Using Twins to Resolve the Twin Problem of Having a Bad Job and a Low Wage We use data on twins matched to register-based information on earnings to examine the long-standing puzzle of non-existent compensating wage differentials. The use of twin data allows us to remove otherwise unobserved productivity differences that were the prominent reason for estimation bias in the earlier studies. Usin...

The existing superstar model (Rosen 1981) does not require imperfect substitutes and explains the convexity of total earnings with respect to talent due to higher output for those with the most talent. We develop a model that explains why per unit earnings (wages or prices) would increase at an increasing rate in talent. Imperfect substitution results due to the probabilistic nature of producti...

This paper examines the links between childhood conduct disorder problems and schooling and labour market outcomes net of genetic and environmental effects. The results show that individuals who experienced conduct disorder problems are more likely to leave school early, have poorer employment prospects and lower earnings. These findings are shown to be due to the genetic and environmental infl...

Wage Gaps Large and Small The law of one wage does not strictly hold, nor should it be expected to hold, in contemporary labor markets. The law of one wage, however, provides a surprisingly good first approximation of the structure of U.S. wages. This generalization is drawn from research on a diverse set of topics: the Mincerian wage equation and earnings imputation, union wage differentials, ...

This paper integrates asymmetric information between firms into a canonical model of on-the-job search. Workers are heterogeneous in ability, but not all employers observe a worker’s type. Wage dispersion caused by search frictions makes the equilibrium wage distribution insensitive to informational asymmetries. Hence, the equilibrium outcome may be the same as when a worker’s ability is known ...

Using administrative data from the state of Georgia, the authors find that average wages among documented workers are lower in industries that employ undocumented workers and that a greater share of undocumented workers in those industries further lowers wages. In addition, undocumented workers have significantly lower labor supply elasticity, likely as a result of their limited employment and ...

This paper develops a model with multiple market locations in which the quality of intangible assets of firms, provided by management, determines the firms. performance. Despite an ex ante symmetry of potential entrants, the equilibrium assignment of heterogeneous managerial skills to firms tends to be asymmetric. This sorting outcome determines both the goods market structure at single locatio...

We analyze how the financial conditions of the firm affect the compensation structure of workers, the size of the firm, and its dynamics. Firms that are financially constrained offer long-term wage contracts characterized by an increasing wage profile, that is, they pay lower wages today in exchange of higher future wages, effectively borrowing from their employees. Because constrained firms al...

This paper develops a model of wage distribution and wage dynamics based on assignment and Pareto learning. The model matches a large number of key facts about wage distribution and wage dynamics. The tractability of Pareto learning allows us to derive joint implications on the wage distribution and wage dynamics as assignment becomes more important. Our model also provides a natural framework ...

This paper estimates the causal impact of compulsory military service on men in Germany using social security and pension administrative data for the cohort of individuals born in the period 1932–1942. Due to the combination of laws restricting conscription only to men born on or after July 1, 1937, diff erence-in-diff erences estimates of the eff ect of conscription on average daily wages can ...