TY  - RPRT
        AU  - Bertheau, Antoine
AU  - Hoeck, Christian Philip
        TI  - Firms’ Beliefs About Wage Setting
        PY  - 2025/Mar/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 17762
        UR  - https://www.iza.org/publications/dp17762
        AB  - This paper yields new insights into why similar workers are paid differently by surveying a representative sample of Danish firms and linking responses to administrative data. We find that a substantial minority of firms, about 18 percent, have inaccurate beliefs about their position in the wage distribution. Inaccurate beliefs are more likely to occur in smaller firms. To study the implications of firms’ inaccurate beliefs, we build a simple model with monopsonistic firms. Using our survey, we elicit firms’ motives for setting high wages. The dominant motive aligns with wage-posting models, i.e., retaining and attracting new employees. The least common motive is compensating for negative job characteristics.
        KW  - firm information frictions
KW  - wage dispersion
KW  - biased beliefs
        ER  -