@TechReport{iza:izadps:dp11402,
            	author={Bingley, Paul and Cappellari, Lorenzo},
            	title={Workers, Firms and Life-Cycle Wage Dynamics},
            	year={2018},
	month={Mar},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={11402},
            	url={https://www.iza.org/index.php/publications/dp11402},
	abstract={Studies of individual wage dynamics typically ignore firm heterogeneity, whereas decompositions of earnings into worker and firm effects abstract from life-cycle considerations. We study firm effects in individual wage dynamics using administrative data on the population of Italian employers and employees. We propose a novel identification strategy for firm-related wage components exploiting the informative content of the wage covariance structure of coworkers. Wage inequality increases three-fold over the working life; firm effects are predominant while young, but sorting of workers into firms becomes increasingly important, explaining the largest share of lifetime inequality. Static models that do not allow for life-cycle dynamics underestimate the importance of sorting and overstate match and firm effects.},
	keywords={wage inequality;wage dynamics;co-workers' covariance},
            }