers from low-productivity to high-productivity firms through job-to-job moves. In this paper, we turn to the question of who moves up this job ladder and the implications for worker sorting across firms. Not surprisingly, we find that job-to-job moves reallocate younger workers disproportionately from less productive to more productive firms. More surprisingly, especially in the context of the recent literature on assortative matching with on-the-job search, we find that job-to-job moves...	John Haltiwanger, Henry R. Hyatt, Erika McEntarfer
8	2018	The Cyclical Job Ladder ↗ This paper is closely related to the project as it empirically links firm characteristics (size, age, productivity, wage premiums) to worker transitions and earnings growth, directly informing the AKM firm fixed effects and sorting components. It provides crucial context on the dynamic mechanisms, such as the job ladder and on-the-job search, that generate and sustain the observed firm wage premiums within an equilibrium framework. Many theories of labor market turnover generate a job ladder. Due to search frictions, workers earn rents from employment. All workers agree on which jobs are, in this sense, more desirable and slowly climb the job ladder through job-to-job quits. Occasionally, negative shocks throw them off the ladder and back into unemployment. We review a recent body of theory and empirical evidence on labor market turnover through the lens of the job ladder. We focus on the critical role that the job ladder plays in transmitting aggregate shocks, through the pace and direction of employment reallocation, to economic activity and wages and in shaping business cycles more generally. The main evidence...	Giuseppe Moscarini, Fabien Postel‐Vinay
8	1996	Wage Inequalities and Firm-Specific Compensation Policies in France This paper directly addresses the project's focus on firm-specific wage premiums by empirically demonstrating their significant role in driving wage inequality in France using matched employer-employee data. It complements the core AKM framework by highlighting how time-varying compensation policies and workforce composition shifts contribute to firm-level wage structures. This paper examines the evolution of the wage structure in France after 1984. Our data come from two matched employer-employee wage surveys performed in 1986 and 1992. So, we have two cross-sections of establishments and individuals. A subsample of establishments present in both surveys allows us to analyse time-variations. We find that the wage inequality increased between 1986 and 1992, which seems to be, in large part, explained by the evolution of employer-specific compensation policies. We analyse the role of employer characteristics in this evolution. We also show that between-plant specialization dramatically increased during the period in all dimensions. Finally, we observe that the...	Françis Kramarz, Stéfan Lollivier, Louis-Paul Pel
8	2014	Returns to Tenure or Seniority? ↗ This paper directly addresses time-varying worker components by distinguishing between tenure and seniority effects on wages, fitting the project's focus on human capital accumulation and wage dynamics. It utilizes matched employer-employee data to identify worker-level determinants of pay, aligning with the AKM framework's goal of decomposing wage variation. This study documents two empirical facts using matched employer-employee data for Denmark and Portugal. First, workers who are hired last, are the first to leave the firm. Second, workers' wages rise with seniority (= a worker's tenure relative to the tenure of her colleagues). The identification problems for the wage return to tenure are shown not to apply to the return to seniority because seniority is not a deterministic function of time. Controlling for tenure, the probability of leaving the firm decreases with seniority. The increase in expected seniority with tenure explains a large part of the negative duration dependence of the hazard. Using a variety of estimation methods, we show...	Sebastian Buhai, Miguel Portela, Coen N. Teulings, et al.
8	2008	Microdata evidence on rent-sharing ↗ This paper directly addresses the project's theme of rent-sharing by estimating the relationship between firm profits and wages using worker and firm fixed effects. It contributes key methodological insights regarding the identification of firm wage premiums and the non-symmetric adjustment of wages to profit changes, which are central to understanding firm-level pay policies. We examine the effect of firm profits on wages for individual workers while focusing on the empirical complications associated with estimating the extent of rent-sharing. Controlling for worker and firm fixed-effects and using several instruments to deal with the endogeneity of profits, we report results indicating that Ordinary Least Square (OLS)-estimates strongly underestimate the effects of profits on wages. Moreover, the effect of profits on wages are estimated separately for firms with increasing and decreasing profits within a given time period. We find a positive and stable effect only in firms with increasing profits. This is in line with the idea that falling profits do not lead...	Mahmood Araï, Fredrik Heyman
8	2022	Estimating Labor Market Power ↗ This paper is closely related as it investigates the structural causes of firm wage premiums, specifically linking them to labor market power and monopsony forces within the AKM framework. It provides critical empirical evidence on how firm-level supply elasticities generate wage gaps, which informs the equilibrium interpretations of firm fixed effects discussed in the project. How much power do employers have to suppress wages below marginal productivity? It depends on the firm-level labor supply elasticity. Leveraging data on job applications from the large job board CareerBuilder.com, we estimate the wage impact on workers' choice among differentiated jobs in the largest occupations. We use a nested logit model of worker's utility for applying to jobs with varying wages and characteristics, including distance from the potential worker's home. We account for the endogeneity of wages by using several different instrumental variable strategies. We find that failing to instrument results in implausibly low elasticities, whereas plausible instruments result in more...	José Azar, Steven Berry, Ioana Elena Marinescu
8	2011	Recent Perspectives on Trade and Inequality ↗ This paper reviews mechanisms through which trade affects inequality, directly aligning with the project's focus on how international trade shocks transmit to firm wage premiums. It covers key topics like offshoring and heterogeneous firms, which are central to the worker-firm wage decomposition and rent-sharing analysis outlined in the project description. The 1990's dealt a blow to traditional Heckscher-Ohlin analysis of the relationship between trade and income inequality, as it became clear that rising inequality in low-income countries and other features of the data were inconsistent with that model. As a result, economists moved away from trade as a plausible explanation for rising income inequality. In recent years, however, a number of new mechanisms have been explored through which trade can affect(and usually increase) income inequality. These include within-industry effects due to heterogeneous?firms; effects of offshoring of tasks; effects on incomplete contracting; and effects of labor-market frictions. A number these mechanisms...	Ann Harrison, John McLaren, Margaret McMillan
8	2022	Career Consequences of Firm Heterogeneity for Young Workers: First Job and Firm Size ↗ This paper directly addresses the identification of firm fixed effects in wage determination, specifically focusing on the impact of firm size on worker outcomes, which is a core theme of the AKM framework. It employs rigorous causal inference methods to address selection bias, aligning with the project's interest in identifying worker and firm effects using matched employer-employee data. I study the long-term effects of landing a first job at a large firm versus a small one using Spanish administrative data. Size could be a relevant employer attribute for inexperienced workers since large firms are associated with greater productivity, wages, and training. The key empirical challenge is selection into first jobs based on unobserved worker characteristics. I develop an instrumental variable approach that, keeping business cycle conditions fixed, leverages variation in the composition of labor demand that labor market entrants face. Initially matching with a larger firm persistently improves long-term outcomes, even through subsequent jobs. Mechanisms suggest better skill...	Jaime Arellano-Bover
8	2016	The Impact of Chinese Import Competition on the Local Structure of Employment and Wages: Evidence from France ↗ [Title only] This paper directly addresses the project's fourth dimension by examining how import competition shocks transmit to local wage structures and employment, a key application of the AKM framework in international trade contexts. It likely provides evidence on how external trade pressures alter firm wage premiums and worker-firm matching, which is central to understanding the distributional effects of globalization within the specified theoretical scope. No abstract available.	Clément Malgouyres
8	2001	Wages, Profits and Individual Unemployment Risk : Evidence from Matched Worker-Firm Data This paper directly addresses the rent-sharing mechanism, which is a key theme in understanding how firm-level productivity shocks translate into firm wage premiums within the AKM framework. It utilizes matched employer-employee data to decompose wage components, providing relevant empirical evidence on firm effects and their determinants. We present new evidence on the extent of rent sharing based on a large panel of matched worker-firm data for Sweden. Controlling for worker and firm heterogeneity, as well as examining the problem of endogeneity of profits, we report evidence implying the existence of rent sharing. Another result is that unemployment risk, aggregated at the firm and various industry levels, has a negative effect on individual workers’ wages after controlling for individual differences in unemployment risk.	Fredrik Heyman, Mahmood Araï
8	2019	Fixed‐Effect Regressions on Network Data ↗ This paper directly addresses the statistical identification and inference challenges inherent in the AKM framework, which relies on two-way fixed effects from matched employer-employee data. It provides crucial theoretical grounding on how network mobility structures affect the consistency and accuracy of estimated firm and worker effects, a central concern for the project's methodology. This paper considers inference on fixed effects in a linear regression model estimated from network data. An important special case of our setup is the two‐way regression model. This is a workhorse technique in the analysis of matched data sets, such as employer–employee or student–teacher panel data. We formalize how the structure of the network affects the accuracy with which the fixed effects can be estimated. This allows us to derive sufficient conditions on the network for consistent estimation and asymptotically valid inference to be possible. Estimation of moments is also considered. We allow for general networks and our setup covers both the dense and the sparse case. We provide...	Koen Jochmans, Martin Weidner
8	2015	Discriminatory Social Attitudes and Varying Gender Pay Gaps within Firms ↗ This paper directly addresses the project's theme of labor market discrimination by analyzing how external social attitudes influence within-firm wage gaps, a key component of the AKM framework's residual or error structure often associated with firm-specific pay policies. It provides relevant empirical evidence on how firm-level pay setting deviates from pure productivity-based wages due to discriminatory factors, aligning with the project's interest in rent-sharing and discrimination applications. This study analyzes the relationship between discriminatory social attitudes toward gender equality and firms’ pay-setting behavior by combining information about regional votes on constitutional amendments on equal rights for women and men with a large data set of multi-establishment firms and workers. The results show a strong relationship between discriminatory social attitudes toward gender equality and gender pay gaps within firms across regions. The results remain robust, even when the authors account for detailed worker and job characteristics and for regional sorting of firms. Overall, the results suggest that gender pay gaps are larger in regions where more people oppose gender...	Simon Janßen, Simone N. Tuor Sartore, Uschi Backes‐Gellner
8	2010	Training, search and wage dispersion ↗ This paper integrates on-the-job search and human capital theory to explain wage dispersion, directly addressing the equilibrium foundations of wage premiums central to the project. It provides valuable theoretical context for understanding how firm-specific policies, such as training, interact with mobility and wage dynamics to shape the worker-firm wage decomposition. This paper combines on-the-job search and human capital theory to study the coexistence of firm-funded general training and frequent job turnovers. Although ex ante identical, firms differ in their training decisions. The model generates correlations between various firm characteristics that are consistent with the data. Wage dispersion exists among ex ante identical workers because workers of the same productivity are paid differently across firms, and because workers differ in their productivity ex post. Endogenous training breaks the perfect correlation between work experience and human capital, which yields new insights on wage dispersion and wage dynamics. © 2010.	Chao Fu
8	2013	WHY FOREIGN OWNERSHIP MAY BE GOOD FOR YOU* ↗ The paper directly addresses rent-sharing and firm wage premiums, which are central to the project's focus on wage decomposition and firm heterogeneity. It provides a theoretical mechanism linking multinational status to wage outcomes, offering relevant context for understanding how firm-level characteristics and international factors influence worker wages. We develop a two‐country model with heterogeneous producers and rent‐sharing at the firm level. We identify two sources of a multinational wage premium: A composition effect because multinational firms are more productive, make higher profits, and pay higher wages, and a firm‐level wage effect, because a firm makes higher global profits and thus pays higher wages in its home market when becoming multinational. With two identical countries, the wage premium is fully explained by firm characteristics. Allowing for technology differences between countries, a residual wage premium exists in the technologically backward country but not in the advanced country.	Hartmut Egger, Udo Kreickemeier
8	2016	Mergers and Acquisitions, Technological Change and Inequality ↗ This paper is closely related as it examines how firm-level shocks from mergers and acquisitions drive technological change and automation, directly impacting wage inequality and occupational composition. It aligns with the project's focus on how firm wage premiums and labor market outcomes respond to structural changes like technology adoption and firm reorganization. This paper documents important shifts in the occupational composition of industries following high merger and acquisition (M&A) activity as well as accompanying increases in mean wages and wage inequality. We propose mergers and acquisitions act as a catalyst for skill-biased and routine-biased technological change. We argue that due to an increase in scale, improved efficiency or lower financial constraints, M&As facilitate technology adoption and automation, disproportionately increasing the productivity of high-skill workers and enabling the displacement of occupations involved in routine-tasks, typically mid-income occupations. An increase in M&A intensity of 10% is associated with a...	Wenting Ma, Paige Ouimet, Elena Simintzi
8	2012	Trade, Labor Market Frictions, and Residual Wage Inequality across Worker Groups ↗ The paper directly addresses the project's theme of international trade's impact on wage structures by analyzing trade liberalization effects on residual wage inequality using matched employer-employee data. It explicitly accounts for non-random worker-firm assignment, linking trade shocks to the worker and firm components central to the AKM framework. Using a matched employer-employee data set, we study the effects of trade liberalization on wage dispersion in Brazil across heterogeneous worker groups, keeping in mind that the assignment of workers to firms may be non-random and determined by the time-invariant productivity of workers specific to the firms with which they are matched. We find differential effects of trade reform on residual wage inequality across worker groups. High education workers experience greater increases in wage dispersion relative to low education workers following trade liberalization. This finding is broadly consistent with the theoretical predictions that emerge from models with heterogeneous firms...	Pravin Krishna, Jennifer P. Poole, Mine Zeynep Senses
8	2009	Wage Dispersion between and within Plants ↗ This paper provides essential descriptive context on wage dispersion and firm-level wage structures, directly supporting the project's focus on decomposing wage inequality into worker and firm components. The strong positive correlation between plant wages and productivity offers key empirical evidence relevant to understanding rent-sharing mechanisms and firm wage premiums within the AKM framework. Abstract This chapter outlines the Swedish labor market institutions, the turbulent macroeconomic events of the 1990s, and the evolution of labor mobility and fixed-term contracts as a background to the later analysis of wages and mobility. It also reports detailed descriptive evidence of wages, wage changes, and mobility at the plant level in the Swedish private corporate sector for the years 1986, 1990, 1995, and 2000. The evolution of the wage structure is then covered. The data show that although the rate of real wage changes increasingly varies between plants, the variation of wage changes has remained stable within plants. The wage dispersion has increased quite consistently for the...	Oskar Nordström Skans, Per‐Anders Edin, Bertil Holmlund
8	2019	Which boats are lifted by a foreign tide? Direct and indirect wage effects of foreign ownership ↗ [Title only] This paper directly addresses the international trade dimension of the project by analyzing how foreign ownership shocks transmit to firm wage premiums. It aligns with the core AKM framework by examining the decomposition of wage effects, specifically distinguishing between direct and indirect impacts on worker and firm components. No abstract available.	Sourafel Girma, Holger Görg, Erasmus Kersting
8	2017	Returns to Education through Access to Higher-Paying Firms: Evidence from US Matched Employer-Employee Data ↗ This paper directly applies the matched employer-employee data framework to quantify the role of firm heterogeneity in wage inequality and returns to education. It aligns with the project's core themes on variance decomposition, worker-firm sorting, and the decomposition of wage gaps into worker and firm components. We use administrative US matched employer-employee data merged with detailed information on individuals' academic records to assess the extent to which returns to education are mediated by the sorting of workers across firms. We present three results. First, we confirm findings in the earlier literature of large pay differences across higher education degrees. Second, we show that up to one quarter of pay premiums for higher degrees are explained by between-firm pay differences. Third, higher degrees are associated with greater representation at the best-paying firms. We conclude that employer heterogeneity is an important factor in mediating the returns to education.	Niklas Engbom, Christian Moser
8	2009	Rent-sharing and collective wage contracts–evidence from German establishment-level data ↗ This paper directly addresses rent-sharing, a core theme of the project, by empirically investigating how firm profitability translates into worker wages. It provides relevant evidence on how institutional factors like collective bargaining influence the measurement of firm-specific wage premiums, which is essential for accurate AKM estimation and understanding wage decomposition. Using German establishment-level data, this article analyses whether wages respond to firm-specific profitability conditions. Particular emphasis is given to the question of whether the extent of rent-sharing varies with collective bargaining coverage. In this context, two conflicting hypotheses are tested. The first one asserts that unions exploit their bargaining power at the firm level and appropriate a larger share of rents than the bargaining parties in uncovered firms. The second one states that unions favour a compressed intra-industry wage structure and suppress the responsiveness of wages to firm-specific profitability conditions. The empirical analysis provides strong support for...	Nicole Guertzgen
8	2019	Productivity and wage effects of firm-level collective agreements ↗ This paper directly addresses the project's theme of rent-sharing and the decomposition of wage premiums by analyzing how firm-level collective bargaining impacts wages relative to productivity. It utilizes matched employer-employee data to provide empirical evidence on the mechanisms sustaining firm wage premiums, aligning with the equilibrium interpretation of fixed effects and wage inequality components. How do firm-level collective agreements affect firm performance in a multi-level bargaining system? Using detailed Belgian linked employer-employee panel data, our findings show that firm agreements increase both wage costs and labour productivity (with respect to sector-level agreements). Relying on a recent approach developed by Bartolucci (2014), they also indicate that firm agreements exert a stronger impact on wages than on productivity, so that on average profitability is hampered. However, this rent-sharing effect only holds in sectors where firms are more concentrated. Firm agreements are thus mainly found to raise wages beyond labour productivity when the rents to be shared between...	Andrea Garnero, François Rycx, Isabelle Terraz
8	2018	Sorting in the Labor Market ↗ This paper is closely related as it directly addresses the role of assortative matching and worker-firm sorting, which are central to the AKM framework's variance decomposition and equilibrium interpretation. It provides essential theoretical context for understanding how the composition of skills and firm productivity drives wage inequality and labor market dynamics. This review surveys the literature on sorting in the labor market. There are inherent differences in worker ability and across-firm productivity. Two fundamental questions are whether the exact composition of skills of workers and productivity of firms affects output and how this composition determines the equilibrium allocation of workers within a firm and between firms. There has been a surge of research investigating the causes and consequences of the process of allocation of heterogeneous workers to firms. The focus in this review is on theory that sheds light on open questions in macroeconomics, labor, and industrial organization, with a particular emphasis on the role of firm size...	Jan Eeckhout
8	2023	The Gender Pay Gap: Micro Sources and Macro Consequences ↗ This paper is closely related as it employs matched employer-employee data to decompose the gender pay gap into worker and firm components, directly addressing firm wage premiums and assortative matching. It also integrates an equilibrium search model to explain how firm pay policies and worker-firm assignment generate wage disparities, aligning with the project's focus on equilibrium interpretations of firm effects. Using linked employer-employee data from Brazil, we document a significant gender pay gap, which is largely attributed to women working at lower-paying employers. To interpret this fact, we develop an equilibrium search model with endogenous firm pay, amenities, and hiring. We provide a constructive proof of identification of all model parameters. The estimated model suggests that amenities are important for both men and women, and that compensating differentials account for half of the gender pay gap. Equal treatment policies partly close gender gaps but are not output- or welfare-improving. (JEL E24, J16, J23, J31, J32, M51, O15)	Iacopo Morchio, Christian Moser
8	2022	The effects of equal pay laws on firm pay premiums: Evidence from Chile ↗ This paper directly applies the matched employer-employee data framework and AKM-style decomposition methods to analyze firm pay premiums, aligning with the project's core methodological and thematic focus. It further addresses the project's interest in firm-level pay policies by examining how regulatory shocks influence wage structures through bargaining and sorting channels. This paper analyzes Chile's 2009 Equal Pay for Equal Work Law (EPL) and its effects on firm pay premiums. The law affected firms with 10 or more workers and specified penalties by firm size, including a disclosure requirement for firms with 200 or more workers. We use matched employer-employee data to estimate worker-firm fixed-effects models, decomposing the firm's contribution to the gender pay gap into bargaining power and sorting channels. The EPL reduces the firm premium gender gap by 6.1%, driven by the bargaining power channel. The effects are larger in firms exposed to higher penalties and disclosure requirements.	Gabriel Cruz, Tomás Rau
8	2022	Monopsony in the U.S. Labor Market ↗ This paper directly addresses the equilibrium interpretation of firm wage premiums by quantifying monopsony power and employer market power, a core component of the project's third dimension. It provides empirical evidence on how firm-level pay policies deviate from competitive benchmarks, which is essential for understanding the structural drivers of the AKM firm fixed effects. This paper quantifies the extent to which the U.S. manufacturing labor market is characterized by employer market power and how such market power has changed over time. We find that the vast majority of U.S. manufacturing plants operate in a monopsonistic environment and, at least since the early 2000s, the labor market in U.S. manufacturing has become more monopsonistic. To reach this conclusion, we exploit rich administrative data for U.S. manufacturers and estimate plant-level markdowns—the ratio between a plant’s marginal revenue product of labor and its wage. In a competitive labor market, markdowns would be equal to unity. Instead, we find substantial deviations from perfect...	Chen Yeh, Claudia Macaluso, Brad J. Hershbein
8	2004	Rent Sharing Before and after the Wage Bill ↗ This paper directly addresses the project's theme of rent-sharing by employing matched employer-employee data and AKM-style fixed effects to decompose wage determination. It specifically tackles key methodological challenges such as limited mobility bias and endogeneity, providing relevant insights into how firm wage premiums are estimated and interpreted. Many biases plague the analysis of whether employers share rents with their employees, unlike what is predicted by the competitive labour market model. Using a Portuguese matched employer-employee panel, this article is one of the first to address these biases 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 firm's 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...	Pedro S. Martins
8	2022	Eclipse of Rent-Sharing: The Effects of Managers' Business Education on Wages and the Labor Share in the Us and Denmark ↗ This paper directly addresses the project's theme of rent-sharing by providing causal evidence on how managerial characteristics alter firm-level wage premiums and profit distribution. It utilizes event-study designs around firm shocks (manager transitions) to identify changes in pay policies, aligning with the research focus on the determinants and dynamics of firm wage premiums. This paper provides evidence from the US and Denmark that managers with a business degree (“business managers”) reduce their employees’ wages. Within ﬁve years of the appointment of a business manager, wages decline by 6% and the labor share by 5 percentage points in the US, and by 3% and 3 percentage points in Denmark. Firms appointing business managers are not on diﬀerential trends and do not enjoy higher output, investment, or employment growth thereafter. Using manager retirements and deaths and an IV strategy based on the diﬀusion of the practice of appointing business managers within industry, region and size quartile cells, we provide additional evidence that these are causal eﬀects...	Daron Acemoğlu, Alex Xi He, Daniel le Maire
8	2019	Firm and Worker Dynamics in a Frictional Labor Market ↗ The paper develops a frictional labor market model that incorporates firm dynamics and worker mobility, directly aligning with the project's focus on equilibrium interpretations of firm fixed effects through search-and-matching theory. By quantifying the misallocation costs of frictions and modeling job-to-job transitions, it provides a theoretical foundation for understanding how firm wage premiums and worker assignment are generated in equilibrium. This paper develops a random-matching model of a frictional labor market with firm and worker dynamics. Multi-worker firms choose whether to shrink or expand their employment in response to shocks to their decreasing returns to scale technology. Growing entails posting costly vacancies, which are filled either by the unemployed or by employees poached from other firms. Firms also choose when to enter and exit the market. Tractability is obtained by proving that, under a parsimonious set of assumptions, all workers' and firm decisions are characterized by their joint marginal surplus, which in turn only depends on the firm's productivity and size. As frictions vanish, the model converges to...	Adrien Bilal, Niklas Engbom, Simon Mongey, et al.
8	2016	Domestic gains from offshoring? Evidence from TAA-linked U.S. microdata ↗ This paper directly addresses the project's theme of how international trade and offshoring shocks transmit to firm-level outcomes, specifically examining the impact on domestic wages and employment. By leveraging matched microdata to analyze the short- and long-term effects of offshoring on wages, it provides empirical evidence relevant to the transmission of offshoring to the worker-firm wage decomposition. We construct a new linked data set with over one thousand offshoring events by matching Trade Adjustment Assistance (TAA) program petition data to U.S. Census Bureau microdata. We exploit these data to study the short- and long-term effects of offshoring on domestic firm-level employment, output, wages, and productivity in this large sample of offshoring events. As implied by heterogeneous firm models with high fixed costs of offshoring, we find that the average offshoring firm in the TAA sample is larger, more productive, older, and more likely to be an exporter, than the average non-offshorer. After initiating offshoring, TAA-certified offshorers experience large declines in employment...	Ryan Monarch, Jooyoun Park, Jagadeesh Sivadasan
8	—	Exports, Imports and Wages:Evidence from Matched Firm-Worker-Product Panels This paper directly addresses the project's interest in the role of international trade by examining how export and import shocks affect wages using matched employer-employee data. It provides specific empirical evidence on how different types of trade flows transmit to firm-level pay policies, aligning with the project's focus on the intersection of trade and wage decomposition. The analysis of the effects of firm-level international trade on wages has so far focused on the role of exports, which are also typically treated as a composite good. However, we show in this paper that firm-level imports can actually be a wage determinant as important as exports. Furthermore, we also find significant differences in the relationship between trade and wages across types of products. In particular, firms that increase their exports (imports) of high- (intermediate-) technology products tend to increase their salaries. Our analysis is based on unique data from Portugal, obtained by merging a matched firm-worker panel and a matched firm-transaction panel. Our data set follows...	Luca David Opromolla, Pedro S. Martins
8	2013	The Sources of Wage Variation: A Three-Way High-Dimensional Fixed Effects Regression Model ↗ This paper is closely related to the project as it directly extends the AKM framework by incorporating job title fixed effects to decompose wage variation into worker, firm, and match components. It provides key empirical estimates on the relative importance of these factors and evidence of assortative matching, which are central themes in the researcher's scope. This paper estimates a wage equation with three high-dimensional fixed effects, using a longitudinal matched employer-employee dataset covering virtually all Portuguese wage earners over a little more than two decades. The variation in log real hourly wages is decomposed into different components related to worker, firm, and job title characteristics (both observed and unobserved) and a residual component.It is found that worker permanent heterogeneity is the most important source of wage variation (36.0 percent) and that the unobserved component plays a more important role (21.0 percent) than the observed component (15.0 percent) in explaining wage differentials. Firm permanent effects are...	Sónia Manuela Torres, Pedro Portugal, John T. Addison, et al.
8	2020	Firms and Skills ↗ This paper directly addresses the project's theme of assortative matching between workers and firms, documenting significant increases in sorting by cognitive and noncognitive skills. It provides empirical evidence on how this sorting contributes to wage inequality and between-firm wage dispersion, which are core components of the variance decomposition discussed in the AKM framework. We document a significant increase in the sorting of workers by cognitive and noncognitive skills across Swedish firms during 1986-2008. During this period, worker skill differences between firms increased, while within-firm skill differences fell. A significant fraction of the increase in the between-firm differences in cognitive skill is due to high-skilled workers moving into the information and communications technology (ICT) sector. Within-firm skill differences fell in all major industries, but particularly in the manufacturing sector. Combined with steeper firm-level skill gradients, the increase in sorting can account for 45 percent of the increase in between-firm wage dispersion...	Christina Håkanson, Erik Lindqvist, Jonas Vlachos
8	2011	Rent-Sharing, Hold-Up, and Wages: Evidence from Matched Panel Data ↗ This paper directly addresses the rent-sharing component of the researcher's project, providing empirical evidence on the relationship between firm profitability and wages using matched employer-employee data. It complements the AKM framework by investigating the hold-up problem and bargaining dynamics, which are central to the equilibrium interpretation of firm wage premiums. It is widely believed that rent-sharing reduces the incentives for investment when long term contracts are infeasible because some of the returns to sunk capital are captured by workers. We propose a simple test for the degree of hold-up based on the fraction of capital costs that are deducted from the quasi-rent that determines negotiated wages. We implement the test using a data set that combines Social Security earnings records for workers in the Veneto region of Italy with detailed financial information for employers. We find strong evidence of rent-sharing, with an elasticity of wages with respect to current profitability of the firm of 3-7%, arising mainly from firms in concentrated...	David Card, Francesco Devicienti, Agata Maida
8	2019	The Sources of the Wage Losses of Displaced Workers ↗ This paper directly applies the AKM decomposition framework to analyze wage losses from displacement, isolating firm fixed effects alongside worker and match components. It provides relevant empirical evidence on the magnitude of firm-specific wage premiums in the context of worker mobility and job changes. We evaluate the sources of wage losses of workers displaced due to firm closure by comparison of workers' wages before and after displacement. We decompose the sources of the wage losses into the contribution of firm, match quality, and job title fixed effects. Sorting into lower paying job titles represents the largest component of the monthly wage loss of displaced workers, accounting for 37 percent of the total average monthly wage loss compared to 31 percent for the firm and 32 percent for the match effects. With respect to the hourly wage losses, job title effects account for 46 percent of the total loss, while firm and match effects contribute in equal shares representing each 27...	Pedro S. Raposo, Pedro Portugal, Anabela Carneiro
8	2022	Firm Productivity, Wages, and Sorting ↗ This paper directly addresses the relationship between firm productivity and wages, a central theme in understanding the sources of firm wage premiums within the AKM framework. It complements the project's focus on equilibrium interpretations of firm effects by linking productivity shocks to wage dynamics and sorting patterns in a search-and-matching context. We study the link between firm productivity and the wages that firms pay. Guided by a search-matching model with large firms, worker and firm heterogeneity, and production complementarities, we infer firm productivity by estimating firm-level production functions. Using German data, we find that the most productive firms do not pay the highest wages. Worker transitions from high- to medium-productivity firms are on average associated with wage gains. Productivity sorting—that is, the sorting of high-ability workers into high-productivity firms—is less pronounced than the sorting into high-wage firms.	Benjamin Lochner, Bastian Schulz
8	2022	Firms and inequality when unemployment is high ↗ This paper directly addresses the project's core theme of decomposing wage inequality into firm and worker components using matched employer-employee data in an AKM-style framework. It provides valuable insights into how limited mobility and monopsony power in developing countries influence firm wage premiums and rent-sharing, extending the standard identification assumptions to contexts with high unemployment. How important are firms for wage inequality in developing countries where structural unemployment is high? Research focused on contexts close to full employment has suggested a substantial role of firms in labor market inequality. Using matched employer–employee data from South Africa, I find that firms explain a larger share of wage variation than in richer countries. I consider drivers of this, documenting first a higher productivity dispersion as found for other developing countries. Secondly, I estimate the separations elasticity by instrumenting wages of matched workers with firm wages, and I find a low separations elasticity. This generates a high degree of monopsony, and the...	Ihsaan Bassier
8	2012	Wage sorting trends ↗ This paper directly addresses the project's theme of assortative matching between workers and firms using matched employer-employee data, a key component of the AKM framework. It provides empirical evidence on how wage sorting trends evolve over time, which is essential for understanding the dynamics of the worker-firm wage decomposition and inequality. We document a strong trend towards more positive assortative wage sorting using Danish Matched Employer-Employee data from 1980 to 2006. The pattern is not due to compositional changes in the labor market and primarily occurs among high wage workers. © 2012 Elsevier B.V.	Jesper Bagger, Kenneth Lykke Sørensen, Rune Vejlin
8	2020	Heterogeneous Passthrough from TFP to Wages ↗ This paper directly addresses the project's focus on how firm wage premiums respond to productivity shocks by quantifying the passthrough from TFP to wages using matched employer-employee data. It provides empirical evidence on rent-sharing dynamics and heterogeneous responses across worker groups, which are central themes in understanding the mechanisms behind firm-level pay policies and wage inequality. In this paper, we use matched employer-employee data from Denmark to analyze the extent to which firms’ productivity shocks are passed to workers wages. The richness of our dataset allows us to separately study continuing and non-continuing workers (switchers), to correct for selection, and to investigate how the passthrough varies across narrow population groups. Our results show a much larger degree of passthrough from firms’ shocks to workers’ wages than reported in previous research. On average, an increase of one standard deviation in firm-level TFP commands an increase of 3.0% in annual wages ($1500 USD for the average worker). Furthermore, we find that the effect of productivity...	Mons Chan, Sergio Salgado, Ming Xu
8	2018	Identifying Sorting in Practice ↗ This paper directly addresses the core AKM theme of identifying assortative matching between workers and firms using matched employer-employee data. It proposes a novel methodology to estimate sorting patterns, which is a key component of the project's interest in variance decomposition and the implications of worker-firm assignment for wage inequality. We propose a novel methodology to uncover the sorting pattern in labor markets. We identify the strength of sorting solely from a ranking of firms by profits. To discern the sign of sorting, we build a noisy ranking of workers from wage data. Our test for the sign of sorting is consistent even with noisy worker rankings. We apply our approach to a panel dataset that combines social security earnings records with detailed financial data for firms in the Veneto region of Italy. We find robust evidence of positive sorting. The correlation between worker and firm types is about 52 percent. (JEL J24, J31, J41, J62, L25)	Cristian Bartolucci, Francesco Devicienti, Ignacio Monzón
8	2022	The Unequal Cost of Job Loss Across Countries ↗ This paper directly relates to the project by quantifying the contribution of firm-specific wage premiums to wage inequality and earnings loss, which aligns with the AKM variance decomposition themes. It provides valuable international context on how employer effects persist after job separation, informing the equilibrium and rent-sharing interpretations of firm fixed effects. IZA DP No. 15033 JANUARY 2022 The Unequal Cost of Job Loss across Countries We document the consequences of losing a job across countries using a harmonized research design. Workers in Denmark and Sweden experience the lowest earnings declines following job displacement, while workers in Italy, Spain, and Portugal experience losses three times as high. French and Austrian workers face earnings losses somewhere in-between. Key to these differences is that Southern European workers are less likely to find employment following displacement. Loss of employer-specific wage premiums accounts for 40% to 95% of within-country wage declines. The use of active labor market policies predicts a...	Antoine Bertheau, Edoardo Maria Acabbi, Cristina Barceló, et al.
8	2023	Location, Location, Location ↗ This paper directly applies the AKM framework to decompose wage variation into worker and place effects, serving as a foundational study for location-based firm premium analysis. It closely aligns with the project's focus on identification strategies, variance decomposition, and the role of sorting in determining wage differentials. We use data from the Longitudinal Employer-Household Dynamics program to study the causal effects of location on earnings.Starting from a model with employer and employee fixed effects, we estimate the average earnings premiums associated with jobs in different commuting zones (CZs) and different CZ-industry pairs.About half of the variation in mean wages across CZs is attributable to differences in worker ability (as measured by their fixed effects); the other half is attributable to place effects.We show that the place effects from a richly specified cross sectional wage model overstate the causal effects of place (due to unobserved worker ability), while those from a model that simply...	David Card, Jesse Rothstein, Moises Yi
8	2022	Social connections and the sorting of workers to firms ↗ This paper directly addresses the project's theme of assortative matching and worker-firm sorting by analyzing how social networks influence the allocation of workers to high-wage establishments. It provides critical empirical evidence on the mechanisms driving the observed correlation between worker and firm quality in wage decomposition frameworks. We assess the presumption that social networks reinforce inequality by providing high-wage workers’ with preferential access to high-wage establishments. Our results based on very detailed Swedish register data contradict this view. We do show that high-wage job seekers tend to be connected to high-wage workers employed in high-wage establishments. Furthermore, social connections appear to directly cause the allocation of workers to jobs. But the sorting resulting from hires within social networks is less unequal than the sorting resulting from market hires, essentially because low-wage firms rely on social connections to hire high-wage workers.	Marcus Eliason, Lena Hensvik, Françis Kramarz, et al.
8	2019	The Firm's Role in Displaced Workers' Earnings Losses ↗ This paper is closely related as it directly quantifies the contribution of firm-specific wage premiums to worker earnings losses, a key application of the AKM framework. It addresses the persistence of firm effects and their role in wage dynamics following displacement, which aligns with the project's focus on rent-sharing and the equilibrium interpretation of firm fixed effects. We use employer-employee matched administrative data from Ohio to study the role of firm pay premiums in explaining the large, persistent earnings losses of displaced workers. We estimate that earnings for displaced workers from the mid-2000s are depressed by 22 percent after four years, consistent with prior work. Drawing upon empirical approaches from the displaced worker and firm heterogeneity literature, we then estimate how much of this earnings loss can be explained by the forfeiture of a favorable employer-specific pay premium. Our preferred estimate attributes one quarter (24 percent) of long-run earnings deficits to lost firm pay premiums. Such firm rents explain up to half the...	Brendan Moore, Judith Scott-Clayton
8	2023	Careers in Firms: The Role of Learning about Ability and Human Capital Acquisition ↗ This paper directly addresses the time-varying worker components of the project by modeling human capital acquisition and learning about ability within a firm. It provides valuable structural insights into how worker-firm sorting and on-the-job learning mechanisms drive wage dynamics, complementing standard AKM decompositions. Job and wage mobility can arise from firms and workers learning about workers’ ability and from workers acquiring human capital with experience. To date, the relative importance of these two mechanisms is debated. Using administrative data from one firm, I estimate a structural model that integrates them. I find the direct effect of beliefs about ability on wages, which existing work has focused on, to be small. However, by improving the sorting of workers to the firm’s jobs, learning about ability is indirectly a crucial determinant of wage growth and dispersion.	Elena Pastorino
8	2015	Cyclical Reallocation of Workers Across Employers by Firm Size and Firm Wage ↗ This paper directly addresses the AKM framework's core component of firm wage premiums and the worker mobility mechanisms that identify them. It provides crucial empirical context on how assortative matching and cyclicality influence the distribution of workers across firms with different wage levels. Do the job-to-job moves of workers contribute to the cyclicality of employment growth at different types of firms? In this paper, we use linked employer-employee data to provide direct evidence on the role of job-to-job flows in job reallocation in the U.S. economy. To guide our analysis, we look to the theoretical literature on on-the-job search, which predicts that job-to-job flows should reallocate workers from small to large firms. While this prediction is not supported by the data, we do find that job-to-job moves generally reallocate workers from lower paying to higher paying firms, and this reallocation of workers is highly procyclical. During the Great Recession, this firm wage job...	John Haltiwanger, Henry R. Hyatt, Erika McEntarfer
8	2019	The Labor Market Effects of Legal Restrictions on Worker Mobility ↗ [Title only] This paper directly addresses the identification challenges of the AKM framework, specifically the 'limited mobility bias' mentioned in the project description, by analyzing how legal restrictions impact worker movement across firms. By examining the causal effects of reduced mobility on wages, it provides critical empirical evidence on the importance of worker-firm matching and the resulting variance decomposition in the labor market. No abstract available.	Matthew S. Johnson, Kurt Lavetti, Michael Lipsitz
8	2013	Trade Adjustment: Worker Level Evidence ↗ This paper directly addresses the project's fourth dimension by empirically analyzing how import competition shocks transmit to worker earnings, which are the dependent variable in firm wage premium decomposition. It provides crucial context on the heterogeneity of worker-level adjustment costs, informing how trade shocks alter the distribution of wages and potentially the identification of firm effects in the presence of mobility. In the past two decades, China’s manufacturing exports have grown spectacularly. U.S. imports from China have surged, while U.S. exports to China have increased more modestly, consistent with the two countries’ divergent current account imbalances. Using data on individual earnings by employer from the Social Security Administration, we examine how exposure to import competition aects the long-term earnings and employment trajectory of workers initially employed in manufacturing industries. We find that workers who in 1991 were employed in industries that experienced high subsequent levels of import growth garner lower cumulative earnings over the subsequent sixteen years (1992 through...	David Autor, David Dorn, Gordon Hanson, et al.
8	2001	Do Firms Really Share Rents with Their Workers? ↗ This paper directly investigates the core mechanism of rent-sharing in the AKM framework, testing whether firm fixed effects reflect genuine rent distribution or statistical artifacts. It employs matched employer-employee data and advanced estimation techniques to address endogeneity and omitted variable bias, which are central to the project's focus on identification and interpretation of firm wage premiums. We use matched firm-worker panel data from France and Norway to consider observationally equivalent alternatives to the hypothesis that firms share product market rents with their workers in the form of higher wages. After documenting the main stylized facts, we find that neither the main statistical explanations (group effect in residuals and measurement error) nor sectoral shocks seem to be responsible for the observed correlation. Statistical-economic explanations (endogeneity of profits, omitted variable biases in terms of individual productive characteristics) are slightly more successful, as instrumentation reduces the significance level in France to 89% (via an increase in the...	David Margolis, Kjell G. Salvanes
8	2018	Does exporting improve matching? Evidence from French employer-employee data ↗ This paper directly addresses the project's focus on international trade by analyzing how export shocks alter assortative matching between workers and firms. It employs matched employer-employee data to measure changes in worker type dispersion and sorting efficiency, aligning with the research theme on how trade transmits to firm wage premiums and worker-firm assignments. Does opening a market to international trade affect the pattern of matching between firms and workers? This paper answers this question both theoretically and empirically in three parts. We set up a model of matching between heterogeneous workers and firms in which variation in the worker type at the firm level exists in equilibrium only because of the presence of search costs. When firms gain access to the foreign market, their revenue potential increases. When stakes are high, matching with the right worker becomes particularly important because deviations from the ideal match quickly reduce the value of the relationship. Hence, exporting firms select sets of workers that are less...	Matilde Bombardini, Gianluca Orefice, Maria D. Tito
8	2022	“Since You’re So Rich, You Must Be Really Smart”: Talent, Rent Sharing, and the Finance Wage Premium ↗ This paper directly addresses the rent-sharing mechanism central to the project's investigation of firm wage premiums and their decomposition. By empirically distinguishing between talent-based selection and firm-specific rent sharing in the financial sector, it provides key insights into how firm pay policies respond to profitability shocks. Abstract Financial sector wages have increased extraordinarily over the last decades. We address two potential explanations for this increase: (1) rising demand for talent and (2) firms sharing rents with their employees. Matching administrative data of Swedish workers, which include unique measures of individual talent, with financial information on their employers, we find no evidence that talent in finance improved, neither on average nor at the top. The increase in relative finance wages is present across talent and education levels, which together can explain at most 20% of it. In contrast, rising financial sector profits that are shared with employees account for up to half of the...	Michael J. Böhm, Daniel Metzger, Per Strömberg
8	2016	Organizational environments and bonus payments: Rent destruction or rent sharing? ↗ This paper directly addresses the project's theme of rent-sharing by empirically decomposing firm-specific effects on bonus payments, a key component of total wages, using matched employer-employee data. It complements the AKM framework by exploring how organizational environments and employee power dynamics influence the distribution of firm rents across different quantiles of the wage distribution. This paper investigates the impact that firms have on the amount of bonus payments employees receive from their employer. Bonus payments are an important component of a firm's pay regime and, like with wages, are subject to an interactional process of claims-making. Depending on the organizational environment, claims can be enforced more or less successfully by certain groups. Hence, we expect different effects depending on the organizational environment of a firm as well as interactions between individual attributes. We use four samples (1995, 2001, 2006, and 2010) of the German Structure of Earnings Survey (GSES), a large dataset linking employers to employees, employing unconditional...	Michael Schweiker, Martin Groß
8	2010	Wage and Productivity Dispersion: Labor Quality or Rent Sharing? This paper closely relates to the project by decomposing wage and productivity dispersion using matched employer-employee data, directly addressing the AKM framework's distinction between worker quality and firm wage premiums. It provides empirical evidence on rent-sharing and the role of firm heterogeneity in wage inequality, which are central themes of the research project. Wage and labor productivity di!er across firms, and more productive firms tend to pay higher wages. We consider a model that allows for di!erences in capital, employment and labor quality as well as rent sharing, all of which should help explain these observations. We estimate the model using detailed matched employer-employee data from the manufacturing sector in Denmark. The production function estimation is embedded in a structural equation system involving worker, firm, time, and occupation e!ects from an individual wage decomposition and accounting for labor input components that are substitutes and complements, while accommodating stochastically varying factor productivity. We find...	Jesper Bagger, Bent Jesper Christensen, Dale T. Mortensen
8	2018	Job-to-job transitions, sorting, and wage growth ↗ This paper directly addresses the AKM framework by testing the exogenous mobility assumption and utilizing a specific subsample to identify firm fixed effects in matched employer-employee data. It also decomposes wage growth into match quality components, which is central to understanding sorting and worker-firm assignment dynamics within the project's scope. We measure the contribution of match quality to the wage growth experienced by job movers. We reject the exogenous mobility assumption needed to estimate a standard fixed-effects wage regression in the Danish matched employer-employee data. We exploit the sub-sample of workers hired from unemployment, for whom the exogenous mobility assumption is not rejected, to estimate firm fixed effects. We then decompose the variance of wage growth of all job movers. We find that 66% of the variance of wage growth experienced by job movers can be attributed to variance in match quality. Expected match quality growth is higher for higher-skilled occupations.	David Jinkins, Annäïg Morin
8	2009	Identifying Sorting - In Theory ↗ This paper directly addresses the core theme of assortative matching and identification issues within the worker-firm wage decomposition framework. It specifically tackles the theoretical limitations of standard fixed effects models in identifying the sign of sorting, which is central to the project's focus on identification and variance decomposition. Assortative Matching between workers and firms provides evidence of the complementarities or substitutes in production. The presence of complementarities is important for policies that aim to achieve the optimal allocation of resources, for example unemployment insurance. We argue that using wage data alone, it is virtually impossible to identify whether Assortative Matching is positive or negative. Even though we cannot identify the sign of the sorting, we can identify the strength, i.e., the magnitude of the cross-partial, and the associated welfare loss. We show first that the wage for a given worker is non-monotonic in the type of his employer. This is due to the fact that in a sorting...	Jan Eeckhout, Philipp Kircher
8	2024	The Gender Pay Gap: Micro Sources and Macro Consequences ↗ This paper directly addresses the decomposition of wage differentials into worker and firm components using linked employer-employee data, aligning with the project's focus on wage inequality and the AKM framework. It further integrates an equilibrium search-and-matching model to interpret firm wage premiums and gender-based sorting, connecting closely to the project's themes on assortative matching and the equilibrium interpretation of firm effects. Using linked employer-employee data from Brazil, we document a large gender pay gap due to women working at lower-paying employers with better nonpay attributes.To interpret these facts, we develop an equilibrium search model with endogenous firm pay, amenities, and hiring.We provide a constructive proof of identification of all model parameters.The estimated model suggests that amenities are important for both men and women, that compensating differentials explain half of the gender pay gap, and that there are significant output and welfare gains from eliminating gender differences.However, equal-treatment policies fail to achieve those gains.	Iacopo Morchio, Christian Moser
8	2017	Ranking Firms Using Revealed Preference ↗ This paper directly engages with the AKM framework by quantifying compensating differentials, which challenges the standard interpretation of firm fixed effects as pure wage premiums. It provides critical evidence for sorting and assortative matching, key themes in the project's analysis of wage decomposition and equilibrium interpretations. This paper estimates workers' preferences for firms by studying the structure of employer-to-employer transitions in U.S. administrative data. The paper uses a tool from numerical linear algebra to measure the central tendency of worker flows, which is closely related to the ranking of firms revealed by workers' choices. There is evidence for compensating differential when workers systematically move to lower-paying firms in a way that cannot be accounted for by layoffs or differences in recruiting intensity. The estimates suggest that compensating differentials account for over half of the firm component of the variance of earnings.	Isaac Sorkin
8	2019	Spatial Wage Gaps in Frictional Labor Markets ↗ This paper is closely related as it employs matched employer-employee data to decompose wage gaps into firm-level premiums and worker mobility frictions, aligning with the project's focus on AKM-style identification and limited mobility bias. It provides valuable empirical context on how firm wage policies and spatial frictions interact to generate persistent wage inequality, a key theme in the researcher's scope. We develop a job ladder model with labor reallocation across firms and regions, and estimate it on matched employer-employee data to study the large and persistent real wage gap between East and West Germany. We find that the wage gap is mostly due to firms paying higher wages per efficiency unit in West Germany and quantify a rich set of frictions preventing worker reallocation across space and across firms. We find that three spatial barriers impede East Germans' ability to migrate West: migration costs, a preference to live in the East, and fewer job opportunities received from the West. The estimated model highlights that the spatial barriers needed to generate the large wage gap...	Sebastian Heise, Tommaso Porzio
8	2024	Return Migration and Human Capital Flows ↗ This paper is closely related to the project as it explicitly employs an AKM-style model to decompose wage returns into worker and location-firm fixed effects, directly addressing the core methodology. It provides valuable context on worker human capital accumulation and the impact of mobility on wage premiums, aligning with themes of worker effects and international dimensions of labor markets. We bring to bear a novel dataset covering the employment history of about 450 million individuals from 180 countries to study return migration and the impact of skilled international migration on human capital stocks across countries. Return migration is a common phenomenon, with 38% of skilled migrants returning to their origin countries within 10 years. Return migration is significantly correlated with industry growth in the origin and destination countries, and is asymmetrically exposed to negative firm employment growth. Using an AKM-style model, we identify worker and country-firm fixed effects, as well as the returns to experience and education by location and current workplace. For...	Naser Amanzadeh, Amir Kermani, Timothy McQuade
8	2023	Firm Market Power, Worker Mobility, and Wages in the US Labor Market ↗ This paper directly addresses the AKM framework's core theme of worker mobility and its impact on wage determination, specifically linking reduced mobility to firm market power. It provides a theoretical foundation for understanding how firm-specific conditions and limited mobility bias interact, which is central to the project's focus on identification and wage decomposition. Worker mobility and wages have declined in the United States amid rising employer market power. I propose a theory of the labor market in which a decrease in employer competition, characterized by fewer firms per worker, drives the decline in worker mobility and wages. A finite and decreasing number of employers exert market power by excluding their offers from the outside options of their employees. This reduces the value of workers’ outside options and, consequently, their wages and transitions across employers. I quantify the model to explain the long-run decline in worker mobility and wages and examine its cross-sectional implications.	Sadhika Bagga
8	2007	An Empirical Assessment of Assortative Matching in the Labor Market ↗ This paper directly addresses the project's theme of assortative matching between workers and firms by quantifying positive matching using matched employer-employee data. It provides empirical evidence on how firm-specific productivity terms correlate with worker skill distributions, offering key insights into the sorting components of wage inequality central to the AKM framework. In labor markets with worker and firm heterogeneity, the matching between firms and workers may be assortative, meaning that the most productive workers and firms team up. We investigate this with longitudinal population-wide matched employer-employee data from Portugal. Using panel data methods, we quantify a firm-specific productivity term for each firm, and we relate this to the skill distribution of workers in the firm. We find that there is positive assortative matching, in particular among long-lived firms. Using skill-specific estimates of an index of search frictions, we find that the results can only to a small extent be explained by heterogeneity of search frictions across worker...	Rute Mendes, Gérard J. van den Berg, Maarten Lindeboom
8	2020	Firm-Level Shocks and Labour Flows ↗ This paper directly addresses the project's interest in how firm-level productivity and demand shocks transmit to labor market outcomes and employment dynamics. By documenting how firms adjust via hiring and separations rather than just employment levels, it provides empirical evidence on the mechanisms underlying firm wage premiums and worker-firm matching processes central to the AKM framework. Abstract We analyse how labour flows respond to permanent idiosyncratic shifts in firm-level production functions and demand curves using very detailed Swedish micro data. Shocks to firms’ physical productivity have only modest effects on firm-level employment decisions. In contrast, we document rapid and substantial employment adjustments through hires and separations in response to firm-level demand shocks. The choice of adjustment margin depends on the sign of the shock: firms adjust through increased hires if these shocks are positive and through increased separations if the shocks are negative.	Mikael Carlsson, Julián Messina, Oskar Nordström Skans
8	2019	Within and between firm trends in job polarization: the roles of globalization and technology ↗ This paper utilizes matched employer-employee panel data to decompose wage inequality and job polarization into within- and between-firm components, directly aligning with the project's core variance decomposition themes. It further examines the impact of globalization and technology on firm-level labor demands, addressing the project's interest in how firm pay policies respond to productivity shocks and international trade. Abstract We analyze occupational polarization within and across firms using a census of matched employer–employee panel data from Finland in the period of 2000–2014. As in most industrialized countries, the Finnish occupational distribution has polarized over the last decades. Using decomposition analysis, we find that jobs involving low-level service tasks increase mostly through the entry dynamics, while the high-level abstract task share increases largely within continuing firms. Worker-level occupational mobility points to some skill upgrading within continuing firms, while labor force entry and retirement contribute the polarizing trend. Instrumental variables (IVs) regressions confirm...	Sari Pekkala Kerr, Terhi Maczulskij, Mika Maliranta
8	2015	Trade Liberalization and Labor Market Dynamics with Heterogeneous Firms This paper is closely related as it explicitly models the transmission of trade liberalization shocks to firm-level wage premiums and labor market dynamics, a key dimension of the project. It provides a structural equilibrium framework that complements the AKM estimation focus by explaining how productivity heterogeneity and labor frictions generate the wage patterns identified in matched employer-employee data. Adjustment to trade liberalization is associated with substantial reallocation of labor across firms within sectors. This salient feature of the data is well captured by models of international trade with heterogeneous firms. In this paper we reconsider the adjustment of firms and workers to changes in trade costs, explicitly accounting for labor market frictions and the entire adjustment path from an initial to a final steady-state. The transitional dynamics exhibit rich patterns, varying across firms that differ in productivity levels and across workers attached to these firms. High-productivity exporters expand employment on impact. But among lower-productivity firms some close shop on...	Elhanan Helpman, Oleg Itskhoki
8	2002	Worker Flows, Job Flows and Firm Wage Policies: An Analysis of Slovenia ↗ [Title only] This paper likely employs matched employer-employee data to analyze the relationship between labor turnover and firm-level pay determination, directly aligning with the project's focus on worker mobility and firm wage policies. By examining how job flows influence wages in Slovenia, it provides relevant empirical evidence for understanding rent-sharing and the transmission of firm-specific effects to worker compensation. No abstract available.	Milan Vodopivec, John Haltiwanger
8	2024	Within-Firm Pay Inequality and Productivity ↗ This paper directly addresses the project's theme of how firm pay policies respond to productivity shocks, specifically examining the relationship between firm productivity and within-firm pay inequality. It provides empirical evidence on the mechanisms, such as performance-pay bonuses, that drive variations in wage premiums and inequality within firms, which is central to understanding wage decomposition and rent-sharing. Combining confidential Census worker and firm data, we find three key results.First, employees at more productive firms earn higher pay at all earnings levels.Second, this pay-productivity relationship strengthens with seniority, doubling from an elasticity of 0.07 for pay on productivity for the median-paid employee to 0.15 for the top-paid employee.Consequently, more productive firms have higher within-firm inequality.Our data suggests this is driven by their greater adoption of aggressive performance-pay bonus and management schemes.Finally, the magnitude of this pay-performance slope suggests rising productivity can explain 40% of the rise in withinfirm inequality since 1980.	Melanie Wallskog, Nicholas Bloom, Scott Ohlmacher, et al.
8	2019	Recent Changes in British Wage Inequality: Evidence from Large Firms and Occupations ↗ This paper directly employs linked employer-employee data to decompose wage inequality into within-firm and between-firm components, aligning with the project's core variance decomposition themes. It provides relevant empirical context on the role of firm-specific factors in wage dynamics, which supports the analysis of firm effects and their contribution to inequality. Abstract Using a linked employer–employee dataset covering large firms, we present new evidence on British wage inequality trends over the past two decades. Differences between firms in the average wages they paid did not drive these trends. Between 1996 and 2005, greater wage variance within firms accounted for 86% of the total increase in wage variance among employees. In the following decade, wage inequality between firms continued to increase, whereas overall wage dispersion decreased. Approximately all the contribution to inequality dynamics from estimated firm‐specific factors, throughout the employee wage distribution, disappears after accounting for the changing occupational content...	Daniel Schaefer, Carl Singleton
8	2016	Globalization, Worker Mobility and Wage Inequality ↗ This paper directly addresses the project's focus on international trade by modeling how export expansions and import competition affect worker-firm assignment and wage inequality within a heterogeneous firm framework. It specifically connects trade shocks to worker mobility and the returns to inter-firm movement, which is central to the identification of firm effects and the equilibrium interpretation of wage premiums. Abstract In the present paper, I integrate frictional labor markets with on‐the‐job search into an otherwise standard heterogeneous firm model of intra‐industry trade. Most importantly, I show that the returns to workers' inter‐firm mobility are higher in a trade equilibrium than in autarky. Intuitively, by favoring large and productive firms, international trade amplifies the disparities in profitability between small and large firms. Hence, the returns to labor reallocation across firms rise. In view of the empirically observed higher inter‐firm mobility among high‐skill workers, this suggests a skill‐biased impact of trade liberalization.	Damir Stijepic
8	2023	Labor Market Power and Between-Firm Wage (In)Equality ↗ This paper directly addresses the core project theme by analyzing the determinants of firm wage premiums using matched employer-employee data in a setting highly relevant to the AKM framework. It provides crucial empirical context on how labor market power contributes to between-firm wage inequality and rent-sharing, which are central mechanisms in the researcher's investigation of wage decomposition and firm-level pay policies. I study how labor market power affects firm wage differences using German manufacturing sector firm-level data (1995-2016). In past decades, labor market power increasingly moderated rising between-firm wage differences. This is because high-paying firms possess high and increasing labor market power and pay wages below competitive levels, whereas low-wage firms pay competitive or even above competitive wages. Over time, large, high-wage, high-productivity firms generate increasingly large labor market rents while charging comparably low product markups. This provides novel insights on why such top firms are profitable and successful. Using micro-aggregated data covering most economic...	Matthias Mertens
8	2022	Cyclical labor market sorting ↗ This paper directly addresses the theme of assortative matching between workers and firms, a key component of the project's variance decomposition analysis. It utilizes matched employer-employee data to examine how cyclical changes affect sorting, providing relevant empirical context for understanding firm wage premiums and worker-firm dynamics. We consider sorting in the labor market, that is, whether high or low productivity workers and firms tend to match with each other, and how this varies cyclically using U.S. matched employer-employee data for recent decades. Although there is considerable disagreement in the nature and extent of assortative matching among different methods for ranking workers and firms, we consistently find that the productivity composition of workers and firms moves in opposite directions over the business cycle. During and after recessions, low-productivity workers leave the labor market, while low-productivity firms gain as a share of employment, so positive assortative matching is greatest in magnitude...	Leland D. Crane, Henry R. Hyatt, Seth M. Murray
8	2019	Trade, Productivity and (Mis)Allocation ↗ [Title only] This paper directly addresses the project's fourth dimension on international trade by examining how trade shocks influence productivity and resource allocation, which fundamentally drives firm-level wage premiums. Although it does not explicitly mention matched employer-employee data or AKM decomposition, the mechanisms of misallocation and productivity transmission are central to understanding the evolution of firm wage effects in open economies. No abstract available.	Antoine Berthou, John J. Chung, Kalina Manova, et al.
8	2023	Dynamic Monopsony with Granular Firms ↗ This paper directly addresses the project's focus on the equilibrium interpretation of firm wage premiums by extending dynamic monopsony models with granular firms. It provides theoretical grounding for how firm heterogeneity and on-the-job search generate wage premiums, aligning with the search-and-matching dimension of the research agenda. This paper extends the "dynamic monopsony" Burdett-Mortensen model of wage posting and onthe-job search to incorporate granular employers with decreasing returns to scale.We provide a complete analytical characterization of the resulting equilibrium and show how to allow for firm heterogeneity, additional inputs, and product market power.As an application, we study noncompete agreements theoretically and quantitatively.A US ban would yield wage gains typically in the range of 0.8 3% depending on local conditions, with a baseline estimate of 0.9%, but these come with higher worker turnover and a mild decline in aggregate welfare.	Axel Gottfries, Gregor Jarosch
8	2022	Global and institutional drivers of wage inequality between and within firms ↗ This paper directly addresses the decomposition of wage inequality into between-firm and within-firm components, a core theme of the AKM framework. It provides valuable empirical context on how institutional factors influence the magnitude of firm wage premiums and worker sorting across countries. Abstract Rising wage inequality in wealthy countries is disproportionately driven by widening differences in pay between workplaces, through increasingly homogenous workforces as well as widening differences in the pay of similar workers. While this is found consistently across countries, the variation in trends highlights the need to study institutional settings. This paper uses cross-national representative European data from the Structure of Earnings Survey to study the trends in wage inequality over time between and within firms, linking these to changes in structural and institutional factors. Indeed, common structural changes such as globalization and digitalization contribute to...	Wouter Zwysen
8	2020	Occupations, organizations, and the structure of wage inequality in the Netherlands ↗ This paper directly addresses the project's focus on wage inequality decomposition using matched employer-employee data, specifically highlighting the role of firm fixed effects and worker-firm sorting. It provides empirical evidence on how organizations and occupations interact, which aligns with the project's interest in variance decomposition and assortative matching components of wage dynamics. Abstract Recent studies have identified both occupations and organizations as important structures underpinning wage inequality in the labor market. In this article we investigate how the two structures might work together in explaining inequality. More specifically, we study how organizations affect between- and within-occupation inequality. Using a combination of Dutch linked employer-employee register data and the Dutch labor force survey, we find that organizations are more important in explaining wage differentials between occupations than wage inequality between workers with the same occupation. While organizations are far away from solely driving heterogeneity in pay among workers in...	Christoph Janietz, Thijs Bol
8	2002	Is it Who You Are, Where You Work, or With Whom You Work? Reassessing the Relationship Between Skill Segregation and Wage Inequality This paper directly extends the AKM framework by incorporating co-worker effects, aligning with the project's theme of time-varying worker components and peer spillovers. It provides empirical evidence on how sorting and coworker interactions contribute to wage inequality, a key topic for the researcher's investigation into variance decomposition. In a recent paper, Kremer & Maskin (QJE, forthcoming) develop an assignment model in which increases in the dispersion and mean of the skill distribution can lead simultaneously to increases in wage inequality and skill segregation. They then present evidence that, concurrent with rising wage inequality, wage segregation increased for production workers in the United States between 1975 and 1986. My paper argues that relying on wages as a proxy for skill may be problematic. Using a newly developed longitudinal dataset linking virtually the entire universe of workers in the state of Illinois to their employers, I decompose wages into components due, not only to person and firm heterogeneity...	Paul Lengermann
8	2019	Technology Boom, Labor Reallocation, and Human Capital Depreciation ↗ This paper directly addresses the project's focus on time-varying worker components by modeling human capital accumulation and depreciation within the AKM framework using matched employer-employee data. It provides empirical evidence on how labor reallocation and technological shocks influence wage dynamics, aligning with the project's interest in worker-firm interactions and the evolution of worker effects over time. Using matched employer-employee data from France, we uncover an ICT boom-cohort discount on the long-term wage of the large cohort of skilled workers entering in the Information and Communication Technology (ICT) sector during the late 1990s technology boom. Despite starting with 5% higher wages, these workers experience lower wage growth and end up with 6% lower wages fifteen years out, relative to similar workers who started outside the ICT sector. Other moments of the wage distribution are inconsistent with selection effects. These workers accumulate human capital early in their career that rapidly depreciates, implying that labor reallocation during technology booms can have...	Johan Hombert, Adrien Matray
8	2008	Learning from experience or learning from others? Inferring informal training from a human capital earnings function with matched employer–employee data This paper directly addresses the project's theme of time-varying worker components by modeling on-the-job learning and peer spillovers using matched employer-employee data. It extends standard human capital models to capture coworker learning effects, which complements the static AKM framework by providing a structural mechanism for how worker productivity evolves within firms. A model of informal training which combines learning from own experience and learning from others is proposed in this paper. It yields a closed-form solution that revises Mincer-Jovanovic's [Mincer, J., Jovanovic, B., 1981. Labor mobility and wages. In: Rosen, S. (Ed.), Studies in Labor Markets. Chicago University Press, Chicago, pp. 21-64] treatment of tenure in the human capital earnings function. We estimate the structural parameters of this non-linear model on a large French cross-section with matched employer-employee data. We find that workers on average can learn from others 10% of their own human capital on entering one plant, and catch half of their learning from others' potential...	Guillaume Destré, Louis Lévy‐Garboua, Michel Sollogoub
8	2022	Firm Pay Policies and the Gender Earnings Gap: The Mediating Role of Marital and Family Status ↗ This paper directly applies the AKM framework to decompose wage inequality into sorting and rent-sharing components, specifically analyzing how firm pay policies contribute to the gender earnings gap. It addresses key themes of the project including wage decomposition, limited mobility bias implications, and the role of firm-level practices in shaping wage dynamics across different worker demographics. Using data from the Canadian Employer-Employee Dynamics Database between 2001 and 2015, the authors examine the impact of firms' hiring and pay-setting policies on the gender earnings gap in Canada. Consistent with the existing literature and following Card, Cardoso, and Kline (2016), findings show that firm-specific premiums explain nearly one-quarter of the 26.8% average earnings gap between female and male workers. On average, firms' hiring practices, due to differences in the relative proportion of women hired at high-wage firms (known as sorting), and pay-setting policies, due to differences in pay by gender within similar firms, each explain approximately one-half of this firm effect...	Jiang Li, Benoît Dostie, Gaëlle Simard‐Duplain
8	2019	The Effects of Foreign Multinationals on Workers and Firms in the United States ↗ This paper directly addresses the project's theme of how firm-level characteristics, specifically multinational status and production networks, generate wage premiums and influence worker outcomes. By leveraging matched employer-employee data to estimate direct firm effects and indirect spillovers, it provides empirical insights into firm wage heterogeneity and the distributional consequences of international economic integration. Governments go to great lengths to attract foreign multinationals because they are thought to raise the wages paid to their employees (direct effects) and to improve outcomes at local domestic firms (indirect effects). We construct the first U.S. employer-employee dataset with foreign ownership information from tax records to measure these direct and indirect effects. We find the average direct effect of a foreign multinational firm on its U.S. workers is a 7 percent increase in wages. This premium is larger for higher skilled workers and for the employees of firms from high GDP per capita countries. We find evidence that it is membership in a multinational production network-instead of...	Bradley Setzler, Felix Tintelnot
8	2020	Immigration and Worker-Firm Matching ↗ This paper directly addresses the project's core theme of assortative matching between workers and firms by empirically demonstrating how immigration shocks alter the positive assortative matching pattern. It utilizes matched employer-employee data to analyze changes in worker-firm alignment and their subsequent effects on wage dispersion and productivity, which is central to understanding wage inequality components in the AKM framework. The process of matching between firms and workers is an important mechanism in determining the distribution of wages. In a labor market characterised by large dispersion of workers' productivity and worker-firm complementarity, high quality firms have strong incentives to screen for the quality of workers. This process will increase the positive quality association of firm-worker matches known as positive assortative matching (PAM). Immigration in a local labor market, by increasing the variance of workers abilities, may drive stronger PAM between firms and workers. Using French matched employer-employee (DADS) data over the period 1995-2005 we document that positive supply-driven changes...	Gianluca Orefice, Giovanni Peri
8	2002	The Impact of Worker and Establishment-Level Characteristics on Male-Female Wage Differentials: Evidence from Danish Matched Employee-Employer Data ↗ [Title only] This paper directly addresses the project's theme of labor market discrimination by decomposing wage differentials using matched employer-employee data, which is the foundational dataset for AKM-style analysis. Its focus on worker and establishment-level characteristics aligns with the variance decomposition and sorting components central to the researcher's investigation of wage inequality and firm effects. No abstract available.	Nabanita Datta Gupta, Donna S. Rothstein
8	2020	Do Cash Windfalls Affect Wages? Evidence from R&D Grants to Small Firms ↗ This paper directly estimates rent-sharing elasticity, a core component of the project's focus on firm wage premiums and their response to productivity or cash flow shocks. It complements the AKM framework by providing empirical evidence on how firm-specific pay policies adjust to exogenous financial constraints, addressing the project's interest in the mechanisms behind firm effects. This paper examines how employee earnings at small firms respond to a cash flow shock in the form of a government R&D grant. We use ranking data on applicant firms, which we link to IRS W2 earnings and other U.S. Census Bureau datasets. In a regression discontinuity design, we find that the grant increases average earnings with a rent-sharing elasticity of 0.07 (0.21) at the employee (firm) level. The beneficiaries are incumbent employees who were present at the firm before the award. Among incumbent employees, the effect increases with worker tenure. The grant also leads to higher employment and revenue, but productivity growth cannot fully explain the immediate effect on earnings...	Sabrina T Howell, Jason Brown
8	2024	The Gender Pay Gap: Micro Sources and Macro Consequences ↗ This paper directly addresses the decomposition of the gender wage gap into worker and firm components, utilizing empirical facts about sorting and within-employer pay differences that are central to the AKM framework. Its use of an equilibrium search model to interpret firm wage premiums and the consequences of pay discrimination aligns closely with the project's themes on firm-level pay policies, worker-firm assignment, and the equilibrium interpretation of fixed effects. We assess the sources and consequences of the gender pay gap using a combination of theory and measurement. We start by documenting three empirical facts. First, women are more likely than men to work at low-paying employers. Second, for women as for men, pay is not the sole determinant of workers’ revealed-preference rankings of employers. Third, both pay and the revealed-preference rank differ between women and men within the same employer. To interpret these facts, we develop an empirical equilibrium search model featuring endogenous gender differences in pay, amenities, and recruiting intensities across employers. The estimated model suggests that compensating differentials explain one...	Iacopo Morchio, Christian Moser
8	2011	Firm Ownership and Rent Sharing ↗ This paper directly investigates rent-sharing mechanisms, a core theme of the project, by analyzing how firm ownership structure influences the degree of wage premiums shared with workers. It provides relevant empirical evidence on how changes in firm characteristics (ownership) affect the transmission of firm-level rents to wages, fitting within the study of firm wage premiums and their determinants. In this paper we analyse-theoretically and empirically-how the degree of private versus public ownership of firms affects the degree of rent sharing between firms and their workers. Using a particularly rich linked employer-employee dataset from Portugal, covering a large number of corporate ownership changes across a wide spectrum of economic sectors over more than 20 years, we find that rent sharing is significantly higher in firms with a larger share of private ownership. Estimates from our most preferred empirical specification suggest that an increase in the private ownership share of 10 percentage points increases (on average) the rent-sharing elasticity by 0.0002. Based on a...	Natália P. Monteiro, Miguel Portela, Odd Rune Straume
8	2017	Labour Market Effects of International Trade When Mobility is Costly ↗ This paper directly addresses the project's focus on international trade and costly worker mobility by quantifying the friction that limits the identification of firm effects via worker moves. It provides crucial structural context for understanding how imperfect human capital transferability and mobility costs influence the transmission of trade shocks to wage premiums and labor market dynamics. I build and estimate a dynamic structural model of sectoral choices with heterogeneous workers accumulating imperfectly transferable human capital. Utility costs provide an additional barrier to mobility. Estimated by simulated minimum distance on administrative data covering the population of Danish workers, costs are found to be in the range from 10% to 19% of average annual wages. Removing permanent unobserved heterogeneity increases the utility costs by an order of magnitude. I show that both the imperfect transferability of human capital and the utility costs are important in explaining the slow adjustment of the labour market following shocks to the economy.	Damoun Ashournia
8	2019	Wage Compression within the Firm: Evidence from an Indexation Scheme ↗ This paper directly addresses rent-sharing and the distribution of firm-specific wage premiums, using a search and bargaining model to explain how institutional shocks alter wage compression and worker sorting. It aligns closely with the project's focus on equilibrium interpretations of firm effects, worker mobility, and the mechanisms sustaining wage premiums. Abstract We revisit the role of labour market institutions by showing how they affect the sharing of firm-specific rents between employers and employees. We look at an Italian wage indexation mechanism (‘Scala Mobile’) that compressed the distribution of wages, imposing real wage increases at the bottom of the distribution. After developing a simplified version of a search model with intra-firm bargaining and on-the-job search, we document that skilled workers received lower wage adjustments when employed at firms with many unskilled workers and they tended to move towards more skill-intensive firms. Moreover, the system drove the least skill-intensive firms out of the market.	Marco Leonardi, Michele Pellizzari, Domenico Tabasso
8	2017	The spatial dimension of internal labor markets ↗ This paper extends the core AKM framework by incorporating a spatial dimension to worker mobility, distinguishing between movement across firms versus establishments and regions. It directly addresses the identification of firm effects and wage premiums using matched employer-employee panel data, offering insights into how local labor market conditions and sorting mechanisms influence wage decomposition. Abstract We integrate into a unified framework the spatial and the employment dimensions of worker mobility, tracing workers across firms, across establishments, and across regions. Drawing upon the spatial dimension of internal labor markets in firms with multiple establishments in multiple locations, our results indicate that the contemporaneous wage premium to migration is around 3 percentage points. For the case of job switchers, we find that the return to regional migration is due to access to better jobs at the destination. We also document the existence of an urban premium for same‐employer migrants but for employer changes this premium is driven by selection.	Marisa Fernanda Figueiredo Tavares, Anabela Carneiro, José Varejão
8	2017	Bargaining with Renegotiation in Models with On-the-Job Search ↗ [Title only] This paper directly addresses the equilibrium interpretation of firm fixed effects by modeling wage bargaining and on-the-job search, which are central to the project's theoretical framework. Although it focuses on bargaining dynamics rather than the AKM estimation methodology itself, it provides crucial theoretical grounding for how firm wage premiums are sustained and negotiated. No abstract available.	Axel Gottfries
8	2022	Unintended signals: Why companies with a history of offshoring have to pay wage penalties for new hires ↗ [Title only] This paper directly addresses the project's interest in offshoring shocks and their transmission to firm wage premiums, offering a specific mechanism (signaling) for wage penalties. It aligns with the research theme of how international trade and offshoring alter worker-firm wage decomposition and firm pay policies. No abstract available.	Alina Grecu, Wolfgang Sofka, Marcus M. Larsen, et al.
8	2016	Offshoring and Labor Markets ↗ This paper directly addresses the project's fourth dimension by surveying empirical literature on how offshoring shocks transmit to labor markets, specifically focusing on matched employer-employee data to analyze wage and displacement effects. It critically assesses identification strategies and findings relevant to firm-level pay policies and the worker-firm wage decomposition in the context of international trade. In this paper, we survey the recent empirical literature on the effects of offshoring on wage, employment, and displacement. We start with an overview of the measurement of offshoring, organizing our discussion around the three key elements of offshoring: that it involves intermediate inputs for production (versus final goods for consumption); that it involves imported inputs (versus domestically produced ones); and that the inputs involved could have been produced internally within the same firm. We then briefly discuss the theories of offshoring and survey the literature that examines the wage effects of offshoring: the wave of studies using industry-level data; the wave using firm-level...	David Hummels, Jakob Roland Munch, Chong Xiang
8	2025	Imperfect Competition and Rents in Labor and Product Markets: The Case of the Construction Industry ↗ This paper is closely related as it explicitly models imperfect labor market competition and wage markdowns, providing a structural interpretation of firm wage premiums that complements the AKM framework. It addresses the equilibrium interpretation of firm effects through wage bargaining and market power, which is a key dimension of the research project. We develop, identify, and estimate a model of imperfect competition in both labor and product markets. Our context is the US construction industry, where firms compete for workers, private market projects, and government procurements. Our empirical approach leverages bidding data from procurement auctions linked to employer-employee tax records. We find imperfect competition in both markets generates a total wage markdown of more than 30 percent and a total price markup of around 45 percent. By contrast, if one erroneously assumed a perfectly competitive product (labor) market, then one would conclude wages (prices) are marked down (up) by only 20 percent (16 percent). (JEL D21, D24, H76...	Kory Kroft, Yao Luo, Magne Mogstad, et al.
8	2024	Trade and inequality in Europe and the US ↗ This paper directly addresses the project's focus on the role of international trade by analyzing how import competition from China affects worker earnings and employment. It provides empirical context on the transmission of trade shocks to labor market outcomes, aligning with the theme of how trade alters wage distributions and impacts specific worker groups. Abstract Low-income countries’ share of global exports nearly tripled between 1990 and 2015, largely due to China’s emergence as an exporting powerhouse. Evidence from several European countries and the US shows that import competition from China differentially reduced employment and earnings for workers in more trade-exposed industries and regions. We show that manufacturing employment declined most dramatically in countries where import growth was not matched by a commensurate expansion of exports. We also provide new results for the UK which indicate that imports from China contributed to substantial declines in consumer prices alongside job losses in manufacturing. However, while the...	David Dorn, Peter Levell
8	2015	Trade and inequality in a directed search model with firm and worker heterogeneity ↗ This paper directly addresses the project's interest in international trade by modeling how trade liberalization transmits to wage inequality and skill premiums through firm and worker heterogeneity. It aligns with the equilibrium interpretation of firm effects by integrating directed search theory with the observation that exporting firms are more productive and employ higher-skilled workers. Abstract This paper integrates the insight that exporting firms are typically more productive and employ higher‐skilled workers into a directed search model of the labour market. The model generates a skill premium as well as residual wage inequality among identical workers. A trade liberalization increases the skill premium and likely increases residual inequality among high‐skilled workers. The calibrated model generates results consistent with the prior literature examining the effect of the Canada‐US Free Trade Agreement on the Canadian labour market: a significant decrease in employment in manufacturing, but only a small change in unemployment and wages.	Moritz Ritter
8	2019	Within‐firm wage inequality and firm‐level exports ↗ This paper directly addresses the project's dimension on international trade by empirically linking export shocks to within-firm wage inequality, a key component of the worker-firm wage decomposition. It provides causal evidence on how firm-level pay structures and wage premiums respond to external demand shocks, aligning closely with the study of firm wage premiums and wage dynamics. Abstract This paper analyzes changes in within‐firm inequality of hourly wages arising from export shocks to exporting firms in Denmark. We provide causal evidence that export demand shocks increase within‐firm inequality. Decomposing overall inequality into within and between components for occupational and educational groups, the results show that exports lead to a significant increase in within‐group wage inequality but do not affect the between‐group component. We develop a partial equilibrium model, featuring heterogeneous workers, which rationalizes these observations and shows how export demand shocks induce a complementarity effect, leading to increases in wage inequality within...	Boris Georgiev, Jonas Juul Henriksen
8	2012	Job Search, Human Capital and Wage Inequality ↗ The paper directly addresses the project's core themes by constructing an equilibrium search model with on-the-job search and human capital to decompose wage inequality. It explicitly measures the contributions of worker and firm productivity differentials to wage dispersion, aligning with the project's interest in variance decomposition and equilibrium interpretations of firm effects. The objective of this paper is to construct and quantitatively assess an equilibrium search model with on-the-job search and general human capital accumulation. In the model workers enter the labour market with different abilities and firms differ in their productivities. Wages are dispersed because of search frictions and workers' productivity differentials. The model generates a simple (log) wage variance decomposition that is used to measure the importance of firm and worker productivity differentials, frictional wage dispersion and workers' sorting dynamics. I calibrate the model using a sample of young workers for the UK. I show that wage inequality among low skilled workers is mostly...	Carlos Carrillo‐Tudela
8	2021	Worker and firm heterogeneity, agglomeration, and wages in Brazil ↗ [Title only] This paper likely applies the AKM framework to decompose wages into worker and firm effects within the context of Brazilian agglomeration economies, directly aligning with the project's core methodology. The focus on agglomeration adds a spatial dimension to the standard wage decomposition, which is a relevant extension of firm heterogeneity and sorting models. No abstract available.	Diana Lúcia Gonzaga da Silva, Carlos Roberto Azzoni
8	2014	Gains from Offshoring? Evidence from U.S. Microdata ↗ This paper directly addresses the project's dimension on international trade by empirically analyzing how offshoring shocks transmit to domestic firm wage premiums and labor market outcomes. It provides relevant evidence on whether offshoring acts as a substitute for domestic activity, which is crucial for understanding the dynamics of firm-level pay policies and worker-firm wage decomposition in the context of global supply chains. We construct a new linked data set with over one thousand offshoring events by matching Trade Adjustment Assistance program petition data to confidential data on U.S. firm operations. We exploit these data to assess how offshoring affects domestic firm-level aggregate employment, output, wages and productivity. Consistent with heterogenous firm models where offshoring involves a fixed cost, we find that the average offshoring firm is larger and more productive than the average non-offshorer. After initiating offshoring, firms experience large declines in employment (46.2 per cent), output (38.5 per cent) and capital (28.8 per cent) relative to their industry peers. We find no significant...	Ryan Monarch, Jooyoun Park, Jagadeesh Sivadasan
8	2009	Earnings of Men and Women in Firms with a Female Dominated Workforce: What Drives the Impact of Sex Segregation on Wages? ↗ [Title only] This paper directly addresses labor market discrimination, a key application theme of the project, by investigating how sex segregation within firms affects wage outcomes. It likely employs or relates to the AKM framework to disentangle worker and firm effects, making it highly relevant to the study of wage decomposition and sorting patterns. No abstract available.	Anja Heinze
8	2016	JOB MOBILITY AND EARNINGS INSTABILITY ↗ This paper directly addresses the core AKM theme of job mobility's role in wage decomposition, quantifying how mobility contributes to earnings instability. It also aligns with the project's interest in search-and-matching theory by linking productivity shocks to on-the-job search and wage dynamics. There is still no consensus on the causes of the increase in the variance of transitory earnings (earnings instability) in the United States. It is difficult to attribute the rise in instability to job mobility because there is no evidence of a concurrent increase in job turnover or separations. Using an error component model of the covariance structure of earnings on Panel Survey of Income Dynamics and Survey of Income and Program Participation data, this study shows that job mobility and the increase in the variance of wage changes upon job change accounts for a substantial part of the increase in earnings instability. The empirical evidence is consistent with the simulations of a search...	Marco Leonardi
8	2019	The wage-setting power of firms: Rent-sharing and monopsony in South Africa ↗ This paper directly estimates firm wage premia using administrative data, quantifying their contribution to wage inequality and gender gaps, which aligns with the project's focus on variance decomposition. It further connects these premia to monopsony power and rent-sharing mechanisms, addressing key themes regarding wage-setting power and labor market dynamics. Using administrative tax records from South Africa for the period 2011–14, I find that firm wage premia explain 25 per cent of the total wage variance, 60 per cent of the gender wage gap, and 40 per cent of the gap between workers in the middle and the bottom of the income distribution. Next, I argue that in contrast to the rent-sharing literature, many studies of monopsony fail to use firm-level wage variation. I address this by using the estimated firm wage premia to estimate how wages are related to rent-sharing and monopsony power. I find that the average worker switching from a firm in the 25th percentile to the 75th percentile in profitability is paid 32 per cent more; and that the...	Ihsaan Bassier
8	2022	Accounting for Firms in Ethnicity Wage Gaps Throughout the Earnings Distribution ↗ [Title only] This paper directly addresses the project's core interest in wage inequality decomposition by investigating how firm fixed effects contribute to ethnicity-based wage gaps across the earnings distribution. It aligns with the themes of identifying worker and firm effects and analyzing labor market discrimination, specifically exploring whether firm-level pay policies mediate or exacerbate these disparities. No abstract available.	Van Phan, Carl Singleton, Alex Bryson, et al.
8	2009	Job Mobility, and Wage Dynamics ↗ [Title only] The title directly addresses core themes of worker mobility and wage dynamics, which are fundamental to the AKM framework's identification strategy and the estimation of worker effects. It likely explores the mechanisms behind wage changes associated with job switches, providing direct relevance to understanding limited mobility bias and wage inequality decomposition. No abstract available.	Dean Hyslop, David C. Maré
8	2023	Making Their Own Weather? Estimating Employer Labour-Market Power and its Wage Effects ↗ This paper directly addresses the equilibrium interpretation of firm wage premiums by estimating monopsony power and its impact on wages using matched employer-employee data. It provides empirical evidence on how labor market structure and search frictions contribute to the dispersion of wages, which is a key component of the project's theoretical framework regarding firm fixed effects. The subdued wage growth observed over the last years in many countries has spurred renewed interest in monopsony views of the labour market. This paper is the first to measure the extent and robustness of employer labour-market power and its wage implications exploiting comprehensive matched employer-employee data. We find average (employment-weighted) Herfindhal indices of 800 to 1,100; and that less than 9% of workers are exposed to concentration levels thought to raise market power concerns. However, these figures can increase significantly with different methodological choices. Finally, when holding worker composition constant and instrumenting concentration, wages are found to be...	Pedro S. Martins, António Melo
8	2012	FDI and Wages: Evidence from Firm-Level and Linked Employer-Employee Data in Hungary, 1986-2008 ↗ This paper directly addresses the project's fourth dimension by examining how an external shock (FDI) transmits to firm wage premiums using linked employer-employee data. It aligns with the core AKM framework by decomposing wage effects while providing empirical evidence on how ownership changes alter the worker-firm wage decomposition. We estimate the wage effects of foreign direct investment (FDI) with universal firm-level and linked employer-employee panel data containing 4,926 foreign acquisitions in Hungary. Matching on pre-acquisition data and controlling for fixed effects for firms and detailed worker groups, we find 12-28 percent effects on average wages. The wage effect mostly reverses for 983 foreign acquisitions later divested to domestic owners. We find positive effects for all worker types, occupations, and wage quantiles. The evidence implies little role for either measurement problems or residual selection, but suggests a strong cross-firm association of FDI wage premia with similar differentials in...	John S. Earle, Álmos Telegdy, Gábor Antal
8	2022	"Since You're so Rich, You Must Be Really Smart": Talent, Rent Sharing, and the Finance Wage Premium ↗ This paper directly investigates rent-sharing, a core theme of the project, by decomposing wage increases into talent and firm-specific premium components using matched employer-employee data. It provides empirical evidence that rising firm profits (rents) rather than worker heterogeneity drive the finance wage premium, aligning closely with the study of firm wage premiums and their determinants. Financial sectorwages have increased extraordinarily over the last decades.We address two potential explanations for this increase: (1) rising demand for talent and (2) firms sharing rents with their employees. Matching administrative data of Swedish workers, which include unique measures of individual talent, with financial information on their employers, we find no evidence that talent in finance improved, neither on average nor at the top. The increase in relative finance wages is present across talent and education levels, which together can explain at most 20% of it. In contrast, rising financial sector profits that are shared with employees account for up to half of the relative wage...	Michael Böehm, Daniel Metzger, Per Strömberg
8	2018	Does import competition worsen the gender gap? Evidence from matched employer–employee data ↗ The paper directly addresses the project's focus on international trade shocks and the AKM framework by using matched employer-employee data to estimate firm and worker fixed effects. It provides specific empirical evidence on how import competition interacts with these fixed effects to influence wage outcomes, aligning with the themes of trade, firm premiums, and identification challenges. Using Italian matched employer–employeedata, I examine how accounting for unobserved worker or firm heterogeneity can impact estimates of import competition's impact on industry-level gender wage gaps, and how this can be driven by changes in the composition of female workers and firms within affected industries. First, in wage regressions, I find that import competition lowers women's wages relative to men, but only in specifications that include worker or firm fixed effects. Accounting for these sources of heterogeneity matters because: (1) women that earn low wages are more likely than men to change industries or leave the sample, and (2) firms that employ women are more likely to exit...	Jeff Chan
8	2021	Firms and the Intergenerational Transmission of Labor Market Advantage ↗ This paper directly employs the AKM framework to decompose intergenerational earnings correlations into worker and firm components, aligning with the project's core focus on variance decomposition and sorting. It extends the standard AKM application by analyzing how firm-level pay premiums and assortative matching contribute to the persistence of wage inequality across generations. Pay inequality stems both from firm pay-setting and from workers' individual characteristics. Yet, intergenerational mobility research focuses on transmission of individual traits, and has failed to test how firms shape the inheritance of inequality. We study this question using three decades of Swedish population register data, and decompose the intergenerational earnings correlation into firm pay premiums and worker effects. One quarter of the intergenerational earnings correlation at midlife is explained by sorting between firms with unequal pay. Employer or industry inheritance account for a small share of this firm-based earnings transmission. Instead, high-education and...	Per Engzell, Nathan Wilmers
8	2010	Job Search, Bargaining, and Wage Dynamics ↗ [Title only] This title directly addresses the equilibrium interpretation of firm fixed effects through search-and-matching theory, which is a core dimension of the project. It specifically covers on-the-job search and wage bargaining, providing the theoretical underpinnings for the AKM framework and firm wage premiums. No abstract available.	Shintaro Yamaguchi
8	2008	Should Trade Unions Welcome Foreign Investors? First evidence from Danish Matched Employer-Employee Data ↗ [Title only] This paper directly addresses the project's theme on international trade by analyzing how foreign ownership shocks transmit to firm wage premiums using matched employer-employee data. It likely employs AKM-type frameworks to decompose wage effects and assess how trade-related FDI impacts worker-firm matching and rent-sharing dynamics. No abstract available.	Sebastian Braun
8	2005	The Demand for Labor: An Analysis Using Matched Employer-Employee Data from the German Liab. Will the High Unskilled Worker Own-Wage Elasticity Please Stand Up? ↗ [Title only] This paper directly addresses the estimation of worker and firm effects using matched employer-employee data, a core component of the AKM framework. It critically examines the identification and measurement of worker wage elasticities, which is essential for accurately decomposing wage inequality and understanding labor demand responses. No abstract available.	John T. Addison, Lutz Bellmann, Thorsten Schänk, et al.
8	2019	Monopsonistic Labor Markets and International Trade ↗ [Title only] This title directly addresses the project's fourth dimension on the role of international trade and its first dimension on the equilibrium interpretation of firm wage premiums through monopsony power. It likely explores how trade shocks transmit to firm wage premiums and alter worker-firm matching, which is central to the researcher's interests in rent-sharing and labor market discrimination. No abstract available.	Priyaranjan Jha, Antonio Rodriguez‐Lopez
8	2023	Industry Wage Differentials: A Firm-Based Approach ↗ This paper directly applies the AKM framework and related identification strategies to decompose industry wage effects into firm-level premiums, addressing the core theme of estimating worker and firm effects on wages. It specifically tackles the limited mobility bias and sorting issues, which are central to the project's investigation of variance decomposition and the accuracy of wage premium measurements. We revisit the estimation of industry wage differentials using linked employer-employee data from the U.S. LEHD program. Building on recent advances in the measurement of employer wage premiums, we define the industry wage effect as the employment-weighted average workplace premium in that industry. We show that cross-sectional estimates of industry differentials overstate the pay premiums due to unmeasured worker heterogeneity. Conversely, estimates based on industry movers understate the true premiums, due to unmeasured heterogeneity in pay premiums within industries. Industry movers who switch to higher-premium industries tend to leave firms in the origin sector that pay above-average...	David Card, Jesse Rothstein, Moises Yi
8	2021	An account of the exporter wage gap: Wage structure and composition effects across the wage distribution ↗ This paper directly addresses the project's interest in international trade by decomposing the exporter wage gap using wage structure and composition effects across the distribution. It provides empirical context on how firm-level attributes like exporting status and size contribute to wage premiums, aligning with the themes of rent-sharing and trade impacts on wage inequality. Abstract Globalisation is a prominent driver of wage inequality in advanced economies, and wage differentials paid by the exporter vis‐à‐vis domestically oriented firms play an unmistakable role. In this paper, we measure and decompose the exporter wage gap into several explanatory components by estimating counterfactual distributions for the Spanish economy between 2006 and 2014. To measure the exporter wage gap, an extended Mincer‐type wage equation is estimated along different points of the wage distribution using Unconditional Quantile Regression. Then, we apply the technique of Fortin, Lemieux and Firpo to decompose the exporter wage gap. We find that workers earn higher wages if they...	José Luis Groizard, Xisco Oliver, María Sard
8	2022	The determinants of displaced workers’ wages: Sorting, matching, selection, and the Hartz reforms ↗ This paper directly addresses the AKM framework by decomposing wage dynamics into sorting, matching, and selection components, which is central to the project's themes of worker-firm assignment and variance decomposition. It provides relevant empirical insights into how labor market shocks (Hartz reforms) alter the relative importance of sorting versus match quality in determining wage outcomes for displaced workers. We present a simple new method to decompose the wage effects of displacement into components due to differences in the way that displaced and non-displaced workers are sorted across higher- and lower-paying employers (a sorting effect), differences in the quality of worker–employer matches that they enter into (a matching effect), and differences in their unobservable characteristics (a selection effect). In an extended application, we apply our decomposition to understand how the determinants of displaced workers’ wages in Germany changed following the 2003–2005 Hartz reforms. We find that the wages of displaced workers fell substantially after the reforms, and that over 80 percent of the...	Simon D. Woodcock
8	2020	Decomposition of co-worker wage gains ↗ This paper directly addresses the project's theme of coworker learning spillovers and peer effects by decomposing wage gains attributable to former colleagues. It aligns with the research on dynamic worker interactions within firms, offering empirical evidence on how coworker networks influence wage determination beyond static individual fixed effects. Abstract We address the presence, magnitude, and composition of wage gains related to former co-workers and discuss the mechanisms that could explain their existence. Using Hungarian linked employer–employee administrative data and proxying actual co-workership with overlapping work histories, we show that the overall wage gain attributable to former co-workers consists of multiple elements: a contact-specific, an individual-specific, a firm-specific and a match-specific component. Former co-workers, besides the direct effect of their presence, may funnel individuals into high-paying firms, enhance the sorting of good quality workers into firms, and may contribute to the creation of better...	István Boza, Virág Ilyés
8	2017	Fixed-effect regressions on network data ↗ This paper directly addresses the identification and estimation of two-way fixed effects in matched employer-employee panel data, which is the core methodological framework of the project. It provides formal theoretical conditions for consistent estimation and inference, offering crucial insights into how network structure (worker mobility) affects the accuracy of worker and firm effect estimates. This paper considers inference on fixed effects in a linear regression model estimated from network data. An important special case of our setup is the two‐way regression model. This is a workhorse technique in the analysis of matched data sets, such as employer–employee or student–teacher panel data. We formalize how the structure of the network affects the accuracy with which the fixed effects can be estimated. This allows us to derive sufficient conditions on the network for consistent estimation and asymptotically valid inference to be possible. Estimation of moments is also considered. We allow for general networks and our setup covers both the dense and the sparse case. We provide...	Koen Jochmans, Martin Weidner
8	2021	Chinese import competition, offshoring and servitization ↗ This paper directly addresses the project's theme of international trade's role in altering firm wage premiums, specifically through the lens of import competition from China. It utilizes matched employer-employee data to analyze how firms adapt to trade shocks, providing empirical context relevant to the transmission of trade shocks to firm-level outcomes. Abstract We study how domestic firms adapt to increased import competition from China. Using a Danish employer‐employee matched dataset covering firms over the 1995–2007 period, we find that import competition significantly increases manufacturing firms' expansion of their business activities in the service industry (partial servitization); their probability of offshoring production activities abroad and of exiting the market. Import competition, however, does not induce firms to cease all of their involvement in manufacturing production by completely switching into service sector (complete servitization). These findings are confirmed using various robustness tests as well as an analogous...	Grace Weishi Gu, Samreen Malik, Dario Pozzoli, et al.
8	2018	Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany ↗ This paper is closely related as it directly estimates firm wage premia using the standard two-way fixed effects decomposition central to the AKM framework. It further enhances relevance by analyzing how institutional factors like collective bargaining influence rent-sharing dynamics and the dispersion of these premiums. The authors use three distinct methods to investigate the influence of industrial relations on firm wage premia in Germany. First, ordinary least squares (OLS) regressions for the firm effects from a two-way fixed-effects decomposition of workers’ wages reveal that average premia are larger in firms bound by collective agreements and in firms with a works council, holding constant firm performance. Next, recentered influence function (RIF) regressions show that premia are less dispersed among covered firms but more dispersed among firms with a works council. Finally, in an Oaxaca–Blinder decomposition, the authors find that decreasing bargaining coverage is the only factor they consider...	Boris Hirsch, Steffen Mueller
8	2016	Offshoring and Job Polarisation between Firms ↗ This paper directly addresses the project's dimension on international trade by modeling how offshoring shocks transmit to wage structures through a rent-sharing mechanism. It complements the AKM framework by explicitly linking firm productivity and wage premiums to labor reallocation across firms, providing a theoretical basis for time-varying firm effects driven by trade. We set up a general equilibrium model, in which offshoring to a low-wage country can lead to job polarisation in the high-wage country. Job polarisation is the result of a reallocation of labour across firms that differ in productivity and pay wages that are positively linked to their profits by a rent-sharing mechanism. Offshoring involves fixed and task-specific variable costs, and as a consequence it is chosen only by the most productive firms, and only for those tasks with the lowest variable offshoring costs. A reduction in those variable costs increases offshoring at the intensive and at the extensive margin, with domestic employment shifted from the newly offshoring firms in the...	Hartmut Egger, Udo Kreickemeier, Christoph Moser, et al.
8	2006	Job Search, Bargaining, and Wage Dynamics ↗ [Title only] This title directly aligns with the project's third dimension regarding the equilibrium interpretation of firm effects through search-and-matching theory and wage bargaining. It suggests a theoretical or empirical analysis of the mechanisms that generate and sustain the wage dynamics central to the AKM framework and related extensions. No abstract available.	Shintaro Yamaguchi
8	2025	Labor Market Monopsony: Fundamentals and Frontiers ↗ This paper provides a comprehensive theoretical foundation for understanding firm wage premiums through monopsony power, which is central to the equilibrium interpretation of firm fixed effects in the project. It directly addresses key mechanisms like wage markdowns, worker-firm sorting, and the response of wages to productivity shocks, all of which are relevant to the project's focus on how firm-level pay policies are determined. This chapter reviews the theory of monopsonistic wage setting, its empirical implications, and some puzzles the framework has struggled to explain.We begin by examining the fundamentals of monopsonistic wage determination.The core of the theory is a mapping from the distribution of worker outside options to wages.We study non-parametric shape restrictions that ensure this mapping is unique.Building on these results, we introduce a menu of tractable parametrizations of labor supply to the firm, some of which are shown to emerge naturally from equilibrium search models.Next, we review why wage markdowns do not necessarily signal inefficiency and discuss some criteria for assessing...	Patrick Kline
8	2021	The Worker-Job Surplus ↗ This paper directly addresses the equilibrium interpretation of firm effects by empirically estimating the worker-job surplus, a central construct in search-and-matching theory that determines wage premiums and sorting. It provides key insights into how observable characteristics drive these surpluses and tests assumptions underlying the single-index representation often used in standard AKM-like decompositions. The worker-job surplus -the sum of the worker's and the employer's net values of an employment relationship -is the object that drives decisions in most matching models of the labor market. In this paper, we develop a theory-based empirical method to determine which of the observable worker and job characteristics impact the worker-job surplus in the data. To do so, we exploit the mobility choices of employed workers. Our method further indicates whether workers sort along those surplus-relevant attributes when searching for jobs. It also provides a test of the commonly used single-index assumption, according to which worker and job heterogeneity can each be summarized by scalar indices. We...	Ilse Lindenlaub, Fabien Postel‐Vinay
8	2018	Profit sharing and firm profitability ↗ This paper directly addresses rent-sharing, a core theme of the project, by estimating wage-profit elasticities using linked employer-employee data. It provides empirical evidence on how firm profitability influences wage premiums, aligning with the investigation of firm-level pay policies and the economic mechanisms sustaining firm effects. Purpose This purpose of this paper to examine how profit sharing depends on the underlying profitability of firms. More precisely, motivated by theoretical research on fair wages and unionized labor markets, profit sharing is estimated for six different profitability categories: positive, increasing, positive and increasing, negative, decreasing and negative or decreasing. Design/methodology/approach The paper exploits a high-quality linked employer–employee data set covering the universe of Finnish workers and firms. Endogeneity of profitability and self-selection of firms in different profitability categories are accounted for by an instrumental variables approach. The panel-structure of...	Matthias Strifler
8	2025	Between-Firm Inequality and Informal Social Relations ↗ This paper directly addresses the variance decomposition of between-firm wage premiums, a central component of the researcher's project on wage inequality and AKM frameworks. It extends the analysis by identifying informal social structures as a key driver of firm fixed effects, offering a novel mechanism for understanding how firm-level pay policies are determined. Employer investment, social closure, peer networks: substantial research highlights differences in informal social structure across workplaces. Yet studies of pay inequality between firms have largely neglected these differences in favor of more easily measurable features like firm size or ownership structure. We show how three types of workplace social relations shape firm pay setting: employer relational investment that supports higher wages, social closure as a source of bargaining power, and amenity ties that lock workers into jobs despite low pay. To operationalize these concepts, we draw on text data from a large archive of job reviews. Variance decomposition analyses show that...	Nathan Wilmers, Di Tong, Victoria Zhang
8	2010	The Importance of Two-Sided Heterogeneity for the Cyclicality of Labour Market Dynamics ↗ This paper is closely related as it utilizes linked employer-employee data to decompose labor market dynamics using both observed and unobserved worker and firm heterogeneity. It directly addresses key themes in the project, such as worker mobility, firm size effects on wages, and the role of unobserved matching factors in wage outcomes. Using two data sets derived from German administrative data, including a linked employer-employee data set, we investigate the cyclicality of worker and job flows.The analysis stresses the importance of two-sided labour market heterogeneity in this context, taking into account both observed and unobserved characteristics.We find that small firms hire mainly unemployed workers, and that they do so at the beginning of an economic expansion. Later on in the expansion, hirings more frequently result from direct job-to-job transitions, with employed workers moving to larger firms. Contrary to our expectations, workers moving to larger firms do not experience significantly larger wage gains than...	Ronald Bachmann, Peggy Bechara
8	2022	Firm Responses and Wage Effects of Foreign Demand Shocks with Fixed Labor Costs and Monopsony ↗ This paper directly addresses the project's fourth dimension on the role of international trade by analyzing how foreign demand shocks transmit to firm wage premiums through domestic supply chains. It utilizes matched employer-employee data to quantify wage effects and incorporates monopsony power, aligning closely with the project's focus on labor market structure and equilibrium interpretations of firm-level pay policies. We quantify and explain the firm responses and worker impacts of foreign demand shocks to domestic production networks. To capture that firms can be indirectly exposed to such shocks by buying from or selling to domestic firms that import or export, we use Belgian data with information on both domestic firm-to-firm sales and foreign trade transactions. Our estimates of firm responses suggest that Belgian firms pass on a large share of a foreign demand shock to their domestic suppliers, face upward-sloping labor supply curves, and have sizable fixed overhead costs in labor. Motivated and guided by these findings, we develop and estimate an equilibrium model that allows us to study how...	Emmanuël Dhyne, Ayumu Ken Kikkawa, Toshiaki Komatsu, et al.
8	2012	Threatening to Offshore in a Search Model of the Labor Market This paper directly addresses the project's dimension on international trade by modeling how the threat of offshoring impacts domestic wage premiums and labor market allocations within a search-and-matching framework. It provides theoretical grounding for how firm-level pay policies and worker-firm assignment respond to global production shocks, aligning with the project's interest in the equilibrium interpretation of firm effects. We develop a two-country labor search model in which a multinational firm engages in production sharing by hiring both domestic and foreign labor to produce a final good. A key innovation to the model is the sequential nature of domestic and foreign labor markets in combination with fixed costs of entry. These features introduce an outside option for the multinational in its wage negotiations, by allowing shifts of production overseas. Using this framework, we derive a model-based estimate of the effect of the threat of offshoring on global wages and labor market allocations. In the short run, when firm entry is impeded from fully adjusting, we find that the threat of offshoring has sizable...	David M. Arseneau, Sylvain Leduc
8	2013	Better Workers Move to Better Firms: A Simple Test to Identify Sorting ↗ [Title only] This paper directly addresses the identification of sorting, a central theme in the AKM framework for decomposing wage inequality into worker and firm effects. By proposing a method to test for assortative matching, it contributes to understanding how worker-firm assignment influences observed wage premiums. No abstract available.	Cristian Bartolucci, Francesco Devicienti
8	2015	Do internal labour markets protect the unskilled from low payment? Evidence from Germany ↗ This paper directly addresses the project's core theme by using matched employer-employee data to estimate firm-specific wage components and analyzing their distribution across worker skill levels. It provides empirical evidence on how firm-level pay policies interact with worker characteristics, contributing to the understanding of wage inequality and the role of firms in shaping wage structures. Purpose – Up to date, it remains an unresolved issue how firms shape inequality in interaction with mechanisms of stratification at the individual and occupational-level. Accordingly, the authors ask whether workers of different occupational classes are affected to different degrees by between-firm wage inequality. In light of the recent rise of overall wage inequality, answers to this question can contribute to a better understanding of the role firms play in this development. The authors argue and empirically test that whether workers are able to benefit from firms’ internal or external strategies for flexibility depends on resources available at the individual and occupational level. The...	Holger Lengfeld, Clemens Ohlert
8	2024	The labor market impacts of employer consolidation: Evidence from Germany ↗ This paper directly addresses the project's interest in how firm-level shocks, specifically ownership changes via acquisitions, alter firm wage premiums and rent-sharing dynamics. By employing an event-study design to analyze wage adjustments and employment effects, it provides empirical evidence on the equilibrium responses of firm pay policies to consolidation shocks. We use detailed administrative data to study how acquisitions — specifically the acquisition of a plant by a firm with a similar plant in the same local labor market — affect workers. Using an event study framework with a control group of workers at unaffected plants, we find that acquisitions lead to employment losses for workers initially employed at the acquired firm, mainly associated with labor force withdrawals by older female workers. At the same time we find evidence of a rise in wages for workers initially employed at targets and at the acquiring firm who remain with the combined enterprise, concentrated among lower-wage workers. Our findings suggest that consolidations lead to a...	Kevin Todd, Jörg Heining
8	2020	Do Innovative Firms Pay Higher Wages?: Micro-Level Evidence from Brazil ↗ This paper is closely related as it empirically investigates the determinants of firm-level wage premiums, a central component of the project's focus on firm effects and rent-sharing. It provides valuable micro-level evidence on how firm characteristics, such as innovation, drive wage disparities, which complements the theoretical and methodological exploration of time-varying firm effects. Several studies have documented a positive and causal relationship product or process innovation - and labor productivity. Given the links between labor productivity and wages, a likely implication of this positive relationship is that innovation is associated with higher wages of more productive firms. This paper explores the relationship between innovation and wages using Brazil's employer-employee census and a novel measure of innovation derived from the share of technical and scientific occupations of workers in the firm. The results show a robust and positive wage premium associated with innovative firms. The decomposition of this innovation-related wage premium suggests a series of...	Antonio Martins-Neto, Xavier Cirera
8	2010	Human Capital and Worker Productivity: Direct Evidence from LInk Employer-Employee Data This paper directly addresses the AKM framework by decomposing wages into worker and firm heterogeneity using matched employer-employee data, which is central to the project. It further contributes by linking these components to firm productivity, offering insights into rent-sharing and the economic interpretation of firm effects. The long literatures on the determinants of wage rates at the individual level and on the empirical relation between productivity and wage rates intersect when attention is focused on longitudinally linked employer-employee data. We estimate separate statistical components of wage rates associated with the observable individual characteristics, unobservable individual heterogeneity and unobservable employer heterogeneity. We define general human capital as the portable components of the full-time, full-year wage rate. Within each employer in the linked sample, we create employer-aggregates of the general human capital. We then estimate the relation between sales per employee, general human...	John M. Abowd, Françis Kramarz
8	2012	Wage Sorting Trends This paper directly addresses the project's theme of variance decomposition and assortative matching by documenting trends in positive assortative wage sorting using matched employer-employee data. It provides crucial empirical context on how worker-firm sorting dynamics have evolved over time, contributing to the understanding of wage inequality components within the AKM framework. Using a population-wide Danish Matched Employer-Employee panel from 1980-2006, we document a strong trend towards more positive assortative wage sorting. The correlation between worker and firm fixed effects estimated from a log wage regression increases from -0.07 in 1981 to .14 in 2001. The nonstationary wage sorting pattern is not due to compositional changes in the labor market, primarily occurs among high wage workers, and comprises 41 percent of the increase in the standard deviation of log real wages between 1980 and 2006. We show that the wage sorting trend is associated with worker reallocation via voluntary quits.	Jesper Bagger, Rune Vejlin, Kenneth Lykke Sørensen
8	2017	Profit Sharing and the Firm‐Size Wage Premium ↗ This paper directly investigates rent-sharing mechanisms and the decomposition of firm-specific wage premiums using matched employer-employee data, which is central to the AKM framework. It empirically addresses how firm-level pay policies respond to unobservables and productivity, aligning closely with the project's focus on wage inequality and firm effects. Abstract This study analyzes the relationships among wages, firm size, and profit sharing schemes. We develop a simple theoretical model and explore the relationship empirically using high‐quality panel data. The theoretical model shows that the firm‐size wage premium decreases in the presence of profit sharing. The empirical results based on rich matched employee‐employer data for private sector wage earners in Finland show that the firm‐size wage premium is modest, and it becomes negligible when we account for profit sharing and covariates describing assortative matching and monopsony behavior. The analysis suggests that profit sharing schemes embody effects of firm‐specific unobservables...	Jaakko Pehkonen, Sampo Pehkonen, Matthias Strifler, et al.
8	2023	Technological Change, Firm Heterogeneity and Wage Inequality ↗ This paper directly addresses the project's theme of how firm-level shocks and technology adoption influence wage premiums and inequality. It connects technological change to firm heterogeneity, which is central to understanding time-varying firm effects and their distributional consequences. ,	Guido Matías Cortés, Adrian Lerche, Uta Schönberg, et al.
8	2009	Interfirm Mobility, Wages and the Return to Seniority and Experience in the U.S. ↗ This paper is closely related as it explicitly models interfirm mobility to distinguish between returns to seniority and experience, a core identification mechanism in AKM-style frameworks. By endogenizing mobility decisions within a wage equation, it provides relevant context for understanding how worker-firm matching dynamics influence wage decomposition and human capital accumulation. In this paper, we follow on the seminal work of Altonji and Shakotko (1987) and Topel (1991) and reinvestigate the returns to seniority in the U.S. These papers specify a wage function, in which workers’ wages can change through two channels: (a) returns to their seniority; and (b) returns to their labor market experience. We start from the same wage equation as in previous studies, and, following our theoretical model, we explicitly include a participation-employment equation and an interfirm mobility equation. The employment and mobility decisions define the individual’s experience and seniority. Because experience and seniority are fully endogenized, we introduce into the wage equation a...	Moshe Buchinsky, Denis Fougère, Françis Kramarz, et al.
8	2020	EFFICIENCY OF WAGE BARGAINING WITH ON‐THE‐JOB SEARCH ↗ This paper directly addresses the project's third dimension by modeling the equilibrium mechanisms of on-the-job search and wage bargaining that generate firm wage premiums. It provides a theoretical foundation for understanding how worker-firm assignment and firm response to poaching sustain wage differentials, which is central to interpreting AKM firm effects. Abstract This article studies efficiency in a general class of search models where both unemployed and employed workers search for better jobs and can meet multiple firms simultaneously. Employers can respond to outside offers and wages are a weighted average of the productivities of the current employer and a credible poaching firm. I derive a condition that balances firms' bargaining power and their meeting externality. This condition ensures efficiency of both worker turnover and firm entry. Finally, the efficiency condition unifies and extends many of the results on the efficiency of equilibrium search models.	Xiaoming Cai
8	2022	‘Multinational Firms’ Sourcing Decisions and Wage Inequality: A Dynamic Analysis ↗ The paper directly addresses the project's interest in how international trade shocks, specifically offshoring, transmit to wage inequality and worker-firm dynamics through a general equilibrium framework. It provides relevant context on the mechanisms linking multinational sourcing decisions to skill-based wage gaps, complementing the empirical AKM-based analysis with theoretical insights on trade and labor market adjustments. This paper uses a two-country dynamic general equilibrium model to consider how, following a trade cost shock, multinational firms’ offshoring decision and the countries’ different factor endowments affect wage inequality between high- and low-skilled workers in the home country. Highlighting task-offshoring, heterogeneous firms, and factor proportions, the study sheds light on how offshoring shapes wage inequality along different time horizons. While the paper's focus is the relationship between the U.S. (home country) and China (foreign country), its findings are more broadly relevant. The three main findings are these: First, both intensive and extensive margins of offshoring contribute...	Zhe Jiang
8	2022	Within- and between-firm wage inequalities and trade integration in GVC ↗ The paper directly addresses the project's theme of variance decomposition in wage inequality into within- and between-firm components, utilizing matched employer-employee data. It specifically investigates how international trade integration, a key dimension of the project, transmits to these wage components, aligning with the research focus on the role of trade in altering the worker-firm wage decomposition. This paper examines between- (inter) and within- (intra) firm wage inequality using rich employer-employee data for 12 European countries. We confirm that much overall wage inequality is observed within sectors and within occupations. The share of the within- and between-firm components in overall wage inequality varies across countries. We estimate the link between involvement in global value chains (GVCs) and wages differentiating into the within- and between-firm components and test the hypothesis that there is a different effect of GVCs on wages depending on the position in a value chain (close to or far from the final demand). The results indicate that the between-firm wage component...	Joanna Wolszczak‐Derlacz, Dagmara Nikulin
8	2017	Import competition from and offshoring to low-income countries: Implications for employment and wages at U.S. domestic manufacturers ↗ This paper directly addresses the project's fourth dimension on the role of international trade by examining how import competition and offshoring shocks transmit to firm-level wages and employment. It provides empirical evidence on the response of domestic manufacturer wages to global trade dynamics, which is central to understanding how the worker-firm wage decomposition is altered by external trade pressures. Using confidential linked firm-level trade transactions and census data between 1997 and 2012, we provide new evidence on how American firms without foreign affiliates adjust employment and wages as they adapt to import competition from low-income countries. We provide stylized facts on the input sourcing strategies of these domestic firms, contrasting them with multinationals operating in the same industry. We then investigate how changes in firm input purchases from low-income countries as well as domestic market import penetration from these sources are correlated with changes in employment and wages at surviving domestic firms. Greater offshoring by domestic firms from low-income...	Fariha Kamal, Mary E. Lovely
8	2014	Value Added Exports and U.S. Local Labor Markets: Does China Really Matter? ↗ [Title only] This paper directly addresses the project's fourth dimension concerning the impact of international trade shocks, specifically import competition from China, on local labor markets. It likely provides empirical evidence on how such external shocks transmit to firm wage premiums and worker earnings, which is central to understanding the determinants of the AKM firm effects in an open economy context. No abstract available.	Leilei Shen, Peri Silva
8	2009	Real wages and the business cycle: accounting for worker and firm heterogeneity This paper applies the AKM framework to decompose wage cyclicality into worker and firm components, directly aligning with the project's core methodological focus on matched employer-employee data. It provides empirical evidence on how firm wage premiums vary with macroeconomic conditions, contributing to the theme of time-varying firm effects and equilibrium interpretations of firm fixed effects. Using a longitudinal matched employer-employee data set for Portugal over the 1986-2005 period, this study analyzes the heterogeneity in wages responses to aggregate labor market conditions for newly hired workers and existing workers. Accounting for both worker and firm heterogeneity, the data support the hypothesis that entry wages are much more procyclical than current wages. A one-point increase in the unemployment rate decreases wages of newly hired male workers by around 2.8% and by just 1.4% for workers in continuing jobs. Since we estimate the fixed effects, we were able to show that unobserved heterogeneity plays a non-trivial role in the cyclicality of wages. In particular, worker...	Anabela Carneiro, Paulo Guimarães, Pedro Portugal
8	2017	Productivity and the Allocation of Skills ↗ [Title only] This title suggests a focus on how productivity shocks or heterogeneity influence the assignment of workers to firms, which is central to understanding assortative matching in AKM-type frameworks. It likely addresses the equilibrium mechanisms linking firm-level pay policies to worker sorting, a key theme in the project's broader scope. No abstract available.	David C. Maré, Trinh Le, Richard Fabling, et al.
8	2022	The Peer Effect on Future Wages in the Workplace ↗ This paper directly addresses the project's theme of time-varying worker components by quantifying coworker learning spillovers and peer effects on wage dynamics. Its focus on endogenous sorting and mobility episodes complements the AKM framework by exploring how worker interactions within firms influence wages beyond static fixed effects. This paper examines workplace peer effects in two directions, leveraging employer‐employee data for Italy. First, using a novel estimation approach and addressing endogenous worker‐peer sorting, we estimate that a 10% increase in peer quality raises one's wage by 1.8% in the next year. The effect declines to 0.7% after 5 years. Second, in an event study around mobility episodes, we quantify wage changes associated with the entry and leave of high‐quality and low‐quality workers. Hiring high‐quality workers positively affects peer wages, as does separating from low‐quality workers. Movers experience immediate gains upon moving to high‐quality peer groups.	Long Hong, Salvatore Lattanzio
8	2017	The Lifecycle Wage Growth of Men and Women: Explaining Gender Differences in Wage Trajectories This paper directly applies the matched employer-employee framework to decompose wage growth, closely aligning with the project's focus on worker and firm effects and mobility-driven identification. It extends the core AKM themes by analyzing dynamic wage trajectories, promotion-based wage premiums, and gender-based sorting, which are key mechanisms in understanding wage inequality and rent-sharing. Why do women's wages grow more slowly than men's? Theory indicates that wages grow over the lifecycle as workers progress up an internal "career ladder, " and as they switch firms and move up the "job ladder" to higher-paying firms. In this paper, we use employer-employee linked data from Sweden to decompose cumulative wage growth of men and women at each age into wage gains associated with (1) firm changes, (2) large discrete wage gains relative to one's co-workers -- which we call promotions -- and (3) interim (non-promotion) growth. While women switch firms at almost identical rates as men over the lifecycle, they have substantially lower promotion rates at all ages. Though relatively...	Mary Ann Bronson
8	2008	Rent-Sharing Under Different Bargaining Regimes: Evidence from Linked Employer-Employee Data ↗ [Title only] This paper directly addresses the project's key theme of rent-sharing by leveraging linked employer-employee data to decompose wage premiums under varying bargaining structures. It complements the core AKM framework by exploring how institutional differences influence the allocation of firm-specific rents, which is central to understanding firm wage premiums and their equilibrium determinants. No abstract available.	Michael Rusinek, François Rycx
8	2024	Differences in On-the-Job Learning across Firms ↗ This paper directly addresses the project's theme of time-varying worker components by investigating how on-the-job learning varies across firms. It utilizes methods consistent with the AKM framework, such as leveraging firm movers, to decompose wage variance and identify firm-specific human capital accumulation processes. We present evidence that is consistent with large disparities across firms in their on-the-job learning opportunities using administrative datasets from Brazil and Italy. We categorize firms into discrete “classes”—which our conceptual framework interprets as skill-learning classes—using a clustering methodology that groups together firms with similar distributions of unexplained wage growth. Mincerian returns to experience vary widely across experiences acquired in different firm classes. Four tests leveraging firm movers, occupation/industry switchers, hiring wages, and displaced workers point toward a portable and general human capital interpretation. Heterogeneous employment experiences...	Jaime Arellano-Bover, Fernando Saltiel
8	2015	Inequality in a global economy: evidence from Germany ↗ This paper directly addresses the project's focus on international trade by using matched employer-employee data to analyze how trade liberalization affects wage inequality. It aligns with the project's fourth dimension by investigating the transmission of trade shocks to wage dynamics within a firm-based framework. In the wake of the Melitz (Econometrica 71(6):1695–1725, 2003) model of heterogeneous firms in international trade, new theoretical models arose that try to assess the impact of trade on wage inequality within sectors, a feature that neoclassical trade theory cannot sufficiently explain. Based on the predictions of Helpman et al. (Econometrica 78(4):1239–1283, 2010), we use the LIAB, a German linked employer–employee panel dataset, in order to provide empirical evidence that wage inequality first increases and then decreases with gradual trade liberalization.	Gregor Hesse
8	2016	Domestic Outsourcing Reduces Wages and Contributes to Rising Inequality ↗ [Title only] This paper directly addresses the project's interest in how external shocks, such as international trade and offshoring, transmit to firm wage premiums and alter wage decomposition. By examining domestic outsourcing, it provides relevant insights into the mechanisms driving wage inequality and the role of firm-level pay policies in response to organizational changes. No abstract available.	Johannes F. Schmieder, Deborah Goldschmidt	Other
8	2021	Brazil ↗ The paper explicitly identifies firm-specific effects as the primary driver of falling income inequality through labor earnings, which directly addresses the project's core interest in decomposing wage variation and firm wage premiums. It provides relevant empirical evidence on how firm-level pay policies contribute to broader wage inequality trends within a specific country context. Abstract After three decades of persistently high income inequality, from 2001 onwards Brazil experienced a downward inequality trend followed by rising household income growth. Both movements lasted until 2015. This work synthesizes the results of six papers that describe the evolution of Brazilian income distribution. A common approach pursued was to jointly assess inequality, mean income, and social welfare rates of growth. We use a vast array of datasets to fill the gaps found in the literature. Top incomes’ movements reduced income inequality fall but increased mean income growth, suggesting challenges in measuring and interpreting inequality changes. Overall, inequality fall was...	Marcelo Côrtes Nerí
8	2018	Gender Differences in Sorting ↗ This paper directly addresses the project's themes of worker-firm sorting and wage decomposition using matched employer-employee data, specifically analyzing how gender biases influence mobility and firm selection. It provides empirical evidence on assortative matching and how worker heterogeneity interacts with firm characteristics to generate wage gaps, which aligns with the project's focus on the mechanisms underlying wage inequality and sorting. In this paper, we investigate gender differences in workers’ career development within and outside the firm to explain the existence of gender wage gaps. Using Danish employer–employee matched data, we find that good female workers are more likely to move to better firms than men but are less likely to be promoted. Furthermore, these differences in career advancement widen after the first child is born. Our findings suggest that career impediments in certain firms cause the most productive female workers to seek better jobs in firms in which there is less gender bias.	Luca Paolo Merlino, Pierpaolo Parrotta, Dario Pozzoli
8	2019	Mergers and Managers: Manager-Specific Wage Premiums and Rent Extraction in M&As ↗ This paper directly addresses the decomposition of wage variation by introducing manager fixed effects as a distinct component of firm-specific wage premiums, aligning with the project's focus on identifying sources of firm effects in the AKM framework. It provides valuable context on how internal firm governance and rent extraction dynamics influence wage structures, which is central to understanding the equilibrium interpretation and heterogeneity of firm wage premiums. This paper shows that some managers pay higher wage premiums to their workers and these managers are targets of M&As. We use a manager-firm-worker matched dataset covering the population of Denmark from 1995 to 2011 and develop a novel framework to measure manager styles in wage-setting by tracking workers and managers across firms over time. We find that individual managers do matter for wages, and variation in manager fixed effects can explain a significant part of wage differences between firms. Establishments with high wage premiums due to generous managers are more likely to be acquired, and experience higher manager turnover and larger wage declines after acquisitions. Lower wages...	Alex Xi He, Daniel le Maire
8	2015	Modeling Endogenous Mobility in Wage Determiniation This paper directly addresses the identification of worker and firm effects using matched employer-employee data, specifically tackling the limited mobility bias mentioned in the project's key themes. It provides a methodological correction for endogenous mobility that impacts the estimation of firm wage premiums, which is central to the AKM framework and rent-sharing literature. We evaluate the bias from endogenous job mobility in fixed-effects estimates of worker- and firm-specific earnings heterogeneity using longitudinally linked employer-employee data from the LEHD infrastructure file system of the U.S. Census Bureau. First, we propose two new residual diagnostic tests of the assumption that mobility is exogenous to unmodeled determinants of earnings. Both tests reject exogenous mobility. We relax the exogenous mobility assumptions by modeling the evolution of the matched data as an evolving bipartite graph using a Bayesian latent class framework. Our results suggest that endogenous mobility biases estimated firm effects toward zero. To assess validity, we...	John M. Abowd, Kevin L. McKinney, Ian M. Schmutte
8	2022	Firm Sorting and Spatial Inequality ↗ This paper is closely related as it employs matched employer-employee data to analyze firm wage premiums and their contribution to spatial wage inequality, aligning with the project's focus on variance decomposition. It also connects to the equilibrium interpretation of firm effects by modeling monopsony power and the dynamics of firm location and worker sorting. We study the importance of spatial firm sorting for inequality both between and within local labor markets. We develop a novel model of spatial firm sorting, in which heterogeneous firms first choose a location and then hire workers in a frictional local labor market. Firms' location choices are guided by a fundamental trade-off: Operating in productive locations increases output per worker, but sharing a labor market with other productive firms makes it hard to poach and retain workers, and hence limits firm size. We provide conditions under which there is positive firm sorting, with more productive firms settling in more productive locations. We show that positive firm sorting increases...	Ilse Lindenlaub, Ryungha Oh, Michael A. Peters
8	2025	Innovation Diffusion Among Coworkers: Evidence from Senior Doctors ↗ This paper directly addresses the project's theme of coworker learning spillovers and peer effects by empirically identifying channels of influence through surgeon mobility. It complements the AKM framework's focus on worker fixed effects by providing specific evidence on how team interactions and network structures drive non-static worker outcomes and technology adoption. Using a novel 15-year data set on surgeon adoption of a complex surgical innovation in the English National Health Service and an identification strategy based on surgeon mobility, this paper disentangles three channels of coworker influence on innovation diffusion: (1) peer network size, (2) influential “key players,” and (3) cumulative peer adoption. We find that a one standard deviation in peer connections boost innovation by 16%. Key players can either amplify or dampen diffusion, and peer adoption has a greater impact on less experienced individuals. These results highlight the value of targeting training to high impact network members to speed up diffusion. This work advances our...	Eliana Barrenho, Éric Gautier, Marisa Miraldo, et al.
8	2019	Learning from Coworkers ↗ This paper directly addresses the project's theme of time-varying worker components by modeling and estimating peer learning spillovers within firms using matched employer-employee data. It provides a structural methodology to quantify coworker effects on wage growth, offering a dynamic extension to static worker fixed effects that complements the AKM framework. We investigate learning at the workplace. To do so, we use German administrative data that contain information on the entire workforce of a sample of establishments. We document that having more highly paid coworkers is strongly associated with future wage growth, particularly if those workers earn more. Motivated by this fact, we propose a dynamic theory of a competitive labor market where firms produce using teams of heterogeneous workers that learn from each other. We develop a methodology to structurally estimate knowledge flows using the full-richness of the German employer-employee matched data. The methodology builds on the observation that a competitive labor market prices coworker...	Gregor Jarosch, Ezra Oberfield, Esteban Rossi‐Hansberg
8	2020	History dependence in wages and cyclical selection: Evidence from Germany ↗ This paper directly addresses the equilibrium interpretation of wage dynamics by testing search-and-matching theories with on-the-job search, a core dimension of the research project. It also provides relevant empirical evidence on how worker mobility and selection affect wages, which relates to the identification of firm effects and the impact of labor market conditions on the worker-firm wage decomposition. "Using administrative data from Germany, this paper analyzes the relation between wages and past and current labor market conditions. Specifically, it explores whether the data is more consistent with implicit contract models (Beaudry/DiNardo, 1991) or a matching model with on-the-job search and cyclical selection (Hagedorn/Manovskii, 2013). The data suggests that wages are related to past labor market conditions as contract theories postulate. However, past labor market conditions also affect contemporaneous wages through the evolution of the match qualities over a worker's job history - the main hypothesis of the selection model. Refining the selection model by taking into account within...	Anja Bauer, Benjamin Lochner
8	2020	The Effect of the Hartz Labor Market Reforms on Post-Unemployment Wages, Sorting, and Matching ↗ This paper directly employs matched employer-employee panel data to analyze wage decomposition, specifically isolating the roles of worker mobility, sorting, and firm-level wage premiums following labor market shocks. It aligns closely with the project's themes of limited mobility bias, variance decomposition of wage inequality, and the equilibrium interpretation of how worker-firm assignment affects wages. We use linked longitudinal data on employers and employees to estimate how the 2003-2005 Hartz reforms affected the wages of displaced German workers after they returned to work. We also present a simple new method to decompose the wage effects into components attributable to selection on unobservables, and to changes in the way that displaced workers are sorted across firms and worker-firm matches upon re-employment. We find that the Hartz reforms substantially reduced the wages of displaced workers after their return to work. Women experienced smaller wage losses than men. For both sexes, over 80 percent of the increased wage loss was because displaced workers found re-employment in...	Simon D. Woodcock
8	2006	Testing for Employee Discrimination in Britain using Matched Employer-Employee Data This paper directly addresses the project's theme of labor market discrimination by utilizing matched employer-employee data to estimate wage differentials associated with coworker composition. It aligns with the AKM framework's focus on decomposing wage variation into worker and firm components, specifically investigating how firm-level peer effects influence wage dynamics in the context of racial discrimination. We use recent matched employer-employee data to directly test if white workers have a taste for racial discrimination in Britain. We formally introduce individual and firm heterogeneity into the discrimination model used by Becker (1957, 1971) which we extend to generate predictions consistent with an employee taste for discrimination. We argue firstly that white employees with a taste for discrimination should report lower levels of job satisfaction the larger the proportion of ethnic minorities at their workplace. Secondly, white employees would have to be compensated by higher wages if required to work alongside ethnic minority co-workers. Both hypotheses are clearly supported for white...	Paul Frijters, Michael A. Shields, Stephen Wheatley Price, et al.
8	2023	Estimating Counterfactual Matrix Means with Short Panel Data ↗ This paper directly addresses the methodological challenges of estimating worker and firm effects using short matched employer-employee panels, which is central to the project's focus on AKM frameworks and limited mobility bias. It proposes a spectral approach within a low-rank factor model to improve identification of counterfactual outcomes and firm wage premiums compared to standard two-way fixed effects models. We develop a spectral approach for identifying and estimating average counterfactual outcomes under a low-rank factor model with short panel data and general outcome missingness patterns. Applications include event studies and studies of outcomes of "matches" between agents of two types, e.g. people and places, typically conducted using less-flexible Two-Way Fixed Effects (TWFE) models of outcomes. Given finite observed outcomes per unit, we show our approach identifies all counterfactual outcome means, including those not identified by existing methods, if a particular graph algorithm determines that units' sets of observed outcomes have sufficient overlap. Our analogous, computationally...	Lihua Lei, Brad Ross
8	2018	A korábbi munkatársak bérekre gyakorolt hatása ↗ This paper directly addresses the project's theme of peer and coworker learning spillovers by quantifying the wage premium associated with former colleagues, a key time-varying worker component. It provides empirical evidence on how social networks and latent ability sorting influence wage dynamics, which complements the study of wage inequality and sorting mechanisms within the AKM framework. Kutatásunk célja annak megmutatása, hogy a volt munkakapcsolatok figyelemre méltó hatást gyakorolnak a munkahelyváltó egyének kezdőbérére, a későbbi bérek pályájára, illetve az állásvesztés valószínűségére. Az elemzés adminisztratív államigazgatási adatbázison alapul, mely a 2003–2011 közötti időszakra vonatkozóan tartalmazza a magyarországi népesség felének munkaerőpiaci adatait. Eredményeink alapján azok, akik olyan céghez nyernek felvételt, ahol dolgozik volt munkatársuk, átlagosan 2,5 százalékkal nagyobb kezdőbérre számíthatnak azokhoz viszonyítva, akiknek nincs hasonló ismerősük. Ez azonban közvetett hatás, amely valójában a jobb látens képességűek magasabb bérszintű cégekbe...	István Boza, Virág Ilyés
8	2011	Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation ↗ This paper directly addresses the project's core theme of decomposing wage inequality into worker, firm, and sorting components using matched employer-employee data. It specifically analyzes the role of worker and firm reallocation, which is central to understanding variance decomposition and the dynamics of the AKM framework. This paper exploits longitudinal employer-employee matched data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in earnings inequality within and across industries between 1992 and 2003. We find that factors that cannot be measured using standard cross-sectional data, including the entry and exit of firms and the sorting of workers across firms, are important sources of changes in earnings distributions over time. Our results also suggest that the dynamics driving changes in earnings inequality are heterogeneous across industries.	Julia Lane, Fredrik Andersson, Elizabeth E. Davis, et al.
8	2024	Estimating heterogeneous effects: applications to labor economics ↗ This paper provides a unified framework for estimating heterogeneous treatment effects in settings involving unit mobility, directly addressing the worker-firm matching context central to the AKM framework. It offers methodological insights into recovering the distribution and dispersion of effects, which is essential for analyzing variance decomposition and sorting patterns in wage inequality research. A growing number of applications involve settings where, in order to infer heterogeneous effects, a researcher compares various units. Examples of research designs include children moving between different neighborhoods, workers moving between firms, patients migrating from one city to another, and banks offering loans to different firms. We present a unified framework for these settings, based on a linear model with normal random coefficients and normal errors. Using the model, we discuss how to recover the mean and dispersion of effects, other features of their distribution, and how to construct predictors of the effects. We provide moment conditions on the model’s parameters, and outline...	Stéphane Bonhomme, Angela Denis
8	2023	Wage inequality, firm characteristics, and firm wage premia in South Africa ↗ This paper directly applies the core AKM and KSS decomposition methods to estimate firm wage premia and decompose wage inequality, aligning closely with the project's central theme. It further enhances relevance by examining specific firm characteristics that drive these premia and quantifying the positive worker-firm covariance, which addresses key aspects of assortative matching and variance decomposition. This paper investigates the role of firm characteristics in driving wage inequality and firm wage premia in the South African labour market. The Abowd, Kramarz, and Margolis (AKM) and Kline, Saggio, and Sølvsten (KSS) regression-based decomposition methods are applied to matched employer–employee administrative tax data for the period 2011–19. Additionally, the Theil index is used as a comparative tool for estimating wage inequality, given that the variance of logarithms applied in the regression-based decomposition methods has been established as an imprecise measure of inequality. The results show significantly high dispersion in wages, as estimated by both the AKM and the KSS methods as...	Shakeba Foster
8	2024	Models of Wages and Mobility in Frictional Labor Markets with Random Search ↗ This paper directly addresses the equilibrium interpretation of firm wage premiums through search-and-matching theory, a key theme of the project. It provides theoretical grounding for how on-the-job search and wage bargaining generate the firm effects and worker mobility patterns central to the AKM framework. J’étudie les modèles de détermination de l’équilibre des salaires et de la mobilité avec frictions sur le marché du travail. La recherche d’un emploi est aléatoire. La concurrence entre les entreprises se fait en termes de promesses de valeur faites aux travailleurs. La nature exacte de cette concurrence dicte la répartition des promesses de valeur dans l’économie. La mobilité des travailleurs et l’allocation des emplois sont souvent comprises directement à partir de cette partie du modèle. L’étude détaille comment les restrictions sur les contrats de travail traduisent les valeurs des contrats en salaires .	Rasmus Lentz
8	2022	Gender Pay Gaps in Domestic and Foreign-Owned Firms ↗ [Title only] This title directly addresses the project's theme of labor market discrimination by examining gender pay gaps within the context of foreign ownership. It likely contributes to understanding how international trade dimensions, such as foreign ownership, interact with worker characteristics to influence wage decomposition and firm wage premiums. No abstract available.	Iga Magda, Katarzyna Sałach
8	2024	Careers and Wages in Family Firms: Evidence from Matched Employer-Employee Data ↗ This paper directly applies matched employer-employee data to decompose wage differences using worker sorting and firm-specific wage policies, aligning with the AKM framework's focus on variance decomposition and assortative matching. It provides empirical evidence on how firm-level characteristics (ownership type) influence pay structures and job security, which is central to the project's interest in firm wage premiums and rent-sharing mechanisms. We study compensation packages in family and non-family firms. Using French matched employer-employee data, we first show that family firms pay on average lower wages. We find that part of this wage gap is due to low wage workers sorting into family firms and high wage workers sorting into non-family firms. However, we also find evidence that company wage policies differ according to ownership status, so that the same worker is paid differently under family and non-family firm ownership. We also find evidence that family firms are characterised by lower job insecurity, as measured by dismissal rates and by the subjective risk of dismissal perceived by workers. In addition, family firms...	Marco Pagano, Edoardo Di Porto, Fabiano Schivardi, et al.
8	2016	Long-Run Sectoral Reallocation, Job to Job Transitions, and Earnings Inequality: An Empirical Investigation ↗ [Title only] This paper directly addresses the project's core theme of decomposing wage inequality into worker and firm components by analyzing how job-to-job transitions and sectoral reallocation drive earnings inequality. The focus on long-run reallocation and mobility patterns provides relevant empirical evidence for understanding the dynamic components of the AKM framework and the role of worker mobility in wage determination. No abstract available.	Florian Hoffmann, Anton Laptiev, Shouyong Shi	Other
8	2012	Technological Change and Wages in China: Evidence From Matched Employer-Employee Data This paper directly addresses the project's focus on how firm-level productivity shocks, such as R&D investment, transmit to firm wage premiums and rent-sharing. By using matched employer-employee data, it empirically connects firm characteristics to worker wages, aligning with the project's interest in firm-level pay policies and wage decomposition mechanisms. We examine the relationship between research and development (R&D) intensity and wages, using a unique matched employer-employee dataset. The dataset has the advantage that it links firm-level investment in R&D to individual employee wages and allows us to control for both employee and employer characteristics. Our main finding is that a one standard deviation increase in R&D intensity is associated with an increase in the hourly wage rate between 3.4 per cent and 6.9 per cent for the full sample, depending on the exact specification. We find that the wage elasticity with respect to R&D intensity is higher in larger firms as well as for better educated workers and workers with technical...	Vinod Mishra, Russell Smyth
8	2021	Wage structure and inequality: The role of observed and unobserved heterogeneity This paper directly addresses the variance decomposition of wage inequality into worker, firm, and sorting components, which is a core theme of the project. It provides empirical evidence on assortative matching and the relative contributions of unobserved heterogeneity using matched employer-employee data. This study aims to contribute to the literature of firms and occupations as prominent drivers of wage-inequality in multiple ways. First, we synthesize novel modelling approaches of recent studies in the field and use administrative linked employer-employee panel data from an Eastern European country, Hungary, to assess the contribution of individual, firm and job heterogeneity - and their interactions - to overall wage inequality. Consistent with earlier findings from Western Europe, Scandinavia, the US and Brazil, we show that firm heterogeneity provides around 22%, individual heterogeneity 50%, and occupational heterogeneity 8% of overall wage dispersion, with wage sorting between firms...	István Boza
8	2025	Why Workers Stay: Pay, Beliefs, and Attachment ↗ This paper provides critical empirical evidence on worker mobility frictions and switching costs, which are central to identifying firm fixed effects in AKM models and mitigating limited mobility bias. By quantifying attachment to employers beyond observable pay and amenities, it offers direct insights into the stability of the matched employer-employee links required for accurate variance decomposition. Workers often remain with their employer even when outside firms offer higher pay.This may reflect information frictions or preferences.We use a large-scale survey of full-time German workers, linked to Social Security records, to elicit pay expectations and preferences over specific outside firms.Workers believe outside pay varies across firms and direct their search toward higher-paying employers.Expected pay premia are highly correlated with administrative pay measures observed and with workers' amenity valuations.Yet most workers would not switch firms -even for substantial raises at named destination firms.Implied switching costs range from 7 to 18% of annual pay.Attachment varies...	Sydnee Caldwell, Ingrid Haegele, Jörg Heining
8	2013	THE IMPACT OF A FIRM'S SHARE OF EXPORTS ON REVENUE, WAGES, AND MEASURE OF WORKERS HIRED \| THEORY AND EVIDENCE This paper directly addresses the project's focus on international trade by examining how export expansions affect firm-level wage premiums using linked employer-employee data. It provides relevant empirical evidence on the transmission of trade shocks to wages, aligning with the theme of how trade alters the worker-firm wage decomposition. This paper links an extension to the Melitz (2003) model that allows for a rm’s export status to be continuous to the Helpman et al. (2010) framework of heterogeneous rms in a global economy. A change in a rm’s share of exports triggered by a decrease in trading costs can then be accounted for changes in its revenue, its average wage as well as its measure of workers hired. The predictions of the model are ultimately borne out by the LIAB 1 , a German linked employer-employee data set.	Gregor Hesse
8	2025	Firm-specific pay premia and the returns to higher education: Evidence from community colleges ↗ This paper directly utilizes the concept of firm-specific pay premia within the AKM framework to quantify its contribution to educational wage returns. It provides relevant empirical evidence on assortative matching between worker credentials (education) and firm wage policies, aligning with the project's focus on sorting and wage decomposition. There is an increasing consensus that firm-specific premia are an important determinant of wages, but there is little evidence regarding their roles in the returns to education. This paper examines the extent to which completing an associate degree increases earnings through access to higher-paying firms. Using administrative data on college enrollment and labor market outcomes from Ohio, I estimate that completing an associate degree leads to employment at firms of higher firm-specific premia by approximately 6 %, suggesting that more than one-quarter of the returns to associate degrees is attributable to moving to higher-paying firms.	Weixiang Pan
8	2016	The role of the firm in worker wage dispersion: an analysis of the Ghanaian manufacturing sector ↗ This paper directly applies the AKM framework's core methodology of variance decomposition to linked employer-employee data, aligning with the project's central goal of identifying worker and firm effects on wages. It provides relevant empirical context on how firm-level factors and sorting dynamics contribute to wage inequality, which is a key theme of the research project. This paper uses a linked employer-employee dataset from the Ghanaian manufacturing sector to analyze earnings dispersion in Ghana from 1992 to 2003, a period post extensive economic reforms. I find that variance of earnings increased from 1992 to 1998 and decreased thereafter, resembling an inverted u-shaped relationship. I use analysis of variance and variance decomposition approaches to understand the underlying factors that led to such a pattern in earnings inequality. I find that between-firm factors explain this pattern more than within-firm factors. I also find that the mean earnings gap between workers above and below the 90th percentile of income distribution can explain the...	Somdeep Chatterjee
8	2019	Worker–Plant Matching and Ownership Change* ↗ This paper directly addresses the project's interest in event-study designs around firm shocks, specifically ownership changes, and their impact on worker-firm matching dynamics. It provides empirical evidence on how new owners alter workforce composition and share rents, which aligns with the project's focus on firm-level pay policies and wage premiums responding to ownership transitions. Abstract Is a change in ownership an opportunity for the new owners to make systematic changes to the workforce of the acquired plant? Using matched employer–employee data, we document changes to the workforce along observable and unobservable dimensions of worker quality around the time of ownership change. We observe above‐average separations of workers around domestic acquisitions. This is associated with a decline in unobserved worker quality in the plant. Foreign acquisitions are not associated with above‐average worker turnover; instead, new foreign owners share rents with the high‐skilled workers who are already in the plant before the acquisition.	Ragnhild Balsvik, Stefanie Haller
8	2021	Lønnsforskjeller mellom kvinner og menn – hvilken rolle spiller bedriften? ↗ This paper directly addresses the project's theme of labor market discrimination by analyzing gender wage gaps within the context of firm-specific effects. It employs a matched employer-employee framework to decompose wage differences, aligning with the AKM-style analysis of how firm characteristics and internal sorting contribute to inequality. Denne artikkelen analyserer lønnsforskjeller mellom kvinner og menn i privat sektor i Norge med et spesielt fokus på forskjeller mellom bedrifter av ulik størrelse. Våre analyser viser at lønnsforskjellene mellom kvinner og menn i virksomheter i privat sektor har falt fra 13,5 prosent i 2015 til 11 prosent i 2017, og at den nedadgående trenden som er vist i tidligere undersøkelser har vedvart. Med utgangspunkt i tidligere forskning er det grunn til å tro at lønnsforskjellene mellom kvinner og menn er størst i store bedrifter. I denne artikkelen finner vi at kjønnsforskjellen i lønn er større i de minste bedriftene enn den er i de mellomstore, og den er aller størst i de største bedriftene...	Kjersti Misje Østbakken, Marte Marie Frisell
8	2025	Narrowing industry wage premiums and the decline in the gender wage gap ↗ The paper directly applies the AKM framework using matched employer-employee data to decompose wage inequality into worker and firm components, addressing the project's core themes of identification and variance decomposition. It specifically investigates the dynamics of firm wage premiums over time and their role in explaining changes in aggregate wage gaps, aligning with the project's focus on time-varying firm effects and labor market discrimination. The gender gap in firm wage premiums is well documented, but evidence on its evolution over time and its contribution to declining gender wage gaps remains mixed. Using comprehensive employer-employee data from France, we find that 20% of the reduction in the gender hourly wage gap between 2002 and 2019 can be attributed to a decline in the between-firm component of the gender gap in firm wage premiums. However, our analysis shows that this reduction is not driven by improvements in women’s relative position in the firm wage premium ladder. We find no evidence that, conditional on workers’ skills, women have become more likely to move into higher-paying firms or industries, or that newer...	Marco G. Palladino, Alexandra Roulet, Mark Stabile
8	2022	Job ladder, human capital, and the cost of job loss ↗ This paper closely relates to the project by integrating human capital accumulation and on-the-job search into the structural interpretation of wage dynamics following job displacement. It provides empirical evidence and theoretical modeling that complements the analysis of time-varying worker components and the equilibrium foundations of firm wage premiums. High-tenure workers losing their job experience a large and prolonged fall in wages and earnings. The aim of this paper is to understand and quantify the forces behind this empirical regularity. We propose a structural model of the labor market with (i) on-the-job search, (ii) general human capital, and (iii) firmspecific human capital. Jobs are destroyed at an endogenous rate due to idiosyncratic productivity shocks and the skills of workers depreciate during periods of non-employment. The model is estimated on German Social Security data. By jointly matching moments related to workers' mobility and wages, the model can replicate the size and persistence of the losses in earnings and wages...	Richard Audoly, Federica De Pace, Giulio Fella
8	2019	Earnings Dynamics and Firm-Level Shocks ↗ This paper directly addresses the project's core AKM framework by using matched employer-employee data to decompose wage variance and analyzing the transmission of firm-level shocks to worker wages. It specifically investigates heterogeneity in how firm effects vary by skill level, which aligns with the project's interest in time-varying firm premiums and the distributional consequences of firm-level pay policies. We use matched employer-employee data from Sweden to study the role of the firm in affecting the stochastic properties of wages. Our model accounts for endogenous participation and mobility decisions. We find that firm-specific permanent productivity shocks transmit to individual wages, but the effect is mostly concentrated among the high-skilled workers; firm-specific temporary shocks mostly affect the low-skilled. The updates to worker-firm specific match effects over the life of a firm-worker relationship are small. Substantial growth in earnings variance over the life cycle for high-skilled workers is driven by firms accounting for 44% of cross-sectional variance by age 55.	Benjamin Friedrich, Lisa Laun, Costas Meghir, et al.
8	2025	The firm-pay gender gap and formal sector churn over the life cycle ↗ This paper directly applies the matched employer-employee panel framework to decompose gender wage gaps into sorting and firm-specific components, aligning with the project's core AKM methodology and focus on discrimination. It explicitly examines how assortative sorting between workers and firms varies over the life cycle, a key theme in understanding wage inequality and firm premiums. We find that women sorting into lower paying firms explains nearly half of the gender pay gap in South Africa. Using matched employer-employee panel data covering the universe of formal workers, we show sorting varies considerably over the life cycle: the firm-pay gender gap is negligible for the youngest workers, grows steeply for 25–35 year olds (i.e. typical child-rearing years), and narrows for older workers. The increase is driven by those continuously employed — while women are almost as likely as men to switch firms, men are more likely to switch to better-paying firms, consistent with discrimination or non-pay amenities. Churn also contributes to the gap (though is relatively...	Ihsaan Bassier, Leila Gautham
8	2013	Global firms and wages: is there a rent sharing channel? This paper directly addresses the project's theme of international trade's impact on firm wage premiums by empirically testing rent-sharing channels across different types of global firms. It provides specific evidence on how trade and FDI activities translate into wage premia, aligning with the research focus on the transmission of trade shocks to worker-firm wage decomposition. Summary In this paper we explore the scope of international profit sharing of firms engaged in international trade and FDI activities. We extend the approach proposed in the literature by allowing not only for differences between domestic and foreign owned firms, but also between firms with outward FDI, importers and exporters. We argue that firms engaged in international trade enhance their performance through knowledge spillovers and technology upgrading similarly to what happens for companies which are part of multinational groups, and that this superior performance can translate into substantial wage premia to workers through profitability. Using a unique dataset for Slovenian firms for...	Luca Marcolin
8	2016	International rent sharing and takeovers ↗ This paper directly addresses the project's interest in rent-sharing by examining how foreign takeovers alter firm wage premiums and transmit global productivity shocks to domestic wages. It utilizes matched employer-employee data and event-study designs around firm ownership changes to decompose wage dynamics, aligning closely with the project's themes on equilibrium interpretations and international trade impacts. Purpose – The purpose of this paper is to provide empirical evidence of international rent sharing in multinational enterprises. It looks at changes in rent sharing before and after the acquisition of a company by a foreign entity, and assesses the role of target and acquirer profitability in the wage setting process for the target firm. It therefore contributes to the evaluation of the impact of a form of globalization (inward foreign direct investment (FDI)) onto wages. Design/methodology/approach – The authors use a unique firm level longitudinal dataset of M & As in Belgium between 1998 and 2010. The authors construct a micro-level dataset containing takeover and accounting information...	Jozef Konings, Luca Marcolin, Ilke Van Beveren
8	2010	Wage Adjustment and Productivity: Evidence from Matched Employer-Employee Data This paper directly addresses how firm-level productivity shocks transmit to worker wages, a core mechanism underlying the equilibrium interpretation of firm fixed effects and rent-sharing. By utilizing matched employer-employee data to distinguish between sectoral and idiosyncratic productivity effects, it provides critical empirical evidence on the dynamics of firm wage premiums. This paper studies how workers’wages respond to TFP-driven innovations in …rms’labor productivity. Using unique data with highly reliable …rm level output prices and quantities in the manufacturing sector in Sweden, we are able to derive measures of physical (as opposed to revenue) TFP, which is fundamental for the results. In contrast to predictions from a competitive labor market model our results suggest that wages of both incumbents and new hires depend on …rm’s productivity. We separate the productivity innovations into a sectoral and a pure idiosyncratic component and …nd that the response to sectoral shocks is larger than the response to pure idiosyncratic (…rm-level) shocks. These...	Mikael Carlsson, Julián Messina, Oskar Nordström
8	2019	Do Cash Windfalls Affect Wages? Evidence from R&D Grants to Small Firms ↗ This paper is closely related as it empirically investigates firm-level wage premiums using a quasi-experimental design that isolates the effect of a positive cash flow shock on incumbent worker wages. It directly addresses the project's theme of how firm pay policies respond to productivity or liquidity shocks, providing evidence on rent-sharing mechanisms among existing employees. This paper examines how employee earnings respond to a one-time cash flow shock in the form of a government R&D grant. In a regression discontinuity design, we find that the grant immediately increases average annual employee-level earnings by 2.9%. This benefit accrues only to incumbent employees and rises with job tenure. The grant also affects firm growth, but the initial wage patterns do not appear to reflect growth or productivity. Instead, the evidence supports implicit equity financing within the firm, where employees initially accept lower wages from financially constrained firms and earn more when the firm has ability to pay.	Sabrina T Howell, Jason Brown
8	2024	Between‐firm sorting and parenthood wage gaps in the US service sector ↗ This paper directly applies the AKM framework to decompose wage gaps using matched employer-employee data, focusing on the critical between-firm sorting component of wage inequality. It aligns closely with the project's themes on worker-firm decomposition, assortative matching, and the role of firm effects in explaining wage disparities. Objective: We assess how the distribution of parents across firms contributes to parenthood wage gaps in a low-wage U.S. labor market and examine the role of understudied compensating differentials relevant to precarious work. Background: In the U.S., parenthood drives a wedge in wages, as mothers often earn less than women without children, whereas fathers typically earn more than men without children. Firms bear influence over setting wages and sorting workers, yet firms are largely omitted from research on parental wage gaps in the U.S. Method: We draw on novel employer-employee matched data on 74,086 hourly service-sector workers to decompose parental wage gaps into their within- and...	Charlotte O'Herron, Daniel Schneider, Kristen Harknett
8	2018	Market Power, Finance Wages and Inequality ↗ [Title only] This title suggests a direct examination of how firm-level market power, a key driver of wage premiums, influences the wage distribution, aligning closely with the project's focus on rent-sharing and firm fixed effects. The inclusion of inequality highlights the variance decomposition aspect, which is central to the AKM framework and its applications to wage disparities. No abstract available.	Wenting Ma
8	2025	Winners and losers when firms robotize: wage effects across occupations and education ↗ This paper directly addresses the project's focus on how firm-level technology adoption (robotization) affects wages and firm-level pay policies. It utilizes matched employer-employee data to analyze within-firm wage dynamics, aligning with the project's interest in event-study designs around firm shocks and the distributional consequences of automation. Abstract This paper analyses the impact of robots on workers' wages in the manufacturing sector, with a particular focus on relative wages for workers with different levels of education and in different occupations. Using high‐quality matched employer–employee register data with firm‐level information on the introduction of industrial robots, we identify the effects of robotization on relative wages within firms. Skilled blue‐collar workers with a vocational degree experience a decline in wages when firms introduce robots, while there are only small effects for the other groups of workers. These results suggest that robots are substitutes for tasks undertaken by skilled blue‐collar workers...	Erling Barth, Marianne Røed, Pål Schøne, et al.
8	2021	Higher wages in exporters and multinational firms evidence from linked employer–employee data ↗ This paper directly addresses the project's focus on firm wage premiums and the role of international trade by analyzing wage differentials between exporters, multinationals, and domestic firms using linked employer-employee data. It provides empirical evidence on how firm-level characteristics and ownership types influence wages, which is central to understanding rent-sharing and the transmission of trade shocks to labor markets. This study investigates whether exporters, multinational enterprises (MNEs), and foreign-owned firms pay higher wages in Japan, using linked employer–employee data. It shows that wages of foreign-owned and domestically-owned MNEs are the highest and that wages of non-multinational exporters are higher than those of non-multinational non-exporters. The ordering of wages, with MNEs having the highest wages and exporters having higher wages than purely domestic firms, is consistent with the productivity ordering of the standard firm heterogeneity model. Even after controlling for observable plant and worker characteristics, this ordering of wages remains the same. It further finds that the...	Ayumu Tanaka
8	2024	Preparing for export opportunities ↗ This paper directly addresses the project's theme on the role of international trade by analyzing how export opportunities influence firm hiring practices and workforce composition. It provides empirical evidence on worker-firm sorting and the transmission of trade shocks to firm-level labor dynamics using linked employer-employee data. This paper investigates how firms prepare their workforce to export. We employ a novel identification strategy to isolate how a firm’s hiring decision at home responds to export opportunities that arise from exogenous changes to product demand abroad. Combining Brazilian exporter and linked employer–employee data, we show that firms act on better chances to export by hiring workers with prior experience at exporting firms. We find that firms concentrate this preparatory hiring of experts in skilled blue-collar occupations and that firms separate from the previously hired experts when the predicted export-market participation fails to materialize. The evidence is consistent with the tenet...	Claudio Labanca, Danielken Molina, Marc-Andreas Muendler
8	2020	The exceptional performance of exporters and labour market outcomes: evidence from Egyptian firms ↗ The paper directly addresses the project's theme on how international trade shocks, specifically export expansions, transmit to firm wage premiums and labor market outcomes. It provides empirical evidence on the relationship between export status and wages, which aligns with the study of rent-sharing and wage inequality driven by firm-level productivity differences. This paper examines the manufacturing export market in Egypt after the Arab Spring using a novel firm-level census dataset from 2013. Export is very rare in Egypt. The conventional export premia are very high, except for total factor productivity. Exporters have stark effects on labour market outcomes, including wages, employment, demand for skilled and female workers, wage inequality, and job security. These findings have two important implications: (1) Manufacturing exports might be monopolized by large firms, and (2) promoting exports could improve labour market outcomes, especially for skilled and female workers.	Ayhab F. Saad
8	2022	Do Unemployment Insurance Benefits Improve Match and Employer Quality? Evidence from Recent U.S. Recessions ↗ This paper directly engages with the AKM framework by utilizing LEHD data to decompose wage effects into match quality, employer quality, and sorting, which are central to the project's variance decomposition themes. It empirically investigates how labor market frictions and search policies influence the worker-firm wage premium and assortative matching dynamics. This research uses restricted microdata from the U.S. Census Bureau’s Longitudinal Employer Household Dynamics (LEHD) Program, which was partially supported by the following National Science Foundation Grants SES-9978093, SES-0339191 and ITR-0427889; National Institute on Aging Grant AG018854; and grants from the Alfred P. Sloan Foundation. All results have been reviewed to ensure that no confidential data are disclosed. All results have been approved by the Disclosure Review Board. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau. This research was performed at the Georgetown Federal Statistical...	Adriana D. Kugler, Umberto Muratori, Ammar Farooq
8	2020	Innovation as a Firm-Level Factor of the Gender Wage Gap ↗ [Title only] This title suggests a direct application of firm-level heterogeneity to the gender wage gap, aligning with the project's interest in labor market discrimination and firm wage premiums. It likely employs methods to decompose wage differences into worker and firm components, potentially extending the AKM framework to analyze how firm-specific factors drive gender inequality. No abstract available.	Jaan Masso, Priit Vahter
8	2015	Decomposing the Wage Losses of Displaced Workers: The Role of the Reallocation of Workers into Firms and Job Titles ↗ This paper extends the AKM framework by incorporating job title and match-specific fixed effects, directly addressing the identification and estimation of worker-firm interaction effects on wages. It provides valuable empirical context on how worker mobility and sorting across firms contribute to wage dynamics, aligning closely with the project's focus on variance decomposition and limited mobility bias. Using an unusually rich matched employer-employee-job title data set for Portugal, this paper evaluates the sources of wage losses of workers displaced due to firm closure based on the comparison of workers' wages differentials before and after displacement. Potential wage losses of displaced workers can be related to firm, job title, and match heterogeneity in the pre- and post-displacement jobs. In this vein, we estimate a three-way high-dimensional fixed effects regression model that enables us to decompose the sources of the wage losses into the contribution of firm, job title, and match fixed effects. The worker-firm match plays a very sizable role. We found that the allocation of...	Pedro S. Raposo, Pedro Portugal, Anabela Carneiro
8	2018	Gender Differences in Sorting on Occupational Safety and Establishment Pay ↗ [Title only] This title directly addresses the project's theme of assortative matching and labor market discrimination by investigating how gender influences sorting between occupational safety and establishment pay. It aligns with the research on wage decomposition and firm-worker matching dynamics, specifically exploring non-wage firm characteristics that contribute to wage inequality and sorting patterns. No abstract available.	Kurt Lavetti, Ian M. Schmutte
8	2015	Comparing Micro-Evidence on Rent Sharing from Three Different Approaches ↗ This paper directly addresses the project's theme of rent-sharing by comparing different estimation approaches for measuring how firm ability to pay translates into worker wages. It utilizes matched employer-employee data to quantify rent-sharing parameters, offering critical methodological insights into the AKM framework and the decomposition of wage premiums. Empirical labor economists have resorted to estimating the responsiveness of workers' wages on firms' ability to pay to assess the extent to which employers share rents with their employees. This paper compares this labor economics approach with two other approaches that rely on standard micro production data only: the productivity approach for which estimates of the output elasticities of labor and materials and data on the respective revenue shares are needed and the accounting approach which boils down to directly computing the extent of rent sharing from firm accounting information. Using matched employer-employee data on 60,294 employees working in 9,849 firms over the period 1984-2001...	Sabien Dobbelaere, Jacques Mairesse
8	2008	How Do Firms Adjust their Wage Bill in Belgium? A Decomposition Along the Intensive and Extensive Margins ↗ [Title only] This paper directly addresses the project's interest in firm-level pay policies by decomposing wage bill adjustments along intensive and extensive margins, which relates to how firms respond to shocks. Its focus on Belgium aligns with the use of matched employer-employee panel data, a core methodological requirement for AKM-style decomposition and variance analysis. No abstract available.	Catherine Fuss
8	2006	Mobility between Employers and Assortative Matching: Field Evidence from Soccer Data ↗ [Title only] This paper directly addresses the core project theme of assortative matching between workers and firms using a unique dataset that likely facilitates precise identification of worker and firm effects. The focus on mobility patterns provides strong empirical evidence relevant to understanding how sorting influences wage decomposition and potential limited mobility biases. No abstract available.	Néstor Gándelman
8	2024	Human capital at work ↗ The paper directly addresses worker-firm sorting and the decomposition of wage premiums using matched employer-employee data, aligning closely with the AKM framework's focus on variance decomposition and assortative matching. It provides specific empirical evidence on how human capital composition and peer effects contribute to firm wage premiums, which is central to the project's themes on wage inequality and worker-firm dynamics. Firms vary in their production processes, leading to different occupational skill requirements, and they employ workers with varying skill levels. The sorting of workers with heterogeneous skills into firms differing in productivity, size and age matters for both economic efficiency and distributional outcomes. This paper applies a unified measurement approach to comprehensive administrative micro data from Portugal to establish five facts about the relationship between workforce skills, firm productivity and dynamics, and wage differentials: 1) firms at the productivity frontier not only rely more on high-skill occupations, they also tend to hire the most skilled workers within each...	Chiara Criscuolo, Péter Gál, L. B. Freund
8	2025	Bargaining and Inequality in the Labor Market ↗ This paper is closely related as it investigates individual bargaining, a key mechanism underlying the rent-sharing and wage determination processes central to the AKM framework. It provides empirical evidence on how bargaining strategies influence within-firm wage inequality and gender gaps, directly addressing the project's focus on firm pay policies and wage decomposition. We use novel surveys of firms and workers, linked to administrative employer-employee data, to study the prevalence and importance of individual bargaining in wage determination. We show that simple survey questions accurately elicit firms’ bargaining strategies. Using the elicited strategies for 772 German firms, we document that the majority of firms are willing to engage in individual wage bargaining. Labor market factors predict firms’ strategies better than firm characteristics. Survey responses from nearly 10,000 full-time workers indicate that most workers provide their salary expectations before they receive a job offer. Most outside offers are rejected, with the worker remaining at...	Sydnee Caldwell, Ingrid Haegele, Joerg Heining
8	2004	Microdata Evidence on Rent-Sharing This paper directly addresses the project's theme of rent-sharing by empirically estimating the relationship between firm profitability and worker wages using fixed-effects models. It provides key microdata evidence on how firm-specific shocks translate into wage premiums, which is central to understanding firm wage premiums and the AKM framework's extensions. We examine the effect of firm profits on wages for individual workers while focusing on the empirical complications associated with estimating the extent of rent-sharing. Controlling for worker and firm fixed-effects and using several instruments to deal with the endogeneity of profits, we report results indicating that OLS-estimates strongly underestimate the effects of profits on wages. Moreover, the effect of profits on wages are estimated separately for firms with increasing and decreasing profits within a given time period. We find a positive and stable effect only in firms with increasing profits. This is in line with the idea that falling profits do not lead to wage cuts while...	Mahmood Araï, Fredrik Heyman
8	2018	On Job Mobility and Earnings Growth ↗ [Title only] This title directly addresses on-the-job mobility, which is the primary mechanism for identifying worker fixed effects in the AKM framework and estimating limited mobility bias. It likely provides foundational insights into earnings growth dynamics that underpin the variance decomposition and sorting components central to the researcher's project. No abstract available.	Miri Endeweld
8	2025	The Firm’s Role in Displaced Workers’ Earnings Losses ↗ This paper directly estimates firm-specific pay premiums and their contribution to worker earnings, aligning closely with the project's focus on the AKM framework and rent-sharing mechanisms. It provides empirical evidence on how firm effects persist and impact worker welfare, which is central to understanding wage decomposition and the equilibrium role of firm wages. The authors investigate the role of firm pay premiums in explaining the large, persistent earnings losses of displaced workers. They first estimate that long-run earnings for displaced workers from 2002 to 2008 in Ohio are depressed by 22%. Drawing upon empirical approaches from the displaced worker and firm heterogeneity literature, the authors then estimate that one-quarter of this earnings loss can be explained by the forfeiture of a favorable employer-specific pay premium. Such firm rents are more salient for those laid off from manufacturing firms, explaining half of their lost earnings. Nevertheless, this study adds to early evidence that firm rents do not explain the majority of...	Brendan Moore, Judith Scott-Clayton
8	2023	Firm‐specific Human Capital Accumulation: Evidence from Brazil* ↗ This paper directly extends the core AKM framework by incorporating time-varying worker components, specifically firm-specific human capital accumulation, which aligns with the project's focus on tenure and on-the-job learning effects. It utilizes matched employer-employee data to decompose wage dynamics, providing empirical evidence on the heterogeneity of returns to experience across firms that complements the study of wage inequality and firm pay policies. Abstract We introduce firm‐specific returns to experience and tenure into a standard two‐way fixed effects model, show that they are separately identified under the standard exogenous mobility assumption and with sufficient between firm mobility, and provide a new evidence on heterogeneity of returns to experience and tenure across firms using the administrative data from Brazil over the years 1999–2014. We document that (1) returns to tenure are not strongly related to firm wage premia, (2) returns to experience are strongly negatively correlated with firm wage premia, (3) the relationship between firm wage premium and return to experience is stronger for ‘blue collar’ firms.	Tiago Pires, Arek Szydłowski, Shuai Zhao
8	2019	Wage Determination Across Firms ↗ This paper directly addresses the AKM framework's core concern of quantifying firm effects on wages and critically examines the limited mobility bias by comparing identification strategies using job-to-job versus job-unemployment transitions. Its findings on how inter-firm mobility patterns alter the measured importance of firm wage premiums are highly relevant to the project's focus on estimation methods and bias corrections in matched employer-employee data. Firms are central to many theories of the labor market. However, the actual degree to which firms shape the structure of wages is still not well understood. This paper investigates (i) the importance of firms in explaining wage differences across individuals and industries, and (ii) how the nature of interfirm mobility - job-to-job vs. job-unemployment-job - affects the relative importance of firms and workers in wage determination. Results indicate that (i) firms are much more important in explaining the variance of average wages across industries rather than across individuals, and (ii) using job-to-job transitions to identify the firm's contribution to the wage rate reduces the...	Horng Chern Wong
8	2022	Firms and Inequality When Unemployment is High ↗ [Title only] This paper likely addresses the AKM decomposition of wage inequality and how firm-level heterogeneity contributes to it under different labor market conditions. It fits the project's themes on variance decomposition and equilibrium interpretations of firm effects, particularly regarding how high unemployment alters worker-firm sorting and rent-sharing dynamics. No abstract available.	Ihsaan Bassier
8	2025	Firm Premia and Match Effects in Pay vs. Amenities ↗ This paper directly extends the AKM framework by decomposing firm wage premiums into pay and non-wage amenities, addressing the core theme of wage decomposition and firm-specific effects. It utilizes matched employer-employee mobility data to identify firm and match effects, providing relevant empirical insights into how firm characteristics influence worker utility and wage inequality. This paper develops a new approach to measuring non-wage amenities and compensating differentials in the labor market.Using a survey of 20,000 job movers in Denmark, we elicit workers' reservation wage to return to their previous jobs.Our sample contains a large, connected network of firms, enabling us to estimate firm-wide premia and match effects in amenity values.Overall, higher-paying firms provide slightly worse non-pay amenities.Although they provide better perks and flexibility, they also come with higher layoff risk, faster work pace, and greater stress.On average, moves to jobs offering 10% higher pay involve a 5% reduction in the value of amenities, with 0.7% attributable to...	Anders Humlum, Mette Rasmussen, Evan K. Rose
8	2025	Location Effects or Sorting? Evidence from Firm Relocation ↗ This paper directly addresses the core AKM framework by utilizing firm mobility to disentangle location effects from worker and firm sorting components in wage decomposition. It provides essential empirical context for understanding how worker-firm assignment and spatial sorting contribute to wage inequality, a key theme of the project. Why are wages in cities like New York or Paris higher than in others?This paper uses firm mobility to separate the role of "location effects" (e.g., local geography, infrastructure, and agglomeration) from the spatial sorting of workers and firms.Using French administrative records and U.S. commercial data, we first document that firm mobility is widespread: 4% of establishments relocate annually.Establishments retain their main activity and structure as they move, but adjust their workforce and wages.Combining firm and worker mobility, we then decompose wage disparities across French commuting zones.We find that spatial wage differences are largely driven by the sorting and co-location of...	Pauline Carry, Benny Kleinman, Elio Nimier-David
8	2025	Brand capital and rent sharing: Evidence from firm-level data ↗ This paper directly addresses the project's theme of rent-sharing by investigating how firm-level brand capital influences wage premiums, a key mechanism for understanding firm wage effects. It provides empirical evidence on how firm characteristics drive between-firm wage inequality, aligning with the project's focus on decomposing wage inequality and the equilibrium interpretation of firm fixed effects. Brand capital is widely recognized for its role in enhancing firm value and profitability, but its impact on firms’ incentives to improve workers’ welfare remains unclear. We observe considerable variation in advertising intensity within and across sectors, highlighting its influence on firm-labor dynamics. This study investigates how the accumulation of brand capital affects a firm’s willingness to share rents with workers. Our findings suggest that, on average, higher brand capital enhances this willingness, particularly among service-oriented firms, older firms, firms based in large cities, and during economic downturns. However, workers benefit from more aggressive advertising...	Stella Y. Hua
8	2024	An Engine of (Pay) Growth? Productivity and Wages in the UK Auto Industry ↗ This paper directly addresses rent-sharing mechanisms by empirically linking firm-level productivity shocks to wage premiums, a core component of the project's research themes. It utilizes individual fixed effects to isolate firm/industry-specific wage variations, aligning closely with the AKM framework and the analysis of how pay policies respond to productivity changes. When labour market competition is imperfect, positive industry (and firm) productivity shocks can be passed through to workers in the form of higher wages. We document how the UK auto industry, following a period of decline, experienced a four-decade-long productivity boom. There was a thirteen-fold increase in real output per worker between 1980 and 2018, compared to a four-fold increase in manufacturing. Greater foreign ownership, tougher competition and improved industrial relations all likely played a role. The greater use of intermediate inputs (outsourcing) and growing capital intensity account for most of this growth, but we estimate that TFP still grew three times as fast in the...	Agnes Norris Keiller, Tim Obermeier, Andreas Teichgraeber, et al.
8	2019	Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics ↗ This paper directly applies the AKM framework to decompose aggregate wage dynamics into worker and firm components, aligning with the project's core theme of variance decomposition and worker-firm mobility. It provides empirical evidence on how reallocation across firms contributes to wage inequality and aggregate trends, which is central to understanding limited mobility bias and the sources of wage variation. 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...	Effrosyni Adamopoulou, Emmanuele Bobbio, Marta De Philippis, et al.
8	2024	To Find Relative Earnings Gains after the China Shock, Look Outside Manufacturing and Upstream ↗ This paper directly addresses the project's focus on the role of international trade, specifically import competition and offshoring shocks, in transmitting effects to firm wage premiums. It provides empirical evidence on how exposure to the China Shock alters wage dynamics and relative earnings gains, particularly through upstream linkages and worker tenure, which are central to understanding firm-level pay policies and worker-firm wage decomposition. We find that US workers outside manufacturing exhibit relative earnings increases after US trade liberalization with China. These relative gains cumulate over time as the beneficial effect of a workerâs upstream exposureâincreased competition from China in input marketsâmore than offsets the detrimental impact of her own and downstream (customer) exposures. These relative gains are smaller for non-manufacturing workers with less ex ante firm tenure and lower initial earnings, and are absent among manufacturing workers due to a lack of upstream gains and stronger downstream losses.	Justin R. Pierce, Peter K. Schott, Cristina Tello-Trillo
8	2025	Inequality Grows in Silence: The Impact of Newspaper Closures on CEO-Worker Pay Disparity ↗ [Title only] This paper likely employs matched employer-employee data to analyze wage inequality, fitting the project's core theme of decomposing wage differences. Although it focuses on a specific shock (newspaper closures) to examine CEO-worker pay gaps rather than standard firm fixed effects, it relates to rent-sharing and the distributional impacts of firm-level shocks on labor income. No abstract available.	Jie Chen, Yang Gao, Cheng Zeng
8	2023	Spatial Wage Differentials, Geographic Frictions and the Organization of Labor within Firms ↗ [Title only] This paper likely explores how geographic frictions and internal firm organization influence wage structures, which connects directly to the project's interest in firm wage premiums and spatial sorting. It may also inform the equilibrium interpretation of firm effects by considering how location constraints shape worker-firm matching and rent-sharing mechanisms. No abstract available.	Camilo Acosta Mejia, Ditte Håkonsson Lyngemark
8	2022	Incentives and Peer Effects in the Workplace: On the Impact of Envy and Wage Transparency on Organizational Design ↗ [Title only] This paper directly addresses the project's fourth dimension by examining coworker learning spillovers and peer effects within the firm, which are key drivers of time-varying worker components and team production models. The focus on organizational design responses to envy and transparency provides relevant insights into how internal pay policies and sorting mechanisms interact, complementing the AKM framework's analysis of wage inequality and firm effects. No abstract available.	Jenny Kragl, Benjamin Bental, Peymaneh Safaynikoo
8	2014	Burdett-Mortensen Model of On-the-Job Search with Two Sectors ↗ [Title only] This paper directly addresses the equilibrium interpretation of firm fixed effects via search-and-matching theory, a core theme of the project. Although it focuses on a two-sector model rather than the specific AKM empirical decomposition, its theoretical foundation is highly relevant to understanding how on-the-job search and wage bargaining generate firm wage premiums. No abstract available.	Florian Hoffmann, Shouyong Shi
8	2015	Wage Dispersion with Heterogeneous Wage Contracts ↗ The paper directly addresses the project's focus on equilibrium interpretations of firm wage premiums through search-and-matching theory and wage bargaining mechanisms. It provides relevant theoretical and empirical evidence on how heterogeneous wage contracts contribute to wage dispersion and firm-level pay policies, aligning with the project's interest in the microfoundations of firm effects. I study a labor market in which identical workers search on- and off-the-job and heterogeneous firms employ using either posted wages or wage contracts contingent on outside options. Firm level costs for contingent contracts generate a separating equilibrium in which less productive firms post wages. The model with heterogeneous contracts can achieve wage dispersion, labor share, employment transitions, and flow value of unemployment that are simultaneously consistent with empirical observations even when most firms post wages. Using German employee-level administrative data, I estimate roughly 70 percent of firms post wages and employ nearly 50 percent of workers under such contracts.	Cynthia L. Doniger
8	2006	Chapter 1 Bargaining, On-the-Job Search and Labor Market Equilibrium ↗ [Title only] This title explicitly references on-the-job search and labor market equilibrium, which are central to the project's third dimension regarding the equilibrium interpretation of firm fixed effects and wage premiums. While it may lack specific empirical estimation of AKM-style decompositions, it provides the theoretical foundation necessary for understanding how firm premiums are generated and sustained in equilibrium. No abstract available.	Ken Burdett, Roberto Bonilla
8	2025	Offshoring and Labor Market Power: Comparing Belgian and Dutch Firms ↗ This paper directly addresses the project's interest in how offshoring shocks transmit to firm wage premiums and alter the worker-firm wage decomposition. It provides empirical evidence on the mechanisms linking international trade, firm-level productivity, and wage setting power, which are central to the project's themes on rent-sharing and equilibrium interpretations. ABSTRACT We study the relationship between offshoring and labor market imperfections at the firm level in Belgium and the Netherlands. In both countries, wage‐markup pricing stemming from workers' monopoly power is more prevalent than wage‐markdown pricing originating from firms' monopsony power. Offshoring is associated with a higher prevalence and intensity of wage markdowns, driven by an increase in productivity that is only imperfectly passed through into an increase in wages. The lower firm‐level productivity‐wage pass‐through in Belgium, attributed to its more centralized bargaining structure, makes wage markdowns more responsive to offshoring.	Sabien Dobbelaere, Catherine Fuss, Mark Vancauteren
8	2024	Local labor market effects of offshoring: Evidence from the US Trade Adjustment Assistance program ↗ This paper directly addresses the project's focus on international trade by analyzing how offshoring shocks transmit to local wage dynamics and inequality. It provides empirical evidence on the labor market effects of offshoring, complementing the project's exploration of how such shocks alter worker-firm wage decompositions. Abstract We explore the wage effects of offshoring‐induced employment shocks in US commuting zones (CZs) and industries. Using data on petitions for the Trade Adjustment Assistance (TAA), we measure such shocks by computing the share of TAA‐certified offshoring‐induced layoffs out of total employment. We further identify material‐offshoring shocks and service‐offshoring shocks and connect the TAA data to individual‐level worker data from the American Community Survey. Empirical results show statistically significant and negative wage effects of the CZ‐level offshoring shocks, especially for service offshoring. On the contrary, we find positive wage effects of industry‐level offshoring...	Hyejoon Im, Yang Shen, Myunghwan Yoo
8	2021	Trade, Jobs, and Worker Welfare ↗ This paper is closely related as it analyzes how international trade shocks transmit to firm wage premiums using matched employer-employee panel data, a core theme of the project. It specifically addresses the role of export expansions in altering wage dynamics and worker welfare, aligning with the project's fourth dimension on international trade impacts. We study the welfare effects of international trade on workers with a new dynamic general equilibrium discrete choice model of labor mobility, where the workers’ choice set of jobs is endogenous. Introducing an endogenous number of job options is crucial for matching labor flows in data and quantifying the welfare effects of trade. We exploit differential exposure of sectors and regions to destination-specific demand shocks to estimate the impacts of exports on wages, employment, and labor mobility, using matched employer–employee panel data for Brazil. The same empirical strategy is also applied to estimate structural parameters and the different components of changes in model-implied...	Erhan Artuç, Paulo Bastos, Eun‐Hee Lee
8	2024	International trade and wage inequality: Evidence from Brazil ↗ This paper directly addresses the project's focus on international trade by analyzing how import competition and export expansions transmit to firm wage premiums and alter wage inequality in Brazil. It provides empirical evidence on the cross-firm pay differences driven by trade shocks, which is central to the project's fourth dimension on trade and the AKM framework's variance decomposition. We study the effect of the bilateral trade integration with China on wage inequality in Brazil. Previous studies have documented the contribution of trade opening to the decline in inequality since the 1990s, driven primarily by cross-firm pay differences. We find a sharper reduction in wage inequality over the 2000s, parallel to China's accession to the WTO. Our analysis of the China shock suggests that some firms are harmed by import competition, especially those in the High-Tech Manufacturing sector, while others profit from increased exports and cheaper inputs. We rationalize these patterns by extending the theoretical framework of Helpman et al. (2017) to include sector heterogeneity...	Lucas Squarize Chagas, Vinicios P. Sant’Anna
8	2018	Trade liberalisation and cross‐firm wage heterogeneity: Theory and evidence from China ↗ This paper directly addresses the project's interest in how international trade shocks transmit to firm wage premiums, using Chinese manufacturing data to analyze the impact of tariff reductions on firm-level wages. It provides relevant empirical evidence on how trade liberalization alters firm wage policies, aligning with the project's focus on the intersection of trade and labor market outcomes. Abstract In this paper, we first build a simple model with firm heterogeneity that features input and output tariffs in firms’ production decisions. We show that tariff reduction, due to trade liberalisation, has different effects on firms’ profit. Input tariff reduction generates a cost‐saving effect which benefits firms whilst output tariff reduction results in a competition effect which may hurt domestic firms. Given the fair wage argument, trade liberalisation may affect wages across firms due to the joint effects on firm profit. Using detailed Chinese manufacturing firm data from 1998 to 2007, we conduct empirical tests to investigate how trade liberalisation affects Chinese firm...	Bo Chen, Jinbo Hou
8	2016	Do Higher Corporate Taxes Reduce Wages This paper is closely related as it uses matched employer-employee data to estimate the incidence of shocks on wages, directly addressing how firm-level policy changes transmit to the worker-firm wage decomposition. It employs event study designs to analyze wage responses to corporate tax shocks, aligning with the project's interest in firm-level pay policies and equilibrium interpretations of wage premiums. This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities. Administrative linked employer-employee data allows estimating heterogeneous worker and firm effects. We set up a general theoretical framework showing that corporate taxes can have a negative effect on wages in various labor market models. Using an event study design, we test the predictions of the theory. Our results indicate that workers bear about 40% of the total tax burden. Empirically, we confirm the importance of both labor market institutions and profit shifting possibilities for the incidence of corporate taxes on wages.	Clemens Fuest, Andreas Peichl, Sebastian Siegloch
8	2022	Rent Sharing in China: Evidence from Matched Employer-Employee Data ↗ [Title only] This paper directly addresses rent-sharing, a key theme in the project's framework for understanding how firm wage premiums affect worker wages. By utilizing matched employer-employee data, it aligns with the core AKM methodology and variance decomposition techniques central to the researcher's interests. No abstract available.	Xianqiang Zou
8	2020	How Robots Change Within-Firm Wage Inequality ↗ The paper directly addresses the project's theme of how automation shocks transmit to within-firm wage dynamics, utilizing matched employer-employee data to isolate the impact of robots on skill premiums. It complements the project's focus on firm-level pay policies responding to technology adoption by providing empirical evidence on how such shocks alter wage inequality across different worker types. Using novel matched employer-employee register data with firm-level information on the introduction of industrial robots, this paper analysis the impact of robots on the wages of workers in the manufacturing sector. The results show that industrial robots increase wages for high-skilled workers relative to low-skilled workers, hence robots increases the skill-premium within firms. Furthermore, we find that employees in managerial positions benefit more from robotisation than those in STEM or professional occupations. Overall, our results suggest that the introduction of industrial robots has a positive effect on the average wages of manufacturing workers in Norway.	Erling Barth, Marianne Røed, Pål Schøne, et al.
8	2014	Birthplace Diversity and Productivity Spill-Overs in Firms ↗ This paper directly addresses the project's theme of peer and coworker learning spillovers within the firm by estimating wage effects of workforce composition using matched employer-employee data. It provides relevant empirical context on how worker interactions beyond static fixed effects influence wages, aligning with the research focus on team production models and non-static worker components. We determine workforce composition and wages in firms in the presence of productivity spill-overs between co-workers. In equilibrium, workers' wages depend on the production structure of firms, own group size, and aggregate workforce composition in the firm. We estimate the wage effects of workforce diversity and own group size by birthplace and the implied production structure in Austrian firms using a comprehensive matched employer-employee data set. In our data, we identify a positive effect of workforce diversity and a negative effect of own group size on wages, which suggest that workers of different birthplaces are complements in production on average.	René Böheim, Thomas Horvath, Karin Mayr
8	2018	The Sources of the Union Wage Gap: The Role of Worker, Firm, Match, and Job-title Heterogeneity ↗ This paper directly applies the AKM-style decomposition framework using matched employer-employee data to analyze wage determinants, specifically isolating firm fixed effects alongside worker heterogeneity. It provides valuable empirical context on how firm-level premiums contribute to wage gaps, aligning closely with the project's focus on variance decomposition and identification strategies. Using matched employer-employee-contract data for Portugal – a country with near-universal union coverage – we find evidence of a sizable effect of union affiliation on wages. Gelbach's (2016) decomposition procedure is next deployed to ascertain the contributions of worker, firm, match, and job-title heterogeneity to the union wage gap. Of these the most important is the firm fixed effect, followed at some distance by union workers gaining from elevated job titles and/or more generous promotion policies. For its part, unobserved worker quality plays only a very weak role, while there is even less suggestion that improved match quality bolsters the union premium.	John T. Addison, Pedro Portugal, Hugo Vilares
8	2023	Mergers and Acquisitions, Human Capital Reallocation, and the Costs of Technological Change ↗ [Title only] This title directly addresses firm-level shocks (M&A) and technological change, which are central to the project's interest in how firm wage premiums respond to productivity shocks and ownership changes. It also touches upon human capital reallocation, linking to themes of worker mobility and the costs of adjustment in the labor market. No abstract available.	Malin Gardberg, Fredrik Heyman, Joacim Tå̊g
8	2014	How Firms Affect Wages: a Structural Decomposition This paper directly addresses the project's core theme of decomposing wages into worker and firm effects by estimating a structural model of assortative matching using matched employer-employee data. It contributes to the understanding of wage inequality and the equilibrium interpretation of firm wage premiums by testing theoretical predictions regarding the monotonicity of wages in firm productivity. There is a long literature that has studied the link between firm productivity and the wage they pay their workers. The typical finding is that more productive firms pay higher wages, and are larger in size. A recent stream of papers including Lopes de Melo (13), Eeckhout and Kircher (10) and Lise, Meghir and Robin (12) has emphasized a different aspect of the productivity-wages relationship. These papers have stressed that in assignment models, after you condition on worker skill, wages are non-monotone in firm productivity. The explanation for this is that each worker has an ideal firm that he should be matched and the price system (wages) is what induces matching. While these papers have...	de Melo, Rafael Lopes
8	2017	Comparing Micro-Evidence on Rent Sharing from Two Different Econometric Models ↗ This paper directly investigates rent-sharing, a core theme of the project, by comparing wage determination models with productivity-based measures using matched employer-employee data. It highlights the critical importance of controlling for unobserved worker heterogeneity to accurately identify firm wage premiums, aligning with the project's focus on identification strategies and variance decomposition. The extent to which employers share rents with their employees is typically assessed by estimating the responsiveness of workers’ wages on firms’ ability to pay. This paper compares rent-sharing estimates using such a wage determination regression with estimates based on a productivity regression that relies on standard firm-level input and output data. Using a large matched firm-worker panel data sample for French manufacturing, we find that the respective industry distributions of the rent-sharing estimates are correlated and slightly overlap, but are significantly different on average. Precisely, if we only rely on the firm-level information, we obtain an average rent-sharing estimate of...	Sabien Dobbelaere, Jacques Mairesse
8	2009	Identifying Sorting--In Theory ↗ This paper directly addresses the identification of assortative matching between workers and firms, a key theme in the project's study of wage decomposition and sorting. It critiques standard fixed effects approaches used in the AKM framework and proposes alternative methods to measure sorting strength, providing crucial theoretical context for the project's focus on limited mobility bias and equilibrium interpretations. Assortative Matching between workers and firms provides evidence of the complementarities or substitutes in production. The presence of complementarities is important for policies that aim to achieve the optimal allocation of resources, for example unemployment insurance. We argue that using wage data alone, it is virtually impossible to identify whether Assortative Matching is positive or negative. Even though we cannot identify the sign of the sorting, we can identify the strength, i.e., the magnitude of the cross-partial, and the associated welfare loss. We show first that the wage for a given worker is non-monotonic in the type of his employer. This is due to the fact that in a sorting...	Jan Eeckhout, Philipp Kircher
8	2017	What Drives the Gender Wage Gap? Examining the Roles of Sorting, Productivity Differences, and Discrimination ↗ This paper directly applies matched employer-employee data to decompose the gender wage gap into sorting, productivity, and discrimination components, aligning closely with the project's focus on worker-firm wage decomposition. It provides specific empirical insights into discrimination and sorting mechanisms, which are core themes in the research project's investigation of wage inequality and labor market dynamics. As in other OECD countries, women in New Zealand earn substantially less than men with similar observable characteristics. In this paper, we use a decade of annual wage and productivity data from New Zealand’s Linked Employer-Employee Database to examine different explanations for this gender wage gap. Sorting by gender at either the industry or firm level explains less than one-fifth of the overall wage gap. Gender differences in productivity within firms also explain little of the difference seen in wages. The relationships between the gender wage-productivity gap and both age and tenure are inconsistent with statistical discrimination being an important explanatory factor for the...	Isabelle Sin, Steven Stillman, Richard Fabling
8	2021	Essays on collective bargaining, wage inequality and firm dynamics ↗ This thesis directly addresses the AKM framework's core components by decomposing wage inequality into between-firm and within-firm variances and analyzing firm wage premiums. It further aligns with the project's equilibrium dimension by employing a search-and-matching model to explore how collective bargaining institutions influence rent-sharing and firm dynamics. In this thesis I study collective bargaining, wage inequality, firm dynamics and the ways in which they interact. In the first chapter I investigate the extent to which wages vary across different industries after controlling for detailed worker and job characteristics and how this is related to the wage setting institutions of a given country. In the second chapter I study the drivers of the growth in earnings and wage inequality in Italy between 1985 and 2018 and compare them to the USA. In the third chapter I build a large-firm search model with heterogeneous firms and endogenous firm entry in order to compare the aggregate implications of firm-level and sector-level wage setting...	Juraj Briskar
8	2023	Labor Market Dynamics with Sorting ↗ [Title only] This title directly aligns with the project's core theme of understanding how worker-firm sorting mechanisms generate observed wage disparities within matched employer-employee data. It likely addresses the identification and estimation of worker and firm effects, which are central to the AKM framework and variance decomposition studies outlined in the research agenda. No abstract available.	Bastian Schulz
8	2025	Exporters, multinationals and residual wage inequality: Evidence and theory ↗ This paper directly addresses the project's interest in international trade by analyzing how export and FDI activities shape firm wage premiums using matched employer-employee data. It complements the AKM framework by incorporating sorting and equilibrium search mechanisms to explain residual wage inequality among international firms. A growing empirical literature underscores the pivotal role of ”global firms” in shaping labour market outcomes, including inequality. These are firms that participate in the international economy across multiple dimensions, including both trade and foreign direct investment (FDI). This prompts an important question: Is wage inequality among workers with similar characteristics primarily influenced by firms engaged solely in exporting, those involved solely in FDI, or by multinational enterprises (MNEs) that do both? Using linked employer–employee panel data for Germany, this paper unveils nuanced patterns in wage premia among various internationalising establishments, where I identify...	Sarah Schroeder
8	2025	Location Effects or Sorting? Evidence from Firm Relocation ↗ [Title only] This paper likely investigates the core AKM identification challenge by disentangling true location-specific wage premiums from worker sorting effects using firm relocation as a quasi-experiment. It directly addresses the project's key themes of identifying worker and firm effects and the role of geographic components in wage decomposition. No abstract available.	Pauline Carry, Benny Kleinman, Elio Nimier-David
8	2025	Background wage premia, beyond education: Firm sorting and unobserved abilities of graduates ↗ This paper directly employs the AKM framework to decompose wage premiums into worker and firm components, aligning closely with the project's core methodological focus. It further investigates the critical theme of assortative matching between workers and firms, providing empirical insights into how unobserved traits drive sorting and wage inequality. In this paper, we exploit the properties of a two-way fixed effects wage decomposition ‘a la AKM to disentangle the influence of parental background, beyond education, between individual level components and sorting across firms with different pay policies. We match Italian employer–employee administrative data with university records from a large public institution. Our findings indicate that approximately two-thirds of the background-related wage premium operates through firm assignment, while the remaining third reflects variation in individual returns. The sorting channel becomes increasingly relevant as workers progress in their careers. Moreover, the background channel weakens...	Luca Bonacini, Fabrizio Patriarca, Edoardo Santoni
8	2025	Are ‘good’ firms, good for all employees? ↗ This paper directly addresses the rent-sharing aspect of firm wage premiums by demonstrating heterogeneity in how rents are distributed across different worker types. It contributes to the project's themes on wage decomposition and worker-firm sorting by highlighting that firm effects are not uniform across occupations, challenging standard homogeneous firm premium assumptions. This paper investigates whether employers share rents equally between white-collar and blue-collar workers. Using bias-corrected methods on administrative data from Italy’s Veneto region, I reject this null hypothesis. On average, white-collar workers receive premia that are 13%–15% higher than those of their blue-collar counterparts. This average disparity conceals substantial heterogeneity: half of the top 20% of firms for white-collar workers fall within the bottom 60% of the blue-collar distribution. High-type firms are, thus, not equally beneficial for all employees. Finally, the paper shows that firm premia differentiation has a long history: since the late 1980s, employers have...	Matteo Targa
8	2025	Supply, Demand, Institutions, and Firms: A Theory of Labor Market Sorting and the Wage Distribution ↗ This paper directly addresses the project's core themes by analyzing worker-firm sorting, firm wage premiums, and wage inequality decomposition within an equilibrium framework. It provides valuable context on how labor market institutions and shocks influence the allocation of workers to firms, aligning with the project's focus on matching mechanisms and wage distribution dynamics. This paper examines how workforce composition, labor demand, and minimum wage jointly determine wages through their effects on worker-task assignments, firm wage premiums, and firm-worker sorting. Using an estimated model of monopsonistic local labor markets, it finds that minimum wage hikes and labor demand shocks drove the decline in Brazilian wage inequality from 1998 to 2012. While rising educational attainment compressed skill premiums within firms, it also reallocated skilled workers to high-wage firms, limiting that shock’s effect on inequality. The analysis highlights interactions among exogenous factors, showing that concurrent supply and demand changes attenuated minimum wage...	Daniel Haanwinckel
8	2025	Optimal Estimation of Two-Way Effects Under Limited Mobility ↗ This paper directly addresses the limited mobility bias, a central methodological challenge in estimating worker and firm fixed effects within the AKM framework. It proposes an empirical Bayes estimator that improves identification and estimation accuracy by leveraging assortative matching patterns and addressing weak connectivity in the employer-employee data. We propose an empirical Bayes estimator for two-way effects in linked data sets based on a novel prior that leverages patterns of assortative matching observed in the data. To capture limited mobility we model the bipartite graph associated with the matched data in an asymptotic framework where its Laplacian matrix has small eigenvalues that converge to zero. The prior hyperparameters that control the shrinkage are determined by minimizing an unbiased risk estimate. We show the proposed empirical Bayes estimator is asymptotically optimal in compound loss, despite the weak connectivity of the bipartite graph and the potential misspecification of the prior. We estimate teacher values-added...	Xu Cheng, S. L. Ho, Frank Schorfheide
8	2025	Minimum Wages and the Distribution of Firm Wage Premia ↗ [Title only] This title directly addresses the core AKM framework by analyzing firm wage premia, which are central to the project's decomposition methods. It also connects to the project's interest in how policy shocks and market structures influence the distribution of these premia, aligning with themes of rent-sharing and inequality. No abstract available.	Marcelo Bérgolo, Rodrigo Ceni, Mathias Fondo, et al.
8	2021	Rent sharing in China: Magnitude, heterogeneity and drivers ↗ This paper directly addresses the project's theme of rent-sharing by estimating wage-profit elasticities using matched employer-employee panel data in China. It employs instrumental variables based on trade shocks to identify firm-specific wage premiums, aligning with the project's interest in how firm-level pay policies respond to productivity and external shocks. Abstract Do firms in China share rents with their workers? We address this question by examining firm‐level panel data covering virtually all manufacturing firms over the period 2000–2007, representing an average of 52 million workers per year. We find evidence of rent sharing (RS), with wage–profit elasticities of between 4% and 6%. These results are based on multiple instrumental variables, including firm‐specific international trade shocks. We also present a number of complementary findings to understand better the nature of RS in the country: it involves an element of risk sharing, as wages also decrease when profits fall; RS is lower in regions with more latent competition from rural...	Wenjing Duan, Pedro S. Martins
8	2022	Who Set Your Wage? ↗ This paper provides a crucial theoretical foundation for the project's third dimension on the equilibrium interpretation of firm fixed effects through search-and-matching theory. It directly addresses the mechanisms of wage-setting power and monopsony, which explain how firm wage premiums are generated and sustained in equilibrium. I discuss the recent literature that has led to new interest in the idea of monopsonistic wage setting. Building on advances in search theory and in models of differentiated products, researchers have used a number of different strategies to identify the elasticity of firm-specific labor supply. A growing consensus is that firms have some wage-setting power, though many questions remain about the sources of that power. (JEL B21, D21, D24, D43, J22, J31, J42)	David Card
8	2023	Polarizing Corporations: Does Talent Flow to "Good" Firms? ↗ [Title only] The title directly addresses worker-firm assortative matching and talent allocation, which are central themes for understanding variance decomposition and sorting in the AKM framework. It likely explores how worker heterogeneity flows to firms with higher wage premiums, connecting to the project's interest in the dynamics of worker and firm effects. No abstract available.	Emanuele Colonnelli, Timothy McQuade, Gabriel Ramos, et al.
8	2025	Wage Setting in Multiproduct Firms ↗ [Title only] This paper directly addresses the project's interest in how firm-level pay policies vary based on specific firm characteristics and structures, such as producing multiple products. It likely provides insights into how firm wage premiums are determined within complex multiproduct settings, which relates to the broader themes of firm heterogeneity and wage setting mechanisms covered in the project. No abstract available.	Jackie M.L. Chan, Michael Irlacher, Michael Koch, et al.
8	2025	Labor market monopsony: fundamentals and frontiers ↗ This paper provides a comprehensive theoretical and empirical foundation for labor market monopsony, which directly informs the equilibrium interpretation of firm fixed effects and rent-sharing central to the project. It bridges the gap between the AKM framework and search-and-matching models by explaining how firm-specific wage premiums arise from worker outside options and bargaining frictions. This chapter reviews the theory of monopsonistic wage setting, its empirical implications, and some puzzles the framework has struggled to explain. We begin by examining the fundamentals of monopsonistic wage determination. The core of the theory is a mapping from the distribution of worker outside options to wages. We study non-parametric shape restrictions that ensure this mapping is unique. Building on these results, we introduce a menu of tractable parametrizations of labor supply to the firm, some of which are shown to emerge naturally from equilibrium search models. Next, we review why wage markdowns do not necessarily signal inefficiency and discuss some criteria for assessing...	Patrick Kline
8	2026	Do Machines Make Firms Meaner? Automation and the Erosion of Workplace Amenities ↗ [Title only] This paper directly addresses the project's focus on how firm-level pay policies respond to automation, albeit by examining non-monetary amenities rather than wages. It is highly relevant for understanding the broader impact of technological shocks on worker-firm relationships and firm behavior, which complements the core wage decomposition analysis. No abstract available.	Daniel Keum, Simeng Wang, Nandil Bhatia
8	2022	Estimating the Gains from Trade in Frictional Local Labor Markets ↗ [Title only] This paper directly addresses the project's fourth dimension on international trade by examining how trade shocks transmit to local labor markets within a frictional framework. It likely employs equilibrium search-and-matching models to analyze wage dynamics and worker-firm assignments, which are central to the researcher's interest in the equilibrium interpretation of firm effects. No abstract available.	Germán Pupato, Benjamin Sand, Jeanne Tschopp
8	2021	Workplace Heterogeneity and the Returns to Versatility ↗ This paper is closely related to the project's themes of firm heterogeneity and worker mobility, as it explicitly links firm productivity dispersion to the returns to inter-firm mobility within a search-and-matching framework. It further contributes by distinguishing frictional from structural impediments to mobility through the concept of versatility, providing theoretical grounding for how worker skills interact with firm characteristics in wage determination. Abstract In the canonical random on-the-job search model with continuous firm heterogeneity, I show that a mean-preserving spread of the firm-productivity distribution raises the returns to mobility, i.e., the inter-firm mobility of workers as measured by the number of outside contacts per employment spell. Both sorting and rent-share mechanisms play a role. In a further contribution, I distinguish frictional and structural impediments to mobility in order to establish a link between mobility and skills via the concept of versatility. Versatility enhances a person’s mobility since a mismatch between job requirements and the person’s skill set is less likely to occur. I provide some...	Damir Stijepic
8	2018	Wage Inequality in Latin America: Learning from Matched Employer-Employee Data ↗ This paper directly applies the AKM framework to decompose wage inequality using matched employer-employee data, aligning closely with the project's core methodology and themes of variance decomposition. It further extends the analysis by examining how external trade shocks, such as the China Shock and commodity booms, influence firm-level wage premiums and inequality, addressing the project's interest in international trade effects. Inequality in Latin America fell substantially in the early 2000s. In this paper, we take advantage of administrative matched employee-employed data in Brazil, Chile and Ecuador to examine whether these inequality trends held in the formal sector, as well. We document a significant decrease in the log variance of earnings in Brazil and Ecuador in the early 2000s, whereas inequality in Chile between 2008 and 2015 remained largely flat. In this context, we find that inequality among salaried workers is largely a between-firm phenomenon across these three countries. We expand on our descriptive analysis and estimate an additive worker and firm fixed effects model to understand the driving...	Ercio Muñoz, Graciana Rucci, Fernando Saltiel, et al.
8	2021	Essays in Empirical Labour Economics ↗ This thesis directly addresses the project's core themes by using matched employer-employee data to decompose wages into worker and firm effects, specifically focusing on firm pay policies, sorting, and discrimination. It further aligns with the project's extended scope by analyzing time-varying worker components through peer spillovers and examining how automation shocks transmit to firm wage premiums and labor market sorting. This thesis analyses the role of workplace heterogeneity in determining pay differentials between workers, employing a range of reduced-form tools and using detailed matched employer-employee administrative data. The first chapter, co-authored with Alessandra Casarico, studies the contribution of differences in firm pay policy to the gender wage gap in Italy, decomposing them into a between-firm component of sorting of women in low-pay firms and a within-firm component related to differences in bargaining power between gender. Building on Card et al. (2016), we investigate the contribution of firms to the gender gap in earnings at different deciles of the earnings distribution, by age and...	Salvatore Lattanzio
8	2022	Firm Pay Dynamics ↗ [Title only] The title directly addresses the project's focus on how firm wage premiums vary over time and respond to shocks. It likely covers the core themes of firm-level pay policies and dynamic effects central to the research agenda. No abstract available.	Niklas Engbom, Christian Moser, Jan Sauermann
8	2023	Earnings Inequality Between and Within Firms in Canada’s Commercial Sector ↗ This paper applies the AKM framework to longitudinal matched employer-employee data to decompose earnings inequality, directly addressing the project's core theme of variance decomposition. It provides relevant empirical evidence on how firm and worker effects contribute to wage disparities over time, aligning with the research focus on wage inequality and the static AKM decomposition. Des données administratives appariées employeur-employé tirées du Fichier de données longitudinales sur la main-d’œuvre de Statistique Canada, qui s’étendent sur presque trente ans, de 1991 à 2019, nous permettent d’analyser l’évolution de l’inégalité des gains entre les entreprises du secteur commercial au Canada et à l’intérieur de ces entreprises. Un modèle économétrique tenant compte des effets fixes des travailleurs et des entreprises suggère une inégalité croissante entre les entreprises, attribuable principalement à la disparité de leurs gains moyens et à l’évolution de la composition de leur main-d’œuvre respective.	Tahsin Mehdi, Brian Murphy, Steven Miscione
8	2024	U.S. Worker Mobility Across Establishments within Firms: Scope, Prevalence, and Effects on Worker Earnings ↗ [Title only] This paper directly addresses the AKM framework's critical identification challenge by analyzing worker mobility within firms, which helps assess the extent of limited mobility bias in standard two-way fixed effect models. By quantifying the scope and earnings effects of such intra-firm movement, it provides essential context for understanding the lower-bound nature of estimated firm effects and the potential need for leave-out corrections. No abstract available.	Jerónimo Carballo, Mansfield Richard, Adam Pfander
8	2024	The Contribution of Employer Changes to Aggregate Wage Mobility ↗ This paper directly addresses the AKM framework by quantifying the role of employer mobility and changes in firm wage premia in driving aggregate wage dynamics. It provides crucial empirical context for understanding limited mobility bias and the decomposition of wage inequality into worker and firm components. Wage mobility reduces the persistence of wage inequality. We develop a framework to quantify the contribution of employer-to-employer movers to aggregate wage mobility. Using three decades of German social security data, we find that inequality increased while aggregate wage mobility decreased. Employer-to-employer movers exhibit higher wage mobility, mainly due to changes in employer wage premia at job change. The massive structural changes following German unification temporarily led to a high number of movers, which in turn boosted aggregate wage mobility. Wage mobility is much lower at the bottom of the wage distribution, and the decline in aggregate wage mobility since the 1980s is...	Nils Torben Hollandt, Steffen Mueller
8	2024	The contribution of employer changes to aggregate wage mobility ↗ This paper directly addresses the project's core focus on firm wage premiums and worker mobility by quantifying how employer changes drive aggregate wage mobility. It provides empirical evidence linking firm-specific wage premia to worker movement, a key mechanism for identifying and estimating the AKM framework's components. Abstract Wage mobility reduces the persistence of wage inequality. We develop a framework to quantify the contribution of employer-to-employer movers to aggregate wage mobility. Using three decades of German social security data, we find that inequality increased while aggregate wage mobility decreased. Employer-to-employer movers exhibit higher wage mobility, mainly due to changes in employer wage premia at job change. The massive structural changes following German unification temporarily led to a high number of movers, which in turn boosted aggregate wage mobility. Wage mobility is much lower at the bottom of the wage distribution, and the decline in aggregate wage mobility since the...	Nils Torben Hollandt, Steffen Mueller
8	2025	Economic Inequality and the Firm ↗ [Title only] The title strongly suggests a focus on the distribution of economic outcomes across firms, which is central to understanding firm-level wage premiums and inequality decomposition within the AKM framework. Although the specific econometric methods or data sources are not explicit, the topic aligns closely with the project's core themes on variance decomposition, rent-sharing, and the role of firms in driving wage inequality. No abstract available.	Maurizio Bovi
8	2022	Productivity Shocks, Long-Term Contracts, and Earnings Dynamics ↗ This paper is closely related as it explicitly examines how employer- and worker-specific productivity shocks transmit to earnings, directly addressing the project's focus on firm-level pay policies and worker-firm wage decomposition. By estimating these passthrough values using matched employer-employee data, it provides empirical evidence on the mechanisms behind firm wage premiums and risk-sharing within the AKM-like framework. This paper examines how employer- and worker-specific productivity shocks transmit to earnings and employment. We develop an equilibrium search model and characterize the optimal contract offered by firms. Risk-neutral firms provide partial insurance against shocks to risk-averse workers and offer contingent contracts, where payments are backloaded in good times and frontloaded in bad times. The model is estimated on matched employer-employee data from Sweden. Firms absorb persistent worker and firm shocks, with respective passthrough values of 26 and 10 percent. We evaluate the effects of redistributive policies and find that 30 percent of government insurance is undone by crowding out...	Neele Balke, Thibaut Lamadon
8	2024	Human Capital and Search Models: A Happy Match ↗ This paper directly addresses the project's equilibrium dimension by integrating human capital accumulation with search and matching theory to derive wage equations. It provides a theoretical foundation for how on-the-job learning and worker-firm assignment in equilibrium generate wage premiums, which aligns with the project's focus on time-varying worker components and the equilibrium interpretation of firm effects. Nous présentons un modèle simple d’investissements en capital humain qui peut tenir compte d’une grande hétérogénéité entre agents, et nous étudions sa compatibilité avec certains modèles de recherche d’emploi et de salaire d’équilibre qui ont été proposés dans la littérature. Nous montrons que l’équation de salaire en logarithme dérivée de la combinaison de ces modèles est additivement séparable dans le processus d’investissement en capital humain et dans les effets dynamiques de l’échelle des emplois sous certaines conditions parmi lesquelles figurent des contraintes de liquidité strictes et l’exogénéité de la recherche d’emploi. C’est le cas en particulier du modèle populaire proposé par...	Thierry Magnac
8	2025	On-the-Job Search and Inflation Under the Microscope ↗ The paper directly addresses the equilibrium interpretation of firm wage premiums through on-the-job search, a core dimension of the project. It utilizes matched employer-employee data to analyze wage dynamics and firm behavior, aligning with the project's focus on labor market mechanisms and wage decomposition. We develop a Heterogeneous Agents New Keynesian (HANK) model with a job ladder and endogenous on-the-job search (OJS) that challenges the traditional view of a negative relationship between unemployment and inflation. On the one hand, OJS is inflationary, sparking wage competition among firms to attract or retain workers. On the other hand, OJS strengthens workers’ bargaining power, reducing firms’ incentives to post vacancies and thereby increasing unemployment. The model explains the effects of the 2012 Danish tax reform, which influenced OJS differentially across the income distribution, on the employment transitions and wage growth observed in the microdata	Saman Darougheh, Renato Faccini, Leonardo Melosi, et al.
8	2025	Labor market dynamics in a highly competitive industry ↗ The paper directly addresses the project's core themes by examining worker mobility and assortative matching, which are central to the identification and interpretation of worker and firm effects in the AKM framework. It provides empirical evidence on how mobility and within-firm dynamics jointly determine wage trajectories, offering valuable context for understanding wage inequality and firm wage premiums. We study labor market dynamics of workers in a highly competitive industry with a highly competitive labor market. We focus on the relationship between workers’ age, wages, and productivity. Our analysis uncovers an inverse U-shaped relationship. While some wage adjustments occur within the current firm, job mobility plays a crucial role in shaping wage trajectories. There is assortative matching with highly productive workers moving to highly productive firms, while less productive workers gravitate towards less productive firms. Our findings suggest that both in-firm wage progression and wage growth via job mobility contribute to a close alignment between wages and productivity throughout...	Francesco Principe, Jan C. van Ours
8	2017	Learning by Hiring, Network Centrality and Within-Firm Wage Dispersion ↗ This paper is closely related as it examines within-firm wage dispersion through the lens of labor mobility and knowledge spillovers, directly engaging with themes of worker interactions and limited mobility bias. It extends the AKM framework by modeling how worker flows and firm absorptive capacity generate wage dynamics beyond static fixed effects. In this paper, we highlight knowledge as specific channel through which labour mobility affects conditional within-firm wage dispersion. We present a model in which workers acquire knowledge on the job and firms pursue a policy of learning-by-hiring. The latter generates workers flows that connect firms in a network. A firm’s position in the network depends on its capacity to absorb the tacit knowledge developed by other firms in the economy. The model predicts that firms central to the network, those with the highest absorptive capacity of tacit knowledge, have the highest wage dispersion. Using 1995-2001 Veneto (a region of Italy) matched employer-employee data, we map workers flows...	Ambra Poggi, Piergiovanna Natale
8	2022	Firm and Worker Dynamics in a Frictional Labor Market ↗ This paper directly addresses the project's third dimension by modeling firm wage premiums within a search-and-matching framework, linking firm size and productivity to worker retention and hiring dynamics. It provides a theoretical foundation for understanding how equilibrium mechanisms like on-the-job search and firm boundaries generate the firm effects central to the AKM decomposition. This paper integrates the classic theory of firm boundaries, through span of control or taste for variety, into a model of the labor market with random matching and on‐the‐job search. Firms choose when to enter and exit, whether to create vacancies or destroy jobs in response to shocks, and Bertrand‐compete to hire and retain workers. Tractability is obtained by proving that, under a parsimonious set of assumptions, all worker and firm decisions are characterized by their joint surplus, which in turn only depends on firm productivity and size. The job ladder in marginal surplus that emerges in equilibrium determines net poaching patterns by firm characteristics that are in line with the...	Adrien Bilal, Niklas Engbom, Simon Mongey, et al.
8	2015	Dissecting the Exporter Wage Gap along the Distribution: Evidence from Matched Employer{Employee Data This paper directly addresses the project's dimension on the role of international trade by analyzing how export expansions transmit to firm wage premiums and alter wage decomposition. It utilizes matched employer-employee data to decompose the exporter wage gap, providing empirical evidence on how firm-level pay policies and workforce composition respond to trade shocks. It is well known that exporting rms pay higher wages and are more skill intensive than domestically-oriented rms. In this paper, we measure and decompose the exporter wage gap into several explanatory components by estimating counterfactual distributions for the Spanish manufacturing sector between 1995 and 2010 using matched employer{employee data. We nd that conditional wages are more compressed at exporting rms, dierences in characteristics are relatively less important at the center of the distribution, and that the plot of dierences in unobservable characteristics has an inverted-U shape. Separate analysis by education and sex shows that workers with higher levels of education receive...	José Luis Groizard
8	2017	Worker Adjustment to Trade Shocks: Where You Work or What You Do? ↗ [Title only] This paper likely examines how trade shocks impact workers differently based on their firm affiliation versus their specific occupation, directly addressing the project's interest in the interaction between trade and firm-level wage dynamics. It provides empirical evidence relevant to how international trade transmits to firm wage premiums and alters the worker-firm wage decomposition. No abstract available.	Felipe Benguria
8	2019	Offshoring within South African manufacturing firms: An analysis of the labour market effects ↗ This paper directly addresses the project's fourth dimension by analyzing how offshoring shocks transmit to labor market outcomes, specifically examining changes in worker composition and earnings. It utilizes employer-employee data to disentangle these effects, providing relevant empirical context for understanding the interaction between international trade, firm-level adjustments, and worker wage dynamics. In South Africa, the manufacturing sector—important for growth and employment creation—has shown declining growth, poor productivity performance, decreased labour demand, and increased imports of intermediate goods (offshoring activities). Offshoring influences jobs and wages differently depending on the type of industry and worker. We provide a nuanced view of offshoring in South Africa, using firm- and employer–employee-level data to disentangle its impact on the labour market in terms of capital- and labour-intensive industries and skilled and unskilled workers. Contrary to previous findings in developed countries, we find that offshoring generally lowers employment in manufacturing...	Anmar Pretorius, Carli Bezuidenhout, Marianne Matthee, et al.
8	2019	New imported inputs, wages and worker mobility ↗ This paper directly addresses the project's focus on the role of international trade in transmitting shocks to firm wage premiums and altering worker-firm wage decomposition. It empirically analyzes how import competition affects wage dynamics, worker mobility, and assortative matching, providing key contextual evidence for the equilibrium interpretations of firm effects. Abstract We study how firms and industries adjust to increasing international trade in intermediate inputs. In particular, we provide a comprehensive assessment of the effects of new imported inputs on wage dynamics, on the skill-composition of the labor force, on worker mobility, and on assortative matching between firms and workers. We employ matched employer-employee data for Italy, over 1995–2007. We complement these data with information on the arrival of new imported inputs at the industry level. We find new imported inputs to have a positive effect on average wage growth at the firm level. This effect is driven by two factors: (1) an increase in the white-collar/blue-collar ratio...	Italo Colantone, Alessia Matano, Paolo Naticchioni
8	2018	New Imported Inputs, Wages and Worker Mobility ↗ This paper directly addresses the project's interest in how international trade shocks transmit to firm wage premiums and alter worker-firm wage decomposition. It specifically examines the impact of imported inputs on wage dynamics, worker mobility, and assortative matching, which are key themes in the research scope. We study how firms and industries adjust to increasing international trade in intermediate inputs. In particular, we provide a comprehensive assessment of the effects of new imported inputs on wage dynamics, on the skill-composition of the labor force, on worker mobility, and on assortative matching between firms and workers. We employ matched employer-employee data for Italy, over 1995–2007. We complement these data with information on the arrival of new imported inputs at the industry level. We find new imported inputs to have a positive effect on average wage growth at the firm level. This effect is driven by two factors: (1) an increase in the white-collar/blue-collar ratio; and (2) an...	Italo Colantone, Alessia Matano, Paolo Naticchioni
8	2020	Trade Boomers: Evidence from the Commodities-for-Manufactures Boom in Brazil ↗ [Title only] This paper directly addresses the project's fourth dimension by examining how international trade shocks (commodities-for-manufactures boom) transmit to firm wage premiums and labor markets. It provides empirical evidence on how external trade dynamics alter the worker-firm wage decomposition, aligning with the study of trade's impact on wage inequality and rent-sharing. No abstract available.	Jeff Chan, Ridwan Karim
8	2022	Offshoring within South African manufacturing firms: An analysis of the labour market effects ↗ This paper directly addresses the project's fourth dimension by analyzing how offshoring shocks transmit to worker wages and employment within firm-level contexts. It utilizes matched employer-employee data to investigate labor market effects, aligning with the project's focus on international trade shocks and wage decomposition. Abstract South Africa's manufacturing sector experiences declining growth and labour demand, and increased imports of intermediate goods. The paper investigates the influence of offshoring on employment and wages for capital‐ and labour‐intensive industries and skilled and unskilled workers, using firm‐ and employer–employee‐level data. Unlike findings in developed countries, offshoring generally lowers employment in manufacturing firms and increases and decreases the percentage of unskilled workers and lower skilled workers, respectively. Increased narrow offshoring seemingly grows the cohort of unskilled workers, particularly in ultra‐labour‐intensive industries. As offshoring gains...	Anmar Pretorius, Carli Bezuidenhout, Marianne Matthee, et al.
8	2024	Complements or Substitutes: Labor Market Effects of Foreign Inputs in Developing Economies ↗ [Title only] This paper directly addresses the project's interest in how international trade shocks, specifically the import of foreign inputs, transmit to firm wage premiums and alter labor market outcomes. It provides empirical evidence relevant to understanding the intersection of global supply chains and worker-firm wage decomposition in developing economies. No abstract available.	Román D. Zárate, Juan Muñoz-Morales, Leonardo Bonilla‐Mejía
8	2013	Offshoring, labor market mobility and wage growth This paper directly addresses the project's fourth dimension by investigating how offshoring shocks transmit to employee wage growth and labor market mobility. It utilizes linked employer-employee data to analyze wage dynamics, which is central to the AKM framework and the study of firm-level pay policies in response to trade-related disturbances. Abstract:This paper uses longitudinal linked employer-employee data to study how firms’ offshoring decisions affect labor market mobility and the wage growth of their employees. The results show that offshoring affects mobility primarily in occupations that are easily offshored. Wage growth, however, is weaker in the occupations that are offshorable, even if the employer has not offshored, and for employees whose initial employer has offshored some activities, irrespective of their occupation	Antti Kauhanen
8	2026	Complements or substitutes? Labor market effects of foreign inputs in developing economies ↗ The paper directly investigates how import competition shocks transmit to firm wage premiums and labor market outcomes, aligning with the project's focus on international trade's role in wage decomposition. It utilizes employer-employee level data to analyze the interaction between trade shocks and labor demand, providing relevant empirical context for understanding firm-level pay policies under trade liberalization. This paper examines how import liberalization affects labor markets when labor and intermediate inputs can be complements or substitutes. We embed a constant-elasticity-of-substitution production function in a dynamic trade model, showing that labor market responses depend on sector-specific substitution elasticities. Empirically, we exploit tariff reductions in Colombia using a difference-in-differences design that decomposes trade shocks into import-competition and input channels. Import competition reduces the wage bill, while cheaper intermediate inputs increase it; these gains are driven by services, are imprecisely estimated in manufacturing, and reverse in agriculture. Combining the...	Leonardo Bonilla‐Mejía, Juan Munoz-Morales, RomÃ¡n David ZÃ¡rate
8	2026	Location-specific wage effects from offshoring and backshoring ↗ [Title only] This paper directly addresses the project's fourth dimension by investigating how offshoring and backshoring shocks transmit to local wage structures, a key aspect of the international trade and firm wage premium analysis. It likely employs matched employer-employee data to decompose these location-specific effects, aligning well with the core AKM framework and its extensions to trade-related labor market dynamics. No abstract available.	Torben Dall Schmidt, Timo F. Mitze
8	2019	Social Connections and the Sorting of Workers to Firms ↗ This paper directly utilizes the AKM framework to analyze the sorting mechanisms between workers and firms, a central theme of the project. It provides empirical evidence on assortative matching and how social connections influence the distribution of workers across firm wage premiums. The literature on social networks often presumes that job search through (strong) social ties leads to increased inequality by providing privileged individuals with access to more attractive labor market opportunities. We assess this presumption in the context of sorting between AKM-style person and establishment fixed effects. Our rich Swedish register data allow us to measure connections between agents – workers to workers and workers to firms – through parents, children, siblings, spouses, former co-workers and classmates from high school/college, and current neighbors. In clear contrast with the above presumption, there is less sorting inequality among the workers hired through social...	Marcus Eliason, Lena Hensvik, Françis Kramarz, et al.
8	2024	Firm Wage Effects ↗ [Title only] The title directly aligns with the core AKM framework and the specific focus on decomposing wage premiums, making it highly relevant to the project's primary subject. However, the vague title introduces uncertainty regarding whether it covers the broader dimensions like time-varying effects or equilibrium interpretations. No abstract available.	Patrick Kline
8	2026	TWICE: Tree-based Wage Inference with Clustering and Estimation ↗ This paper directly engages with the core AKM framework and wage inequality decomposition while offering a novel methodological alternative to address its limitations, such as sparse mobility networks and additivity assumptions. It provides relevant insights into the relative importance of sorting and non-additive interactions in generating wage dispersion, aligning closely with the project's focus on variance decomposition and identification strategies. How much do worker skills, firm pay policies, and their interaction contribute to wage inequality? Standard approaches rely on latent fixed effects identified through worker mobility, but sparse networks inflate variance estimates, additivity assumptions rule out complementarities, and the resulting decompositions lack interpretability. We propose TWICE (Tree-based Wage Inference with Clustering and Estimation), a framework that models the conditional wage function directly from observables using gradient-boosted trees, replacing latent effects with interpretable, observable-anchored partitions. This trades off the ability to capture idiosyncratic unobservables for robustness to sampling...	Aslan Bakirov, Francesco Del Prato, Paolo Zacchia
8	2026	TWICE: Tree-based Wage Inference with Clustering and Estimation This paper directly engages with the AKM framework by proposing an alternative method to address its limitations regarding additive assumptions and sparse mobility networks. It contributes to the project's core themes of variance decomposition and wage inequality by offering a new tool to analyze the contributions of worker skills, firm policies, and sorting. How much do worker skills, firm pay policies, and their interaction contribute to wage inequality? Standard approaches rely on latent fixed effects identified through worker mobility, but sparse networks inflate variance estimates, additivity assumptions rule out complementarities, and the resulting decompositions lack interpretability. We propose TWICE (Tree-based Wage Inference with Clustering and Estimation), a framework that models the conditional wage function directly from observables using gradient-boosted trees, replacing latent effects with interpretable, observable-anchored partitions. This trades off the ability to capture idiosyncratic unobservables for robustness to sampling...	Aslan Bakirov, Francesco Del Prato, Paolo Zacchia
8	2026	Ridge Estimation of High Dimensional Two-Way Fixed Effect Regression ↗ This paper directly addresses the AKM framework by proposing ridge estimation methods to handle high-dimensional two-way fixed effects in matched employer-employee data. It specifically tackles the limited mobility bias inherent in sparse networks, a core methodological challenge in identifying worker and firm effects. We study a ridge estimator for the high-dimensional two-way fixed effect regression model with a sparse bipartite network. We develop concentration inequalities showing that when the ridge parameters increase as the log of the network size, the bias, and the variance-covariance matrix of the vector of estimated fixed effects converge to deterministic equivalents that depend only on the expected network. We provide simulations and an application using administrative data on wages for worker-firm matches.	Junnan He, Jean-Marc Robin
8	2018	Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany ↗ This paper directly addresses the project's core theme of rent-sharing and firm wage premia by estimating AKM-style fixed effects in the German context. It further enriches the analysis by investigating how institutional factors like industrial relations and works councils influence the level and dispersion of these firm-specific wage components. The authors use three distinct methods to investigate the influence of industrial relations on firm wage premia in Germany. First, ordinary least squares (OLS) regressions for the firm effects from a two-way fixed-effects decomposition of workers’ wages reveal that average premia are larger in firms bound by collective agreements and in firms with a works council, holding constant firm performance. Next, recentered influence function (RIF) regressions show that premia are less dispersed among covered firms but more dispersed among firms with a works council. Finally, in an Oaxaca–Blinder decomposition, the authors find that decreasing bargaining coverage is the only factor they consider...	Boris Hirsch, Steffen Müller
8	2006	The Spatial Sorting and Matching of Skills and Firms ↗ [Title only] This title directly addresses the core theme of worker-firm assortative matching and sorting, which is fundamental to understanding the variance decomposition in AKM frameworks. It likely explores how spatial dimensions influence the identification of firm effects and wage inequality, fitting well within the project's focus on labor market structure and matching. No abstract available.	Giordano Mion, Paolo Naticchioni
8	2024	Efficiency, Sorting, and Selection ↗ [Title only] This title strongly suggests a focus on the variance decomposition and sorting mechanisms central to the AKM framework, which is the core of the researcher's project. It likely addresses how worker and firm heterogeneity interact to determine wage distributions, a key theme in understanding firm wage premiums and inequality. No abstract available.	Esteban Peralta
8	2012	Identifying Sorting - In Data This paper directly addresses the identification of assortative matching between workers and firms, a key theme in the project that examines how sorting components influence wage inequality and the AKM framework. It provides a method for identifying sorting using wage data alone, which complements the project's focus on limited mobility bias and the structural interpretation of worker-firm fixed effects. We show theoretically how to identify, using wage data alone, whether assortative matching between workers and firms is positive or negative. The results of a Monte Carlo study of calibrated models featuring positive and negative sorting illustrate that the method performs well given the limitations (on sample size, frequency of labor market transitions, etc) of the commonly used matched worker-firm data sets. We apply the method to a large matched worker-firm data set from Germany.	Iourii Manovskii
8	2017	Adverse Selection and Assortative Matching in Labor Markets This paper directly addresses the project's theme of assortative matching by providing a theoretical mechanism for negative matching driven by information asymmetry. It complements the AKM framework by explaining how limited information and worker-firm assignment dynamics generate specific sorting patterns that influence wage structures. We show that adverse selection in the labor market may generate negative assortative matching of workers and firms. In a model in which employers asymmetrically learn about the ability of their workers, high-productivity firms poach mediocre workers, whereas low-productivity firms retain high-ability workers. We show that this flipping property is caused by information asymmetry alone. Our model has a number of positive and normative predictions: External promotions are not an indication of high talent, within-job wage growth is higher in industries with more revenue dispersion, and non-compete clauses are inefficient in industries with significant firm heterogeneity.	Daniel Ferreira, Radoslawa Nikolowa
8	2020	Firm Dynamics With Labor Market Sorting This paper is closely related as it explicitly incorporates assortative matching and worker-firm complementarities, which are central themes of the research project. It also utilizes matched employer-employee data to analyze how labor market sorting and search frictions influence establishment-level dynamics, aligning with the equilibrium interpretations and sorting components discussed. I develop a multi-worker firm model with search frictions, job-to-job transitions, firm dynamics and worker-firm complementarities to study the employment dynamics at the establishment level. Due to the complementarities in production, the ideal worker type changes after productivity shocks, which leads firms to adjust the skill composition of their workforce. Hence, the relationship between changes in workforce quality and firm growth rates in the data informs the strength of complementarities. Using German social security data, I document how firms reorganize the skill composition of their workforce. The estimated model matches many salient facts of establishment level employment dynamics...	Andreas Gulyas
8	2018	Sherwin Rosen Prize ↗ This paper directly addresses the project's core AKM framework by analyzing firm-specific wage premiums, assortative matching, and their role in wage inequality using matched employer-employee data. It provides essential empirical context and methodological examples for understanding how firm effects interact with worker sorting and bargaining to determine wages. Previous articleNext article FreeSherwin Rosen PrizePDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMoreIn 2018, the Society of Labor Economists awards the Sherwin Rosen Prize to Patrick Kline for outstanding contributions in the field of labor economics.Pat Kline is a productive and creative scholar with an outstanding research output. He has written innovative and influential papers on several important topics, including place-based policies, firm-level wage determination, and intergenerational mobility, as well as other areas of labor economics and applied econometrics. Kline’s major...
8	2020	The Effect of the Hartz Labor Market Reforms on Post-Unemployment Wages, Sorting, and Matching This paper is closely related as it utilizes matched employer-employee panel data to decompose wage changes into firm effects and worker sorting components, aligning with the project's core AKM framework and variance decomposition themes. It specifically addresses how labor market shocks alter the distribution of workers across firms, providing valuable context for understanding limited mobility bias and the equilibrium interpretation of firm wage premiums. We use linked longitudinal data on employers and employees to estimate how the 2003-2005 Hartz reforms affected the wages of displaced German workers after they returned to work. We also present a simple new method to decompose the wage effects into components attributable to selection on unobservables, and to changes in the way that displaced workers are sorted across firms and worker-firm matches upon re-employment. We find that the Hartz reforms substantially reduced the wages of displaced workers after their return to work. Women experienced smaller wage losses than men. For both sexes, over 80 percent of the increased wage loss was because displaced workers found re-employment in...	Simon D. Woodcock
8	2022	Do Workers Share in Firm Success? Pass-Through Estimates for New Zealand ↗ [Title only] This paper directly addresses the concept of rent-sharing, a key application of the AKM framework, by estimating the pass-through of firm success to worker wages in New Zealand. It provides empirical evidence on the magnitude of firm wage premiums, which is central to understanding variance decomposition and the equilibrium interpretation of firm effects. No abstract available.	Corey Allan, David C. Maré
8	2025	Assortative Matching and Human Capital Investment ↗ [Title only] This title directly addresses the core theme of assortative matching between workers and firms, which is central to understanding wage inequality and sorting in the AKM framework. It also intersects with the project's focus on human capital accumulation, making it highly relevant to the decomposition of wage dynamics and non-static worker effects. No abstract available.	Stuart Alexander Breslin
8	2013	Peer Effects in the Workplace ↗ This paper directly addresses the project's interest in peer and coworker learning spillovers by estimating their impact on wages using matched employer-employee data. It specifically tackles the endogenous sorting problem, which is a critical methodological challenge in decomposing wage variance into worker, firm, and peer components within the AKM framework. Existing evidence on peer effects in the productivity of coworkers stems from either laboratory experiments or real-world studies referring to a specific firm or occupation. In this paper, we aim at providing more generalizable results by investigating a large local labor market, with a focus on peer effects in wages rather than productivity. Our estimation strategy--which links the average permanent productivity of workers' peers to their wages--circumvents the reflection problem and accounts for endogenous sorting of workers into peer groups and firms. On average over all occupations, and in the type of high-skilled occupations investigated in studies on knowledge spillover, we find only...	Thomas Cornelißen, Christian Dustmann, Uta Schönberg
8	2015	Decomposing the wage losses of displaced workers: the role of the reallocation of workers into firms and job titles This paper closely relates to the project by extending the AKM framework to include job title fixed effects and analyzing wage decomposition in the context of worker displacement. It provides valuable empirical evidence on the role of sorting and match quality in wage dynamics, which connects directly to themes of limited mobility bias and the variance decomposition of wage inequality. Using an unusually rich matched employer-employee-job title data set for Portugal, this paper evaluates the sources of wage losses of workers displaced due to firm closure based on the comparison of workers’ wages differentials before and after displacement. Potential wage losses of displaced workers can be related to firm, job title, and match heterogeneity in the pre- and post-displacement jobs. In this vein, we estimate a threeway high-dimensional fixed effects regression model that enables us to decompose the sources of the wage losses into the contribution of firm, job title, and match fixed effects. The worker-firm match plays a very sizable role. We found that the allocation of...	Pedro Portugal, Pedro S. Raposo, Anabela Carneiro
8	2017	Decomposing the structure of wages into firm and worker effects: some insights from a high unemployment economy This paper directly applies the AKM framework to decompose wage variation into worker and firm effects, providing empirical estimates of firm wage premiums and sorting behavior in a specific economic context. It contributes to the project's themes on variance decomposition, limited mobility issues (via censoring controls), and the importance of firm effects in explaining wage inequality across industries. This paper estimates an individual wage equation where firm and workers effects are considered and the estimation process controls for censored wages. This exercise is performed for the Spanish economy over the course of a whole business cycle (2000-2015). It is acknowledged that Spain is a country where firm wage setting policies are at least as important as they are in to other European countries with apparently less rigid labour market. Spanish firms explain around 27% of the individual wage heterogeneity but more importantly around 74% of inter-industry wage differentials and these numbers increased over the current Big Recession. It is found evidence of an important sorting process of...	Yolanda F. Rebollo‐Sanz
8	2024	A Firm Link: Overall, Between- and Within-Firm Inequality Through the Lens of a Sorting Model ↗ The paper directly addresses the variance decomposition of wage inequality and the role of assortative matching between workers and firms, which are central themes of the project. It provides a theoretical sorting model framework that complements the empirical AKM decomposition by explaining the co-movement of overall and between-firm inequality components. This paper provides a new theory of the observed co-movement between overall wage inequality and its between-firm component. We develop and solve analytically a frictionless sorting model with two-sided heterogeneity, in which firms consist of distributions of tasks, choose how many workers to employ and reward their workers both through wages and amenities. We show that, for empirically-relevant parameter ranges, overall and between-firm inequality are firmly linked: A change in any of the models' primitives increases overall wage inequality if and only if it also increases the ratio of between-firm to overall inequality. Subsequently, we calibrate the model to match the Norwegian economy...	Paweł Gola, Yuejun Zhao
8	2020	A researcher’s guide to the Swedish compulsory school reform This paper directly addresses the project's theme of time-varying worker components by empirically estimating peer learning spillovers within firms. It utilizes matched employer-employee data and fixed effects methods to quantify how coworker interactions influence wage dynamics, which is central to understanding wage decomposition beyond static worker effects. To produce output for a firm, coworkers often interact. This paper examines the possibility that as a byproduct of these interactions, there are learning spillovers: coworkers learn general skills from each other that increase future productivity. In the first part of t he paper I show t hat learning spillovers imply externalities in the return to human capital which firms may not internalize when there is asymmetric information. As a result, individuals may inefficiently invest in their own education. Next, I show that learning spillovers are empirically relevant. Using matched administrative data from Sweden and a combination of fixed effects and controls to address bias from worker...	Emily Nix
8	2026	Labor Market Power, Firm Productivity, and the Immigrant-Native Pay Gap ↗ This paper directly addresses the equilibrium interpretation of firm fixed effects by estimating an oligopsony model that links labor market power and firm productivity to wage determination. It utilizes matched employer-employee data to decompose wage gaps, providing valuable context on how firm-level pay policies and worker sorting interact within a general equilibrium framework. <div> This paper examines the importance of labor market power and firm productivity for <span>understanding the immigrant-native pay gap. Using matched employer-employee data </span><span>covering the universe of Canadian tax filers, I estimate an oligopsony model of the </span><span>labor market with heterogeneous workers and firms. The results reveal two opposing </span><span>forces: firms have more labor market power over immigrants—marking down wages </span><span>by 23% for immigrants compared to 16% for natives—yet immigrants sort into more </span><span>productive firms. To decompose the immigrant-native pay gap, I use the model to </span><span>conduct counterfactual experiments in a...	Stephen P. Tino
8	2023	International Trade and Wage Inequality: Evidence from Brazil ↗ [Title only] This paper directly addresses the project's fourth dimension by examining how international trade shocks, specifically in the context of Brazil, transmit to wage outcomes. It likely provides empirical evidence on trade's impact on wage inequality and potentially firm-level wage premiums, fitting well within the scope of trade and labor market decomposition. No abstract available.	Lucas Squarize Chagas, Vinicios Sant'Anna
8	2021	For whom the bell tolls: The firm-level effects of automation on wage and gender inequality The paper directly addresses the project's focus on how automation shocks transmit to firm-level wage premiums by utilizing an event-study design around technology adoption. It also engages with the AKM framework by discussing worker heterogeneity and rent-sharing, which are central to the project's themes on wage decomposition and firm pay policies. This paper investigates the impact of investment in automation- and AI- related goods on withinfirm wage inequality in the French economy during the period 2002-2017. We document that most of wage inequality in France is accounted for by differences among workers belonging to the same firm, rather than by differences between sectors, firms, and occupations. Using an event-study approach on a sample of firms importing automation and AI-related goods, we find that spike events related to the adoption of automation- or AI-related capital goods are not followed by an increase in withinfirm wage nor in gender inequality. Instead, wages increase by 1% three years after the events at different...	Giacomo Domini, Marco Grazzi, Daniele Moschella, et al.
8	2025	Firm Premia and Match Effects in Pay vs. Amenities ↗ [Title only] This paper directly addresses the core AKM framework by extending the wage decomposition to include non-pecuniary amenities, a critical dimension for understanding total compensation and worker-firm matching. It likely explores identification strategies and bias corrections similar to those central to the project's focus on rent-sharing and limited mobility. No abstract available.	Anders Humlum, Mette Rasmussen, Evan K. Rose
8	2012	Exports and Within-Plant Wage Distributions: Evidence from Mexico ↗ This paper directly addresses the project's theme of how international trade shocks, specifically export expansions, transmit to firm wage premiums and alter within-plant wage distributions. It utilizes matched employer-employee data to decompose wage effects into plant-level premia and worker heterogeneity, aligning with the research focus on rent-sharing and the equilibrium interpretation of firm fixed effects. In many developing countries, increasing international integration has been accompanied by rising wage inequality, and traditional Heckscher-Ohlin models, which rely on between-sector reallocations to link trade and labor-market outcomes, are difficult to reconcile with this pattern (Goldberg and Pavcnik 2007). Recently, researchers have proposed a number of potential within-sector explanations based on the behavior of heterogeneous firms, involving technology choice, quality upgrading, search and bargaining, or fair wages, among other mechanisms. There is evidence at the plant level to support a within-sector link between trade and inequality. For instance, Verhoogen (2008) finds that...	Judith Frías, David S. Kaplan, Eric Verhoogen
8	2002	Wages and International Rent Sharing in Multinational Firms This paper directly addresses the project's interest in how firm-level pay policies respond to profitability shocks, specifically examining international rent-sharing mechanisms. It provides valuable empirical evidence on how firm wage premiums are determined and transmitted across borders, aligning with themes of firm effects on wages and the economic implications of firm profitability. We use a unique firm-level panel of multinational parents and their foreign affiliates to analyze whether profits are shared across borders within multinational firms. Affiliate wages are estimated to respond to both affiliate and parent profitability. The elasticity of affiliate wages to parent profits per worker is approximately 0.03, which can explain over 20 percent of observed variation in affiliate wages. These results reveal a previously ignored aspect of rent sharing. They also reveal an important micro-level linkage with potential macro-level implications. International rent sharing can transmit economic conditions across countries, and can thereby provide an implicit risk-sharing...	John W. Budd, Jozef Konings, Matthew J. Slaughter
8	2006	Industry wage differentials, unobserved ability, and rent-sharing: evidence from matched employer-employee, 1992-2005 This paper directly addresses the project's interest in rent-sharing and wage inequality by empirically quantifying how firm profitability contributes to industry wage differentials. It provides relevant evidence on the magnitude of rent-sharing, which is a key mechanism for understanding the economic interpretation of firm fixed effects in the AKM framework. This paper investigates inter-industry wage differentials in Belgium, taking advantage of access to a unique matched employer-employee data set covering the period 1995-2002. Findings show the existence of large and persistent wage differentials among workers with the same observed characteristics and working conditions, employed in different sectors. The hypothesis that workers with better unmeasured abilities are over-represented in high-wage sectors may not be rejected on the basis of Martins’ (2004) methodology. However, the contribution of this explanation to the observed industry wage differentials appears to be limited. Further results show that ceteris paribus, workers earn...	Robert Plasman, François Rycx, Ilan Tojerow
8	2026	How do Workers Learn? Theory and Evidence on the Roots of Lifecycle Human Capital Accumulation ↗ This paper directly addresses the project's theme of time-varying worker components by modeling human capital accumulation through on-the-job learning and coworker spillovers. It provides theoretical and empirical evidence on how these dynamic learning mechanisms influence wage growth and lifecycle earnings, complementing the static AKM framework. How do the sources of worker learning change over the lifecycle, and how does this affect human capital and wages? Using data from Germany and the US, we document that internal learning (from coworkers) decreases with experience, while external learning (on-the-job training) follows an inverted U-shape. We develop a search model featuring multiple learning sources whose returns evolve as workers age and accumulate human capital. Quantitative results indicate that the interaction between sources is key to lifecycle wage dynamics and the effects of remote work, which disrupts internal learning and early-career wage growth, though external learning partially offsets these losses.Institutional...	Xiao Ma, Alejandro Nakab, Daniela Vidart
8	2025	The Gender Gap in Career Trajectories: Do Firms Matter? ↗ [Title only] This title directly addresses the intersection of gender inequality and the AKM framework's core premise of firm-specific effects on wages. It likely investigates whether firm-level policies or fixed effects drive gender disparities in career progression, fitting the project's themes on labor market discrimination and firm wage premiums. No abstract available.	David Card, Francesco Devicienti, Maria Christina Rossi, et al.
8	2025	The Gender Gap in Career Trajectories: Do Firms Matter? ↗ This paper directly applies the AKM framework to decompose wage growth and analyze firm-specific effects on gender wage disparities, aligning closely with the project's focus on worker and firm effects. It addresses key themes such as sorting, mobility, and the interaction of firm policies with worker characteristics like maternity. The gender wage gap rises with experience. To what extent do firm policies mediate this rise? We use administrative data from Italy to identify workers’ first jobs and compute wage growth over the next 5 years. We then decompose the contribution of first employers to the rise in the gender wage gap, taking account of maternity events affecting a third of female entrants. We find that idiosyncratic firm effects explain 20% of the variation in early career wage growth, and that the sorting of women to slower-growth firms accounts for a fifth of the gender growth gap. Women who have a child within 5 years of entering work have particularly slow wage growth, reflecting a maternity effect that...	David Card, Francesco Devicienti, Mariacristina Rossi, et al.
8	2023	Replication package for "EXPLOITING GROWTH OPPORTUNITIES: THE ROLE OF INTERNAL LABOR MARKETS" ↗ This replication package supports research directly relevant to the project's core AKM framework, as it facilitates the analysis of internal labor markets and worker mobility within firms. The underlying methodology addresses key themes such as wage determination, human capital accumulation, and the identification of firm and worker effects. The replication package provides all the codes needed to extract and merge the raw data, and conduct the analysis that allows one to reproduce all the results presented in Cestone, Fumagalli, Kramarz, Pica "<em>EXPLOITING GROWTH OPPORTUNITIES: THE ROLE OF INTERNAL LABOR MARKETS</em>", Review of Economic Studies. Detailed instructions are also given on how to access the data.	Giacinta Cestone, Chiara Fumagalli, Françis Kramarz, et al.
8	2023	Labour Mobility and Earnings in the UK, 1992-2017 ↗ This paper directly addresses the project's core theme of worker mobility and its impact on wages, providing empirical estimates likely grounded in matched employer-employee data. It offers relevant insights into how job switching dynamics influence earnings trajectories, which is central to understanding worker effects in the AKM framework. Postel-Vinay, F., Sepahsalari, A., 2023. Labour Mobility and Earnings in the UK, 1992-2016. The Economic Journal, forthcoming.	Fabien Postel‐Vinay, Alireza Sepahsalari
8	2025	Branching Fixed Effects: A Proposal for Communicating Uncertainty ↗ This paper introduces a novel method for quantifying uncertainty in two-way fixed effects models, directly addressing the statistical challenges inherent in estimating worker and firm effects. By providing a framework for unbiased variance estimation in network data, it offers a crucial tool for correcting limited mobility bias and assessing the reliability of AKM-style decompositions. Economists often rely on estimates of linear fixed effects models produced by other teams of researchers. Assessing the uncertainty in these estimates can be challenging. I propose a form of sample splitting for networks that partitions the data into statistically independent branches, each of which can be used to compute an unbiased estimate of the parameters of interest in two-way fixed effects models. These branches facilitate uncertainty quantification, moment estimation, and shrinkage. Drawing on results from the graph theory literature on tree packing, I develop algorithms to efficiently extract branches from large networks. I illustrate these techniques using a benchmark dataset from...	Patrick Kline
8	2025	Re-assessing the Spatial Mismatch Hypothesis ↗ This paper directly utilizes the AKM framework to decompose wages into worker and firm effects, explicitly addressing the firm premium component which is central to the project's scope. It applies this methodology to analyze racial wage gaps, providing relevant empirical evidence on firm-level pay policies and their role in wage inequality. Using Longitudinal Employer-Household Dynamics data, we demonstrate several facts that are not consistent with the “spatial mismatch” hypothesis that residential segregation and uneven distribution of jobs limit Black workers' opportunities. We show that (a) there is no Black-White gap in the firm premium component of wages in an Abowd-Kramarz-Margolis wage decomposition; (b) there are both more jobs and more good jobs within commuting distance of Black than White workers; and (c) Black workers' commutes are shorter. We conclude that geographic proximity to good jobs is not a major source of racial earnings gaps in major US cities today.	David Card, Jesse Rothstein, Moises Yi
8	2024	Careers and Wages in Family Firms: Evidence from Matched Employer-Employee Data ↗ This paper directly addresses firm wage premiums and worker-firm matching using matched employer-employee data, aligning with the project's core focus on AKM-style decompositions and sorting. It provides specific evidence on how firm ownership structure influences wage distributions and career progression, which is relevant to understanding firm-level pay policies and variance decomposition. We investigate compensation policies in family and non-family firms using a novel employer-employee matched dataset comprising nearly the universe of Italian incorporated firms and ownership information. Family firms pay significantly lower wages and offer slower and less rewarding careers. Differences in worker sorting account for half of the wage gap while productivity differences and compensating differentials explain little of the residual gap. The wage distribution in family firms is more compressed, with infrequent promotions. We rationalize this evidence with a model where family owners seek to maintain control, creating a “glass ceiling” that limits their employees’ career...	Edoardo Di Porto, Marco Pagano, Vincenzo Pezone, et al.

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