CEU Electronic Theses and Dissertations, 2012
| Author | Rigó, Mariann |
|---|---|
| Title | Three Essays on Wages and Productivity |
| Summary | The recent availability of linked employer – employee databases (LEED) opened up new opportunities for empirical labor research. Among the variety of areas in which the LEED can potentially be utilized, my thesis examines earning regressions and production functions supplemented with information on both the employers and the employees. Wage regressions based on LEED may control for – besides the individual level variables, such as age, gender, education, occupation – various firm-level variables. Production functions including traditionally only firm level variables, such as the capital and the labor input, may be augmented with the worker composition of the firm offering the opportunity to study e.g. the relative productivity of various employee groups. The first chapter of the thesis utilizes the rich firm-level and employee information of the LEED to investigate the wage differential associated with the conclusion of firm-level collective contracts. The historical roots of the Hungarian trade unions are in a sharp contrast with the origins of the industrial relations system in Western European or Anglo-Saxon countries. After the regime change, trade unions in the transitional countries had to reorganize themselves, find their new roles in the fundamentally changed economic environment, and cope with their social inheritance. The outcome was a decentralized structure, where the firm-level trade unions are the most important channel of collective negotiations. The estimation results mostly reflect this fragmented industrial relations system, and imply that the wage advantage associated with firm-level agreements is tiny. The 26 percent raw wage gap estimated on individual-level data decreases to 6 percent after controlling for individual and firm-level characteristics, and to 2 percent when including time invariant firm-level unobservables. On the other hand, firm-level regressions using an accounting measure, the total wage bill of the firm as the dependent variable, suggest a surprisingly high wage gap of 8 percent in the final specification. Chapter 2 and 3 pursue a different path, and – building on the rich employee and employer information of the LEED – investigate production functions in the way pioneered by Hellerstein and Neumark (1999). In Chapter 2 (joint with Anna Lovász) we examine the long-term adjustment process following the sudden devaluation of certain labor market skills due to the technological and organizational changes brought about by the regime change. Our hypothesizes are based on the model of skill obsolescence and imply that (a) the devaluation of skills should affect highly educated older workers more severely (b) the disadvantage should disappear over time as newer cohorts acquire more suitable human capital, and (c) the timing should differ among firm ownership types, reflecting the inflow of modern technologies and practices. The results suggest that - in line with the model - the within firm productivity differential between older and younger workers following the transition was largest among the highly skilled (-0.13 in 1996-2000). The fall in relative productivity followed the inflow of modern capital: the gap was largest in 1992-1995 in foreign-owned firms (-0.6), while it appeared later in domestic firms (-0.18 in 1996-2000) before disappearing by 2006. Chapter 3, also based on the worker composition augmented production function methodology, aims to give a more detailed picture of the relationship between age and productivity. Ageing is a particularly relevant research question in Hungary, where both the demographic trends and the low employment rate of the older worker groups make it difficult to cope with the increasing economic burdens of an ageing society. The results on the pooled sample (covering the years 1992-2008) are suggestive that older workers are less productive. Estimates in the within dimension document that productivity drops significantly at the ages of 35, 45, and 55. However, splitting the panel into two samples (before and after 2000) reveals that the productivity disadvantage of older employees disappears in the second period, and methods taking care of both the unobserved heterogeneity and simultaneity issues indicate an essentially flat age – productivity profile in that period. Therefore, the Hungarian results covering the most recent years do not confirm the usual skepticism over the negative impact of the ageing population on firms’ productivity. |
| Supervisor | John Earle |
| Department | Economics PhD |
| Full text | https://www.etd.ceu.edu/2012/cphrim01.pdf |
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