National Wage Setting
How do firms set wages across space? Using job-level vacancy data and a survey of HR managers, we show that 40-50% of a job’s posted wages are identical across locations within a firm. Moreover, nominal posted wages within the firm vary relatively little with local prices, a pattern we verify with other measures of job level wages. Using the co-movement of wage growth across establishments, we argue these patterns reflect national wage setting---a significant minority of firms choose to set the same nominal wage for a job across all their establishments, despite varying local labor market conditions.
The authors have no relevant material and financial relationships to disclose. We thank Lila Englander, Michael Galperin, Andrew Hicks, Nidhaan Jain, Isaac Liu, and Melyne Nzabonimpa for excellent research assistance; Anna Stansbury for sharing code; Sean Wang for pointing us to the H1B Visa Application data; and Otis Reid for helpful discussions that shaped the development of the project. We thank our discussant Matthew Gentzkow, as well as Daron Acemoglu, David Autor, Adrien Bilal, Allison Cole, Ellora Derenoncourt, Jonathan Dingel, Alex Frankel, Erik Hurst, Anders Humlum, Isabela Manelici, Simon Jager, Lisa Kahn, Alan Manning, Matt Notowidigdo, Benjamin Schoefer, Isaac Sorkin, John Van Reenen and Jose Vasquez for helpful discussions that shaped this draft. First version: September 2021. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.