TY  - JOUR
AU  - Barth, Erling
AU  - Davis, James
AU  - Freeman, Richard B
TI  - Augmenting the Human Capital Earnings Equation with Measures of Where People Work
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 22512
PY  - 2016
Y2  - August 2016
DO  - 10.3386/w22512
UR  - http://www.nber.org/papers/w22512
L1  - http://www.nber.org/papers/w22512.pdf
N1  - Author contact info:
Erling Barth
Institute for Social Research
P.O. Box 3233 Elisenberg
0208 Oslo
Norway
Tel: +(47) 23 08 61 43
E-Mail: erling.barth@samfunnsforskning.no

James C. Davis
Boston Federal Statistical Research Data Center
National Bureau of Economic Research
1050 Massachusetts Ave.
Cambridge, MA 02138
Tel: 617-613-1215
Fax: 617-613-1248
E-Mail: james.c.davis@census.gov

Richard B. Freeman
NBER
1050 Massachusetts Avenue
Cambridge, MA  02138
Tel: 617/868-3900
Fax: 617/868-2742
E-Mail: freeman@nber.org
M1  - published as Erling Barth, James Davis, Richard B. Freeman. "Augmenting the Human Capital Earnings Equation with Measures of Where People Work," in Edward Lazear and Kathryn Shaw, organizers, "Firms and the Distribution of Income: The Roles of Productivity and Luck" Journal of Labor Economics, 36(S1) (2018)

AB  - We augment standard ln earnings equations with variables reflecting unmeasured attributes of workers and measured and unmeasured attributes of their employer. Using panel employee-establishment data for US manufacturing we find that the observable employer characteristics that most impact earnings are: number of workers, education of co-workers, capital equipment per worker, industry in which the establishment produces, and R&D intensity of the firm. Employer fixed effects also contribute to the variance of ln earnings, though substantially less than individual fixed effects. In addition to accounting for some of the variance in earnings, the observed and unobserved measures of employers mediate the estimated effects of individual characteristics on earnings and increasing earnings inequality through the sorting of workers among establishments.
ER  -