Longitudinal Employer-employee Data Research Articles

Fixed-term contracts and firm productivity: Do workers’ skills and firm conversion rates from fixed-term to permanent contracts matter?

PurposeWe aim to elucidate the relationship between fixed-term employment and firm productivity by examining workers’ skills and considering how firm-level conversion rates influence this relationship.Design/methodology/approachWe use longitudinal employer-employee data between 2011 and 2017 in the Netherlands to estimate a nonlinear regression derived from a production function proposed by Addessi (2014) and Castellani et al. (2020).FindingsThe contribution of fixed-term contracts to firm-level productivity is less than that of permanent contracts. However, this contribution is greater when firms exhibit a high conversion rate from fixed-term to permanent positions. The effect of the conversion rate is more substantial for high-skilled fixed-term workers than for low-skilled ones.Originality/valueOur results suggest the extent to which firms benefit from fixed-term contracts when these are used for screening high-skilled workers for permanent employment.

Do Organizational Policies Narrow Gender Inequality? Novel Evidence from Longitudinal Employer–Employee Data

Scholars have long proposed that gender inequalities in wages are narrowed by organizational policies to advance gender equality. Using cross-sectional data, scarce previous research has found an association between gender wage inequalities and these organizational policies, but it remains unclear whether this correlation represents a causal effect. We provide first evidence on this topic by using longitudinal linked employer–employee data covering almost 1,500 firms and nearly one million employee observations in Germany. We investigate whether and how organizational policies affect gender gaps using firm fixed-effects regressions. Our results show that organizational policies reduce the gender wage gap by around nine percent overall. Investigating channels, we show that this effect is entirely driven by advancing women already employed at a given firm, whereas we find no effect on firms' composition and wages of new hires. Furthermore, we show that our findings are not driven by potential sources of bias, such as reverse causality.

The Impact of Work Engagement on Future Occupational Rankings, Wages, Unemployment, and Disability Pensions—A Register-Based Study of a Representative Sample of Finnish Employees

Despite ample interest in the potential consequences of work engagement over the last two decades, the question of whether work engagement predicts proximal and more distal career-related outcomes has gained surprisingly little attention. Using Conservation of Resources (COR) theory and a sustainable careers framework, the aim of this study was to investigate whether work engagement predicts register-based outcomes of wages, moves in occupational rankings, unemployment, and disability pensions. We used nationally representative survey data (n = 4876; response rate 68.7%) on Finnish employees derived from the Quality of Work Life Survey (QWLS) and matched respondent data to the Finnish Longitudinal Employer–Employee Data (FLEED), which covered the period 2013–2015. We utilized ordinary least squares (OLS) and instrumental variable (IV) estimations to strengthen causality in the analyses. Even after controlling for outcomes at baseline and several covariates, e.g., health, we found that work engagement positively predicted future wages and the probability of rising in occupational rankings, and negatively predicted future unemployment and disability pensions. This study extends the scope of the possible benefits of work engagement for employees, organizations, and society at large and contributes to career research by indicating the importance of work engagement for objectively measured indicators of sustainable careers.

Does age diversity boost technological innovation? Exploring the moderating role of HR practices

We shed new light on the linkages between age diversity and technological innovation, and explore the moderating effect of human resource practices on such relationships. Based on a linked dataset that contains cross-sectional survey data and longitudinal employer–employee data from Luxembourg, we show that the effect of age diversity on innovation depends on the age distribution pattern of employees: positive for firms characterized by heterogeneous age groups (variety), negative for those dominated by polarized age groups (polarization). HR practices such as information sharing mitigate the adverse effects of age polarization on innovation. Practices enhancing development such as training are found to play a significant and negative role in moderating the relationship between age diversity and innovation. We illustrate how academics and practitioners may use HR practices within the context of a heterogeneous aging workforce and the age-related differences in values and abilities between generations.

Dynamic capabilities for hire – How former host-country entrepreneurs as MNC subsidiary managers affect performance

MNC subsidiaries benefit from managers with entrepreneurial skills for finding superior combinations of MNC and host-country resources. However, such management skills are scarce. We reason that subsidiaries can improve their performance by hiring host-country entrepreneurs as managers since they develop similar skills in start-ups. Our theoretical model integrates mechanisms from entrepreneurial experience into theory on the microfoundations of dynamic capabilities. We test and support our prediction using longitudinal employer–employee data for 5587 foreign MNC subsidiaries in Portugal. Further, we show that performance effects are weaker when a subsidiary’s management is internationally diverse and stronger in dynamic host-country environments.

The public–private sector wage differential in the UK: Evidence from longitudinal employer–employee data

If fiscal policy exerts pressure on public services, then attention often falls on the public–private sector wage differential. Estimated with longitudinal employer–employee data for the years 2002–2016 in the United Kingdom, among men there was no significant public sector wage premium. However, women received an average 4% premium compared with working in private sector firms.

The Public-Private Sector Wage Differential in the UK: Evidence from Longitudinal Employee-Employer Data

If fiscal policy exerts pressure on public services, then attention often falls on the public-private sector wage differential. Estimated with longitudinal employer-employee data for the years 2002-16 in the United Kingdom, among men there was no significant public sector wage premium. However, women received an average 4% premium compared with working in private sector firms.

Specific measures for older employees and late career employment

We analyse the relationship between the application of specific measures for older employees (SMOE) and job duration of workers aged 40 and above. Using longitudinal employer-employee data for German establishments, we account for worker and establishment heterogeneity and correct for stock-sampling. We find a positive relation of mixed-aged team work to job duration and a negative relation of specific part-time addressed at older workers. Job duration does not appear to be related to other SMOE, such as training and specific equipment of workplaces. Our findings suggest that only certain specific measures for older employees alter employee retention.

The Roles of Job and Worker Restructuring in Aggregate Wage Growth Dynamics1

We propose an approach for measuring and analyzing the dynamics of the standard aggregate wage growth of macro statistics with micro data. Our method decomposes the aggregate wage growth into the wage growth of job stayers and into various terms related to job and worker restructuring. This method produces explicit expressions with clear interpretations for the various restructuring components. Using comprehensive longitudinal employer–employee data, we study how job and worker restructuring influence the aggregate wage growth and its cyclicality. The results highlight the importance of drawing a sharp distinction between job and worker restructuring in the analysis of aggregate wage growth dynamics.

Childhood Physical Activity and Adulthood Earnings.

This study examined the associations between childhood physical activity level and adulthood earnings. The data were drawn from the ongoing longitudinal Young Finns Study, which was combined with register-based Finnish Longitudinal Employer-Employee Data and register-based parents' background information from the Longitudinal Population Census of Statistics Finland. The study consisted of children who were 9 yr (n = 1257, 52% boys), 12 yr (n = 1662, 51% boys), and 15 yr (n = 1969, 49% boys) of age at the time when physical activity was measured. The children were followed until 2010, when they were between 33 and 45 yr old. Leisure-time physical activity in childhood was self-reported, whereas earnings in adulthood were register based and covered over a 10-yr period from 2000 to 2010. Ordinary least squares models were used to analyze the relationship between physical activity and earnings. Childhood physical activity level was positively associated with long-term earnings among men (P < 0.001). In more detail, a higher level of leisure-time physical activity at the age of 9, 12, and 15 yr was associated with an approximate 12%-25% increase in average annual earnings over a 10-yr period. The results were robust to controlling, e.g., an individual's chronic conditions and body fat, parents' education and physical activity, and family income. Among women, no relation was observed. The findings provide evidence that childhood physical activity can have far-reaching positive effects on adulthood earnings. Possibilities for improving physical activity during childhood may not only promote health but also affect long-term labor market outcomes.

Depressive symptoms and long-term income: The Young Finns Study

BackgroundHigher depressive symptoms have been associated with lower future income. However, studies examining this issue have had limited follow-up times and have used self-reported measures of income. Also, possible confounders or mediators have not been accounted. Methods971 women and 738 men were selected from the ongoing prospective Young Finns Study (YFS) that began in 1980. Depressive symptoms were measured in 1992 when participants were from 15 to 30 years old. Information on annual income and earnings from 1993 to 2010 were obtained from the Finnish Longitudinal Employer-Employee Data (FLEED) of Statistics Finland and linked to the YFS. ResultsHigher depressive symptoms were associated with lower future income and earnings. For men, the associations were robust for controlling childhood parental socioeconomic status, history of unemployment, and adulthood health behavior, but attenuated circa 35% when three major temperament traits were taken into account. For women, similar pattern was found, however, in the models adjusted for temperament traits the associations did not remain statistically significant. The association between depressive symptoms and earnings was three times stronger for men than women. LimitationsPrevious depressive episodes could have influenced on some participants’ economic and educational choices. ConclusionsHigher depressive symptoms in adolescence and early adulthood lead to significant future losses of total income and earnings, and this association is particularly strong for men.

Patterns of Integration: &lt;i&gt;A Longitudinal View of the Labour Market Attachment of Immigrants in Finland&lt;/i&gt;

The labour market integration of immigrants is often time-consuming and a socially selective process that depends on macroeconomic, institutional and individual characteristics. In this paper, we studied the labour market integration of immigrants as a longitudinal process through different patterns of labour market attachment. Using information about individuals’ main activity statuses based on the Finnish Longitudinal Employer-Employee Data (FLEED) and using sequence analysis, we followed the labour market transitions of immigrants during the years 2000–2010. The theory on transitional labour markets provides an analytical tool for analysing the heterogeneity of the individuals’ labour market attachment. The results contribute to a more comprehensive understanding of the labour market integration of immigrants.

Born Entrepreneur? Adolescents' Personality Characteristics and Self-Employment in Adulthood

Is there an entrepreneurial personality and does it appear early in life? We provide a new answer on this question by using the so-called Type A behavior traits (Aggression, Leadership, Responsibility, and Eagerness-Energy), measured in childhood and adolescence, and examining their relationship to self-employment propensity in adulthood. Using data from the Young Finns Study linked to the Finnish Longitudinal Employer-Employee Data and the Longitudinal Population Census of Statistics, our results show that the early-life Leadership-dimension is significantly associated with a higher likelihood 1) of becoming self-employed later in life and 2) of being more successful as an entrepreneur, as approximated by sales. Our results also reinforce the prior evidence on the intergenerational transmission of entrepreneurship.

Where Do Immigrants Fare Worse? Modeling Workplace Wage Gap Variation with Longitudinal Employer-Employee Data

The authors propose a strategy for observing and explaining workplace variance in categorically linked inequalities. Using Swedish economy-wide linked employer-employee panel data, the authors examine variation in workplace wage inequalities between native Swedes and non-Western immigrants. Consistent with relational inequality theory, the authors' findings are that immigrant-native wage gaps vary dramatically across workplaces, even net of strong human capital controls. The authors also find that, net of observed and fixed-effect controls for individual traits, workplace immigrant-native wage gaps decline with increased workplace immigrant employment and managerial representation and increase when job segregation rises. These results are stronger in high-inequality workplaces and for white-collar employees: contexts in which one expects status-based claims on organizational resources, the central causal mechanism identified by relational inequality theory, to be stronger. The authors conclude that workplace variation in the non-Western immigrant-native wage gaps is contingent on organizational variationin the relative power of groups and the institutional context in which that power is exercised.

The Impact of Segregation and Sorting on the Gender Wage Gap: Evidence from German Linked Longitudinal Employer-Employee Data

For this study, the author inspects the relationship between segregation in the workplace (measured as the proportion female in job cells) and the gender wage gap using linked longitudinal employer-employee data from the German Employment Register. He extends the literature by controlling for nonrandom sorting of workers into job cells, establishments, and occupations. In line with previous studies, the pooled least squares estimates show that the gender wage gap increases as the job-cell-level proportion of females increases. This increase is attributable to the fact that women experience greater wage declines than men do when additional women enter their job cells. Controlling additionally for unobserved heterogeneity at the individual, establishment, occupation, and job-cell levels considerably reduces the size of the proportion female effects on women's wages while rendering the effects on men's wages insignificant or even positive. The same controls also significantly decrease the proportion effects on the wage gap. The related sorting analysis shows that a good deal of the proportion effects can be explained by unobserved individual ability and suggests that especially women working in job cells with small proportions of females show above-average unobserved individual ability.

Where Do Immigrants Fare Worse? Modeling Workplace Wage Gap Variation with Longitudinal Employer-Employee Data

We propose a strategy for observing and explaining workplace variance in categorically linked inequalities. Using economy wide Swedish linked employer-employee panel data, we examine variation in workplace wage inequalities between native Swedes and non-Western immigrants. Consistent with relational inequality theory (RIT) we find that immigrant-native wage gaps vary dramatically across workplaces, even net of strong human capital controls. We also find that, net of observed and fixed effect controls for individual traits, workplace immigrant-native wage gaps decline with increased workplace immigrant employment and managerial representation and increase when job segregation rises. These results are stronger in high inequality workplaces and for white collar employees: contexts in which we expect status-based claims on organizational resources, the central causal mechanism identified by relational inequality theory, to be stronger. While Sweden displays substantial workplace rank segregation between non-western immigrants and native Swedes and patterns of statistical discrimination against non-western immigrants, both decline with increased labor force experience. Overall, workplace variation in the non-western immigrant-native wage gaps are contingent on organizational variation in the relative power of groups and the institutional context in which that power is exercised.

Labour mobility and plant performance: on the (dis)similarity between labour‐ and capital‐intensive sectors for knowledge diffusion and productivity

In this article we analyse differences between capital‐ and labour‐intensive sectors with regard to the impact of workforce composition and labour mobility on plant performance. By the use of geo‐referenced longitudinal employer–employee data on a micro level, we analyse labour flows between plants within and between labour market regions. The analysis is carried out using weighted least squares (WLS) regression analysis combined with additional variance analysis (ANOVA). The results show that there are differences between the sectors with regard to both in‐house workforce composition and type of skill inflow. A high degree of related knowledge in the in‐house workforce has a strong positive effect on plant performance in the labour‐intensive sectors. The analysis of labour inflow indicates that knowledge in the capital‐intensive sectors is localized – only intra‐regional labour flows give rise to increased plant productivity. In the labour‐intensive sectors, the geographic and cognitive dimensions complement one another; similar knowledge needs to be non‐local in order to be beneficial to plant performance, and unrelated knowledge mainly contributes to plant productivity growth when it is local.

The effect of physical activity on long-term income

Empirical evidence for the direct effects of physical activities on long-term labor market outcomes is limited. This state of affairs is surprising, because there is a growing amount of support on the positive effects of physical activities on health on the one hand and on the effects of good health on labor market outcomes on the other hand. We examine the long-term income effects of physical activity using a large sample (N = 5042) of male twins from Finland (Older Finnish Twin Cohort Study, 1975, 1981, 1990), matched to detailed register-based income data (Finnish Longitudinal Employer-Employee Data, 1990–2004). Our primary income measure is calculated over a fifteen-year period and it covers the prime working age of the twins that we study. We use the twin dimension of the data to control for unobservable genetic and family confounding factors. Our within-twin estimates show that being physically active has a positive impact on the long-term income. We argue that our results are not easily reconciled with the intuitive explanation of physical activity enhancing long-term income via health or more intense labor market attachment. We reason that instead, there may be various non-cognitive mechanisms at work: Physical activity can, for example, make people more persistent in the face of work-related difficulties and increase their desire to partake in competitive situations, with greater expected pecuniary rewards.

Specific Measures for Older Employees and Late Career Employment

We analyse the effects of specific measures for older employees (SMOE) on employment duration of workers aged 40 and above. Using longitudinal employer-employee data for German establishments, we account for worker and establishment heterogeneity and correct for stock sampling. We find a positive effect of mixed-aged team work on employment duration and a negative effect of a part-time scheme addressed at older workers. Employment duration does not appear to be related to other SMOE, such as training and specific equipment of workplaces.

Job Durations With Worker- and Firm-Specific Effects: MCMC Estimation With Longitudinal Employer–Employee Data

We study job durations using a multivariate hazard model allowing for worker-specific and firm-specific unobserved determinants. The latter are captured by unobserved heterogeneity terms or random effects, one at the firm level and another at the worker level. This enables us to decompose the variation in job durations into the relative contribution of the worker and the firm. We also allow the unobserved terms to be correlated in a model that is primarily relevant for markets with small firms. For the empirical analysis, we use a Portuguese longitudinal matched employer–employee dataset. The model is estimated with a Bayesian Markov chain Monte Carlo (MCMC) estimation method. The results imply that unobserved firm characteristics explain almost 40% of the systematic variation in log job durations. In addition, we find a positive correlation between unobserved worker and firm characteristics.