do ties affect your wage?
DESCRIPTION
Do ties affect your wage?. Applying the BSPS-SME matched employer-employee data. Outline. Introduction Theory Empirical strategy Results Conclusion. Introduction. Traditional wage determinants Informal contacts in the labour market (Rees, 1966) Recruitment ties (Granovetter, 1973) - PowerPoint PPT PresentationTRANSCRIPT
Do ties affect your wage?
Applying the BSPS-SME matched employer-employee data
Outline
1) Introduction
2) Theory
3) Empirical strategy
4) Results
5) Conclusion
2
Introduction
• Traditional wage determinants
• Informal contacts in the labour market (Rees, 1966)
• Recruitment ties (Granovetter, 1973)
• Manager tie (34 pct)
• Worker tie (24 pct)
• Mechanism through which ties affect wages
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Theory
• Human capital (Mincer, 1974)
• Efficiency wage (Lazear, 1979)
• Job search (Stigler,1970; Pissarides 2001)
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Data
• BSPS SME data from 2007
• The subsample:• 426 enterprises• 753 employees
• 392 production workers• 76 managers
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Empirical strategy
• Following Troske, 1999
• wi: real wage of worker i
• Xi: vector of worker i’s characteristics
• Zi: vector of firm characteristics of worker i's employer
• Ti: vector of the recruitment tie of worker i
• ui: worker-specific error term.
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Dependent variable
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Explanatory variables - employee
Traditional wage determinants• Education• Experience (years in firm, age)• Gender• Union membership• Occupation
• Recruitment ties
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Occupation and ties
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Recruitment method (%)
manager tie = 1 worker tie = 1
Full sample 33.9 23.5
Occupation:
Manager 51.3 10.5
Professional worker 26.3 23.2
Office worker 29.3 26.7
Sales worker 41.2 19.1
Service worker 23.3 25.6
Production worker 33.2 26.0
Explanatory variables - firm
• Size• Legal status• Sector• Province• Manager education• Share of professional workers• Share of female workers• Other labour costs
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Results – employee characteristics
Dependent variable: Log real wage (1) (2)Education:
No education = 1 -0.740*** -0.587***
Primary school = 1 -0.554*** -0.328***
Secondary school = 1 -0.471*** -0.269***
High school = 1 -0.404*** -0.239***
Technical certificate/Elementary worker = 1 -0.308*** -0.128
Technical worker without certificate = 1 -0.243*** -0.128
Technical worker/professional secondary = 1 -0.167*** -0.073
Occupation NO YES 11
Results – informal recruitment
Dependent variable: Log real wage (1) (2) (3) (4)
Recruitment: Manager tie = 1 0.111*** 0.077** 0.088** 0.043
Worker tie = 1 0.088*** 0.098*** 0.038 0.051*
Occupation: Manager = 1 0.467*** 0.491***
Professional worker = 1 0.179*** 0.204***
Office worker = 1 0.096* 0.109**
Sales worker = 1 0.224*** 0.231***
Service worker = 1 -0.004 -0.040
Firm characteristics NO NO YES YES12
Worker tie
Manager tie
WageOccupationEmployee and
firm char.
How do ties affect wages?
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Sensitivity analysis
• Sensitivity analysis
• Occupation*
• Sector
• Location*
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Occupation
Dependent variable: Log real wage
(1)Production workers
(2)Non-production workers
Recruitment ties: Manager tie = 1 -0.001 0.143**
Worker tie = 1 0.066* 0.021
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Location
Dependent variable: Log real wage
(1)Rural
(2)Urban
(3)Rural
(4)Urban
Recruitment ties:
Manager tie = 1 -0.027 0.178*** -0.071* 0.122***
Worker tie = 1 0.036 0.063 0.040 0.089**
Occupation NO NO YES YES
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Location – urban provinces only
Dependent variable: Log real wage (3) (4)HCMC:
Manager tie = 1 0.315*** 0.234***
Worker tie = 1 0.053 0.061
Hanoi:Manager tie = 1 0.039 0.020
Worker tie = 1 0.127 0.183**
Occupation NO YES
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Conclusion
• Traditional wage determinants significant
• Informal contacts matter!
• Manager tie works through occupation
• Worker tie works within occupation
• Large differences across location
• Future work – explain productivity
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