TY  - RPRT
        AU  - Bingley, Paul
AU  - Cappellari, Lorenzo
        TI  - Workers, Firms and Life-Cycle Wage Dynamics
        PY  - 2018/Mar/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 11402
        UR  - https://www.iza.org/index.php/publications/dp11402
        AB  - 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.
        KW  - wage inequality
KW  - wage dynamics
KW  - co-workers' covariance
        ER  -