12 noon - 1:15pm
Thursday 14 November 2019

Applied Micro Seminar: Firm Heterogeneity in Skill Returns

Dr. Michael Boehm (University of Bonn)  is visiting the Schoool. Michael's research interests include: Labor Economics; Applied Econometrics; Corporate Finance; Personnel Economics; Education Economics; Macroeconomics


Room: 81 MS 02
University of Surrey
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Title: Firm Heterogeneity in Skill Returns


We use administrative data from Sweden to document how firm heterogeneity shapes both levels and changes of the economy-wide returns to skills. Workers with high cognitive ability systematically select into higher-paying firms and this selection has become stronger over time. We propose a tractable way to allow for heterogeneous skill biases in production across firms within a model featuring worker and firm heterogeneity. Estimation results indicate the presence of substantial heterogeneity in skill biases across firms, which is consistent with their skill selection. Firms with high returns to skills also tend to pay higher general wage premia. Numerical experiments reveal that the dispersion of firm productivity and skill biases, and their correlation with high-skill workers’ preferences for working in such firms increased over time. This has induced sharper selection of skilled workers into high paying firms and a stark rise in the aggregate return to skill.

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