Microdata Evidence on Rent-Sharing

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 increasing profits imply higher wages.Rent-sharing; Matched employer- employee data

Temporary contracts and the dynamics of job turnover

We report results indicating that job turnover is not countercyclical in general but rather reflects the inability of smooth labor adjustment through the use of temporary employment contracts. Service establishments with a high share of temporary employment exhibit acyclical job reallocation, while only permanent jobs within manufacturing are found to be countercyclical.Dual labor markets

Wages, Profits and Individual Unemployment Risk : Evidence from Matched Worker-Firm Data

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.Wages; Profits; Rent-Sharing; Wage-curve

Immigrants' and Natives' Unemployment-risk: Productivity Differentials or Discrimination?

Studying the unemployment risk during 1992 to 1995 for a sample of employees in 1991, we find that immigrants from the non-European countries run a risk of unemployment that is twice the corresponding risk for the native workers. There exist substantial unemployment-risk differentials taking into account employees’ demographic and human capital characteristics, the wage-rate in 1991 and systematic sorting of workers across establishments associated with varying unemployment risks. Exaggerating beyond all reasonable limits, the ability differentials (measured in school grades and IQ-tests) between immigrants and natives fails to explain the differences between immigrants and natives in unemployment risks. Our simulations indicate that the observed unemployment-risk differentials between native and non-European workers correspond to ability differentials that are at least as large as the whole range of IQ-scores. Our conclusion is that discriminatory behavior and stereotype beliefs must be involved. Furthermore, we report results indicating that the existing income-gap between immigrants and natives in Sweden is almost entirely due to unequal employment opportunities.Immigration; Unemployment; Discrimination

Giving up Foreign Names: An Empirical Examination of Surname Change and Earnings

In this paper we compare the earnings development for a group of immigrants that changes their names to Swedish-sounding or neutral names with immigrants who retain their names from the same region of birth. Our results indicate that name-changers are apparently similar to name-keepers and the earnings before the name change is essentially the same for both groups. However, an earnings gap after the name change is observed. The earnings gap corresponds to on average approximately 26 percent. Our understanding of the data and our results is that the groups are similar before the name change and that the earnings gap after the name change should be attributed to the name change. Our results should be viewed as evidence of unequal treatment of immigrants and natives in the Swedish labor market.Ethnic discrimination; earnings development; name change

Giving Up Foreign Names: An Empirical Examination of Surname Change and Earnings

In this paper we compare the earnings development for a group of immigrants that changes their names to Swedish-sounding or neutral names with immigrants who retain their names from the same region of birth. Our results indicate that name-changers are apparently similar to name-keepers and the earnings before the name change is essentially the same for both groups. However, an earnings gap after the name change is observed. The earnings gap corresponds to on average approximately 26 percent. Our understanding of the data and our results is that the groups are similar before the name change and that the earnings gap after the name change should be attributed to the name change. Our results should be viewed as evidence of unequal treatment of immigrants and natives in the Swedish labor market.Ethnic discrimination; earnings development; name change

Learning by Helping: A Bounded Rationality Model of Mentoring

Within an organization, a bounded rational principal organizes a promotion test based on a sequence of test regarding candidates' relative performances. We assume the principal to suffer from limited ability to rank the performances, only identifying the best in each test. Furthermore, he satisfies the expected gains do not decreases whit the information generated by additional tests. Then, mentoring is shown to improve the information about candidates' ability when the principal offers help to the current best candidate provided by a manager promoted after a similar contest.Mentoring; Selection; Contests; Bounded Rationality

Between Meritocracy and Ethnic Discrimination: The Gender Difference

Using a two stage correspondence test methodology, this study tests employer priors against job-applicants with Arabic names compared to job-applicants with Swedish names. In the first stage, employers are sent CVs of equal observable quality. Thereafter, in the second stage, the CVs with Arabic names are given an advantage of, on average, two more years of relevant work experience. This setup allows us to test the strength of unfavorable priors against job-applicants with Arabic names and to what degree these priors are revised, on average, when resumes are enhanced. Results indicate no significant differences in call-backs for female applicants when CVs with Arabic names are enhanced. The call-back gap for men however remains large and significant despite a positive adjustment of CVs with Arabic names. This implies that negative priors against male job applicants with Arabic names are not revised by an increase in observable merits.correspondence testing, ethnic discrimination, biased testing, gender

Cyclical and Causal Patterns of Inflation and GDP Growth

Empirical foundations for the view that high inflation impairs GDP growth are examined using annual data for 115 countries over the period 1960-1995. Taking into account country heterogeneity and time-specific symmetric shocks, as well as endogeneity of inflation and dynamics of GDP growth we estimate dynamic panel-data models of the effects of inflation on growth. We find no evidence supporting the view that inflation is in general harmful to GDP growth. On the other hand, there is a negative correlation between contemporaneous intra-country inflation and growth for periods characterised by positive oil-price shocks.GDP GROWTH; Inflation

Between Meritocracy and Ethnic Discrimination: The Gender Difference

Using a two stage correspondence test methodology, this study tests employer priors against job-applicants with Arabic names compared to job-applicants with Swedish names. In the first stage, employers are sent CVs of equal observable quality. Thereafter, in the second stage, the CVs with Arabic names are given an advantage of, on average, two more years of relevant work experience. This setup allows us to test the strength of unfavorable priors against job-applicants with Arabic names and to what degree these priors are revised, on average, when resumes are enhanced. Results indicate no significant differences in call-backs for female applicants when CVs with Arabic names are enhanced. The call-back gap for men however remains large and significant despite a positive adjustment of CVs with Arabic names. This implies that negative priors against male job applicants with Arabic names are not revised by an increase in observable merits.Correspondence Testing; Ethnic Discrimination; Biased Testing; Gender