TY  - JOUR
AU  - Abowd,John M.
AU  - Kramarz,Francis
AU  - Margolis,David N.
TI  - High Wage Workers and High Wage Firms
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4917
PY  - 1994
Y2  - November 1994
UR  - http://www.nber.org/papers/w4917
L1  - http://www.nber.org/papers/w4917.pdf
N1  - Author contact info:
John M. Abowd
School of Industrial and Labor Relations
261 Ives Hall
Cornell University
Ithaca, NY 14853
Tel: 607/255-8024
Fax: 866/873-9078
E-Mail: John.Abowd@cornell.edu

Francis Kramarz
CREST-INSEE
15 blvd Gabriel Peri
Malakoff CEDEX, 92245
FRANCE
E-Mail: kramarz@ensae.fr

David N. Margolis
AB  - We study a longitudinal sample of over one million French workers and over 500,000 employing firms.  Real total annual compensation per worker is decomposed into components related to observable characteristics, worker heterogeneity, firm heterogeneity and residual variation.  Except for the residual, all components may be correlated in an arbitrary fashion.  At the level of the individual, we find that person-effects, especially those not related to observables like education, are the most important source of wage variation in France. Firm-effects, while important, are not as important as person-effects. At the level of firms, we find that enterprises that hire high-wage workers are more productive but not more profitable.  They are also more capital and high-skilled employee intensive.  Enterprises that pay higher wages, controlling for person-effects, are more productive and more profitable.  They are also more capital intensive but are not more high-skilled labor intensive.  We also find that person-effects explain 92% of inter-industry wage differentials.
ER  -