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The Return to Big City Experience: Evidence from Danish Refugees
We offer causal evidence of higher returns to experience in big cities. Exploiting a natural experiment that settled political refugees across labor markets in Denmark between 1986 and 1998, we find that while refugees initially earn similar wages across locations, those placed in Copenhagen exhibit 35% faster wage growth with each additional year of experience. This gap is driven primarily by differential sorting towards high-wage establishments, occupations, and industries. An estimated spatial model of earnings dynamics attributes an important role to unobserved worker ability: more able ...
Wage Inequality and Job Stability
How much wage inequality in Brazil is caused by firing costs? To answer this question, I develop and estimate a general equilibrium search and matching model with heterogeneous layoff rates among firms. Using matched employer-employee data from Brazil, I estimate the model, and I find that it replicates the observed residual wage inequality in the data. I simulate a counterfactual removal of existing firing costs, and I find that residual wage inequality drops by 26% as measured by wage variance and by 4.4% as measured by the p95-p5 ratio among 25- to 55-year-old males working in the private ...
Wage Determination in Social Occupations: The Role of Individual Social Capital
We make use of predicted social and civic activities (social capital) to account for selection into "social" occupations. Individual selection accounts for more than the total difference in wages observed between social and nonsocial occupations. The role that individual social capital plays in selecting into these occupations and the importance of selection in explaining wage differences across occupations is similar for both men and women. We make use of restricted data from the 2000 decennial census and the 2000 Social Capital Community Benchmark Survey. Individual social capital is ...
Even one is too much: the economic consequences of being a smoker
It is well known that smoking leads to lower wages. However, the mechanism of this negative relationship is not well understood. This analysis includes a decomposition of the wage gap between smokers and nonsmokers, with a variety of definitions of smoking status designed to reflect differences in smoking intensity. This paper finds that nearly two-thirds of the 24 percent selectivity-corrected smoking/nonsmoking wage differential derives from differences in characteristics between smokers and nonsmokers. These results suggest that it is not differences in productivity that drive the smoking ...
Impact of first-birth career interruption on earnings: evidence from administrative data
This paper uses unique administrative data to expand the understanding of the role women's intermittency decisions play in the determination of their wages. We demonstrate that treating intermittency as exogenous significantly overstates its impact. The intermittency penalty also increases in the education level of the woman. The penalty for a woman with a high school degree with an average amount of intermittency during six years after giving birth to her first child is roughly half the penalty for a college graduate. We also demonstrate the value of using an index to capture multiple ...