Linked Employer Employee Data Research Articles

High‐Performance Management Practices and Employee Outcomes in Denmark

AbstractHigh‐performance work practices are frequently considered to have positive effects on corporate performance, but what do they do for employees? After assessing the correlation between organizational innovation and firm performance, this article investigates whether high‐involvement work practices affect workers in terms of wages, wage inequality and workforce composition. The analysis is based on a survey directed at Danish firms matched with linked employer–employee data and also examines whether the relationship between high‐involvement work practices and employee outcomes is affected by the industrial relations context.

Wage Insurance Within German Firms: Do Institutions Matter?

SummaryUsing a large linked employer–employee data set, the paper studies the extent to which German employers insure workers against transitory and permanent firm level shocks. Particular emphasis is given to the question of whether the amount of wage insurance depends on the nature of industrial relations. Adopting the identification strategy that was introduced by Guiso and co-workers, it is shown that industry level contracts and local works councils are important insurance providers. These findings lend support to the notion that collective institutions may mitigate the enforcement problems that typically arise within risk sharing agreements. Moreover, the ability of industry level contracts to insulate workers' wages from shocks appears to decrease with plant size, whereas works councils' ability to provide insurance increases with plant size. This latter finding is consistent with works councils having, by law, more information rights at larger employers.

The impact of female managers on the gender pay gap: Evidence from linked employer–employee data for Germany

We find that increasing the female share in first-level management by 10% points decreases the unexplained within-job gender pay gap by 0.5 log points. The effect is more pronounced for the female share in second-level than in first-level management.

Positive employee attitudes: How much human resource management do you need?

We propose a selective view of human resource management (HRM) that is guided by work motivation theory, arguing that one of the means by which firms achieve higher performance is by investing in certain forms of HRM practice that help fulfil intrinsic work values and thereby influence employees’ attitudes to their jobs and to the firm in a positive direction. Additionally, an accumulation of complementary practices has important communicative functions that intensify positive employee attitudes. Using nationally representative linked employer–employee data for Britain, we investigate the strength and form of the association between the array of practices deployed by the workplace on one hand, and organizational commitment (OC) and intrinsic job satisfaction (IJS) on the other – two types of job attitude that research has shown to be related to a range of performance measures. We find strong evidence that the relationship between employee job attitudes and our measure of HRM is non-linear, rising chiefly at higher levels of HRM. Results are robust to altered composition of the HRM index. Higher OC and IJS emerge at HRM intensity values which are attained by roughly half the British population of workplaces.

The Cyclical Behaviour of Employers' Monopsony Power and Workers' Wages

This paper investigates the behaviour of employers' monopsony power and workers' wages over the business cycle. Using German administrative linked employer employee data for the years 1985-2010 and an estimation framework based on duration models, we construct a time series of the firm-level labour supply elasticity and estimate its relationship to the aggregate unemployment rate. In line with theory, we find that firms possess more monopsony power during economic downturns, which shows to be robust to controlling for time-invariant unobserved worker heterogeneity. We also document that cyclical changes in workers' entry wages are of similar magnitude as those predicted under monopsonistic wage setting, suggesting that monopsony power should not be neglected when analysing wage cyclicality.

Worker Information and Firm Disclosure Analysis on French Linked Employer–Employee Data

Information disclosure requirements significantly increased in French listed companies in the early 2000s, converging toward the U.S./U.K. stock market standards. We investigate the consequences of this process regarding worker information: does more information for shareholders mean more information for workers? Our empirical analysis takes advantage of a French establishment survey that generates linked “employer–employee” data at two points in time, 1998 and 2004. Our results show that worker information has improved in listed companies as an externality of the financialization process. We find, however, that this extra information is only partially correlated with greater employee satisfaction.

Exporters and the rise in wage inequality: Evidence from German linked employer–employee data

Using a linked employer–employee data set of the German manufacturing sector, this paper analyses the role of exporting establishments in explaining rising wage dispersion both within and between skill groups in the time period 1996 to 2007. A decomposition analysis shows that the strong increase in the exporter wage gap, conditional on workers' skill levels, contributed to the growth in wage inequality, whereas the increase in the exporters' share in total employment worked towards a reduction in wage dispersion. The resulting net contribution is positive (inequality-increasing) but moderate. These findings are consistent with recent heterogeneous-firm trade models that feature an exporter wage premium as well as variability of the premium with respect to increasing trade liberalisation.

Discovering the Regional Small World of Labour Mobility. Evidence from Linked Employer–Employee Data

Gianelle C. Discovering the regional small world of labour mobility. Evidence from linked employer–employee data, Regional Studies. This paper investigates the structure of inter-firm worker mobility in an industrial region of Northern Italy by using complex network analysis applied to linked employer–employee data. The empirical network reveals a small-world pattern based critically on a small number of hub firms that keep the labour market integrated. Focal firms are: long-established manufacturing companies; wholesalers; and companies that supply the workforce to third parties. The paper discusses the immediate policy implications of these findings as well as the potential of the methodology as a monitoring tool to guide industrial policies aimed at safeguarding and promoting labour reallocation mechanisms.

Collective Wage Contracts, Opt‐Out Clauses, and Firm Wage Differentials: Evidence from Linked Employer–Employee Data

Using a large linked employer–employee data set, this article studies whether the existence and use of flexibility provisions within centralized collective wage agreements alter the structure of pay across employers. Using level regressions and first‐difference methods, we find that—compared with contracts without any flexibility—wages under opt‐out clauses are more responsive to local profitability conditions in below‐average‐performing establishments. In contrast, the sensitivity of wages to local profitability is smaller in high‐performance establishments. Our results provide further evidence for a threat potential of the existence of opt‐out clauses whose impact on flexibility is larger than the real application.

Women Move Differently: Job Separations and Gender

Using a large German linked employer–employee data set and methods of competing risks analysis, this paper investigates gender differences in job separation rates to employment and nonemployment. In line with descriptive evidence, we find lower job-to-job and higher job-to-nonemployment transition probabilities for women than men when controlling for individual and workplace characteristics and unobserved plant heterogeneity. These differences vanish once we allow these characteristics to affect separations differently by gender. When additionally controlling for wages, we find that both separation rates are considerably lower and also significantly less wage-elastic for women than for men, suggesting an interplay of gender differences in transition behaviour and the gender pay gap.

Immigrant wage profiles within and between establishments

Life cycle wages of immigrants from developing countries fall short of catching up with wages of natives. Using linked employer–employee data, we show that 40% of the native–immigrant wage gap is explained by differential sorting across establishments. We find that returns to experience and seniority are similar for immigrant and native workers, but that differences in job mobility and intermittent spells of unemployment are major sources of disparity in lifetime wage growth. The inferior wage growth of immigrants primarily results from failure to advance to higher paying establishments over time. These empirical patterns are consistent with signaling disadvantages of immigrant job seekers, but not with the explanation that low wage growth follows from inferior information about employers and job opportunities.

Unhappy working with men? Workplace gender diversity and job-related well-being in Britain

This paper attempts to establish empirically the link between workplace gender diversity and employee job-related well-being in Britain. Using nationally representative linked employer–employee data and accounting for unobserved workplace heterogeneity the paper finds gender diversity to be associated with lower employee well-being for women. Workplace gender equality policies and practices are not found to ameliorate this finding.

Outsourcing, Occupational Restructuring, and Employee Well-Being: Is There a Silver Lining?

This study examines the relationship between outsourcing and various aspects of employee well‐being by devoting special attention to the role of occupational restructuring as a conveying mechanism. Using linked employer–employee data, we find that offshoring involves job destruction, especially when the destination is a low‐wage country. In such circumstances, staying employees’ job satisfaction is reduced. However, the relationship between outsourcing and employee well‐being is not entirely negative. Our evidence also shows that offshoring to high‐wage countries stimulates the vertical mobility of employees in affected firms in a manner that improves perceived well‐being, particularly in terms of better prospects for promotion.

Human Capital and Labor Productivity

Using a linked employer–employee data set, this study estimates a production function for a sample of seventy Spanish hotels. This function, which identifies the main labor productivity determinants, leads to the conclusion that the more productive hotels in Andalusia are those older than twelve years, have three or more stars, belong to a chain, and subcontract some of the services offered. A chief finding is that a mismatch between the employees’ education levels and the education required for a job is relevant in explaining differences in the hotels’ and workers’ productivity. This result is especially clear when workers with less than five years of service were eliminated from the sample. Suitably educated employees are more efficient than those whose education is not matched to the job. In addition, undereducated employees (as compared to job requirements) are less efficient than overeducated ones. The study also found evidence that hotel employees with an average tenure of more than ten years have superior performance in terms of labor productivity.

Unobserved Individual and Firm Heterogeneity in Wage and Job-Duration Functions: Evidence from German Linked Employer–Employee Data

AbstractWe analyse the correlations between individual and firm fixed effects, and wage and job-duration functions. Our results for large firms suggest that low-wage firms tend to be stable firms, suggesting that lower wages can buy job stability. Furthermore, high-wage workers sort into the stable low-wage firms. Our interpretation is that high-wage workers have a higher wage to insure against job loss and can afford more easily to forgo wages in favour of job stability. This may provide an explanation of the puzzle identified in previous literature that high-wage workers are matched to low-wage firms.

A Dissenting View from Julia Lane

The topic of the role of privacy and confidentiality in the use of administrative records for statistical purposes is an important one. In providing comments, I will draw extensively from my experience in working with fifty states and six federal agencies in creating the LEHD (Longitudinal Employer-Household Dynamics) program at the Census Bureau between 1997 (when I started my ASA fellowship) and 2004 (when the program became a fully-fledged Census Bureau program). However, I will also draw on my experience in building the LEED (Linked Employer-Employee Data) program at Statistics New Zealand, as well as my experience working with the data producers from many countries (both statistical agencies and administrative agencies) while in my World Bank consultancy. The final context is my experience with cyberinfrastructure initiatives within the United States, as well as in Europe.

Do higher wages come at a price?

Using linked employer–employee data for Britain we find that higher wages are associated with higher job satisfaction and higher job anxiety. The association between wages and non-pecuniary job satisfaction disappears with the inclusion of effort measures whereas the positive association between wages and job anxiety remains strong and significant providing no support for a compensating differential explanation, but rather for a ‘gift exchange’ type of reciprocal behaviour. No support is found for the proposition that within-workplace wage differentials are a source of job anxiety.

COMPENSATION OF ON‐CALL AND FIXED‐TERM EMPLOYMENT: THE ROLE OF UNCERTAINTY*

This paper analyses the compensation of fixed‐term and on‐call employment contracts, applying an analytical framework in which wage differentials result from two types of uncertainty. Quantity uncertainty originates from product demand volatility. Quality uncertainty, on the other hand, originates from the fact that employers are ex‐ante unable to observe fully a worker's ability. Using matching techniques, we analyse wage differentials using linked employer–employee data for the Netherlands. Findings indicate that on‐call workers receive compensation for providing quantity flexibility, or at least did so before the regulatory change in 1999. Compensation of fixed‐term contracts, however, is dominated by the negative wage effect of quality uncertainty.

Rent‐Sharing under Different Bargaining Regimes: Evidence from Linked Employer–Employee Data

AbstractUsing Belgian linked employer–employee data, we examine how collective bargaining arrangements affect the relationship between firms' profitability and individual wages via rent‐sharing. In industries where agreements are usually renegotiated at firm‐level (‘decentralized industries’) wages and firm‐level profits are positively correlated regardless of the type of collective wage agreement by which the workers are covered (industry or firm). On the other hand, where firm‐level wage renegotiation is less common (‘centralized industries’), wages are only significantly related to firms' profitability for workers covered by a firm‐level collective agreement. Thus, industry‐wide contracts that are not complemented by a firm‐level collective agreement suppress the impact of firm profits on workers' wages in centralized industries.

Adverse workplace conditions, high-involvement work practices and labor turnover: Evidence from Danish linked employer–employee data

Using Danish linked employer–employee data, we find that: (i) exposing the worker to physical hazards leads to a 3 percentage point increase in the probability of voluntary turnover from the average rate of 18%; (ii) working in night shift results in an 11-percentage point hike; and (iii) having an unsupportive boss leads to a 6-percentage point jump. High involvement work practices are found to play a significant role in mitigating the adverse effects of workplace hazards. Finally, the worker under adverse workplace conditions is found to improve the 5-year odds of rectifying such workplace adversities by quitting the firm.