TY  - JOUR
AU  - Earle,John S.
AU  - Telegdy,Álmos
TI  - Ownership and Wages: Estimating Public-Private and Foreign-Domestic Differentials using LEED from Hungary, 1986-2003
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12997
PY  - 2007
Y2  - March 2007
UR  - http://www.nber.org/papers/w12997
L1  - http://www.nber.org/papers/w12997.pdf
N1  - Author contact info:
John S. Earle
School of Public Policy
3351 Fairfax Drive, MS 3B1
Arlington VA 22201
E-Mail: earle@gmu.edu

Almos Telegdy
Dept. of Economics
Nador Utca 9
H-1051 Budapest
Hungary
E-Mail: telegdya@ceu.hu
M3  - presented at "The Analysis of Firms and Employees", January 2, 2007
AB  - Studies of public-private and foreign-domestic wage differentials face difficulties distinguishing ownership effects from correlated characteristics of workers and firms.  This paper estimates these ownership differentials using linked employer-employee data (LEED) from Hungary containing 1.35mln worker-year observations for 21,238 firms from 1986 to 2003.  We find that ownership type is highly correlated with characteristics of both workers (education, experience, gender, and occupation) and firms (size, industry, and productivity), suggesting ownership type is systematically selected along these dimensions.  The large unconditional wage gaps (0.24 for public-private and 0.40 for foreign-domestic) in the data are little affected by conditioning on worker characteristics, but controlling for industry reduces the public and foreign premia (to 0.16 and 0.34, respectively), and controlling for employment size further reduces them (to 0.07 and 0.28).  We also exploit the presence of 3,700 switches of ownership type in the data to estimate firm fixed-effects and random trend models, accounting for unobserved firm characteristics affecting the average level and trend growth of wages.  These controls have little effect on the conditional public-private gap, but they reduce the estimated foreign premium (to 0.07).  The results imply that the substantial unconditional wage differentials are mostly, but not entirely, a function of differences in worker and firm characteristics, and that linked panel data are necessary to take these correlated factors into account.
ER  -