- (a) Rio de Janeiro, 1994â2010 0 .02 .04 .06 .08 .1 .12 .14 .16 .18 .2 .22 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Age Within firm wage growth Between firm wage growth (b) Veneto, 1984â2001. 0 .02 .04 .06 .08 .1 .12 .14 .16 .18 .2 .22 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Age Within firm wage growth Between firm wage growth Notes: Average annual change in log wages, separately for firm stayers (within) and firm switchers (between). A3 Figure A4: Mobility across firm classes: Transition matrix.
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- (a) Rio de Janeiro, 1994â2010. -.02 0 .02 .04 .06 .08 .1 1 2 3 4 5 6 7 8 9 10 Firm class where experience was acquired Baseline Results Alternative Residualization of Wage Growth - Flexible Age Alternative Residualization of Wage Growth - No Education (b) Veneto, 1984â2001. -.02 0 .02 .04 .06 .08 .1 1 2 3 4 5 6 7 8 9 10 Firm class where experience was acquired Baseline Results Alternative Residualization of Wage Growth - Flexible Age Notes: Estimates of returns to experiences acquired in different firm classes, using different ways of residualizing unexplained wage growth. Black dots: baseline estimates from Figure 1. Yellow diamonds: fully flexible specification of age effects; in Rio de Janeiro, the fully flexible age profiles are further education-specific. Orange crosses in Rio de Janeiro only: same as baseline approach but without netting out education effects (i.e., fully comparable to Veneto baseline).
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- (a) Rio de Janeiro, 1994â2010. 0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1 between firm-class var. / between firm var. 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 number of firm classes (b) Veneto, 1984â2001. 0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1 between firm-class var. / between firm var. 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 number of firm classes Notes: Ratio between i) between firm-class variance of unexplained wage growth, over ii) between-firm variance of unexplained wage growth, as a function of the number of firm classes (2â30). The logic of decomposing the variance into a within and between components comes from the law of total variance: V ary(Y ) = Ex[V ary(Y |X)] | {z } âwithinâ + V arx[Ey(Y |X)] | {z } âbetweenâ . Denoting unexplained earnings growth by g, Figure B1 plots: V ark[Eg(g|firm-class=k)] V arj [Eg(g|firm=j)] . Figure B2: Density of unexplained earnings growth, by firm class.
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- (a) Rio de Janeiro, 1994â2010. 0 5 10 15 -.4 -.2 0 .2 .4 .6 k=1 k=2,...,9 k=10 overall (b) Veneto, 1984â2001. 0 5 10 15 -.4 -.2 0 .2 .4 .6 k=1 k=2,...,9 k=10 overall Notes: Densities of unexplained earnings growth across firm classes. Classes ordered according to mean unexplained earnings growth. Dashed blue line marks the density of the overall distribution. A23 Table B1: Firm-class distributions of unexplained earnings growth.
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- A25 are typically found in high-skill professional occupations (Ghosh and Waldman, 2010), whereas our findings hold across the skill distribution. Moreover, such type of contractual arrangements could be positively correlated with on-the-job learningâi.e., they could be one of the âmechanismsâ underlying firm heterogeneity in learning opportunities since these contracts may be implemented precisely to incentivize workersâ human capital investments and effort (Lazear and Rosen, 1981; Waldman, 1990; Zabojnik and Bernhardt, 2001).
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- A32 F Firm Characteristics and Learning Classes F.1 How well do observables jointly predict firm class? Random forest classification Using the data at the firm level (firm is the unit of observation, with characteristics averaged across years), we use half of the sample to train and validate a random forest classification algorithm (Athey and Imbens, 2019). In the other half of the data, we use the algorithm to predict firm class and compare it against its actual classification. We feed the random forest a variety of firm characteristics, but no variables related to employeesâ wage growth as this is the input our clustering methodology described in Section 3.2 uses to classify firms. Table F1: Predicting firm class using observables: Random forest classification results.
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- Firm classes 1â10 represent our firm categorization based on unexplained earnings growth distributions. NC are small firms not categorized by the clustering algorithm. PS is the public sector in each data set. Other is experience acquired outside the state of Rio de Janeiro or outside the region of Veneto. All specifications include year fixed effects and control for age with six age-category indicators. We allow for returns to experiences acquired in different firm classes to differ across workersâ unobserved skills recovered through the iterative method proposed by De La Roca and Puga (2017), as documented in Section 5.2. We present the estimates of the main effects, γm, and the interaction effects, δm, in equation (17). Standard errors clustered at the person level. *p<0.10; **p<0.05; ***p<0.01.
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- Homogeneous experience return -.02 0 .02 .04 .06 .08 .1 1 2 3 4 5 6 7 8 9 10 Firm class where experience was acquired Age category dummies Flat age profile at 35 No age control (b) Veneto, 1984â2001. Homogeneous experience return -.02 0 .02 .04 .06 .08 .1 1 2 3 4 5 6 7 8 9 10 Firm class where experience was acquired Age category dummies Flat age profile at 35 No age control Notes: Estimates of returns to experiences acquired in different firm classes, using different ways of controlling for age effects. Black dots: baseline estimates from Figure 1, controlling for six age-category fixed effects. Blue diamonds: control for an age polynomial restricting the age profile to be flat at 35. Green squares: no age controls. Flat lines: returns to homogeneous experience for each respective age controls. Figure A6: Robustness by alternative residualization of unexplained wage growth: returns to experiences acquired in different firm classes.
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- Zabojnik, J. and D. Bernhardt (2001). Corporate tournaments, human capital acquisition, and the firm size-wage relation. The Review of Economic Studies 68(3), 693â716. - SUPPLEMENTARY APPENDICES -For Online Publication - Appendix A: Additional Figures and Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. A2 - Appendix B: Firm Classification: Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . p. A22 - Appendix C: Exogeneity Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. A25 - Appendix D: Heterogeneous Returns by Firmsâ Observable Characteristics . . p. A27 - Appendix E: Human Capital Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. A30 - Appendix F: Firm Characteristics and Learning Classes . . . . . . . . . . . . . . . . . . . . . . p. A33 A1 A Additional Figures and Tables A.1 Figures Figure A1: Age distribution.
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