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Do ties affect your wage?

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)

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Do ties affect your wage?

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  1. Do ties affect your wage? Applying the BSPS-SME matched employer-employee data

  2. Outline • Introduction • Theory • Empirical strategy • Results • Conclusion

  3. 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

  4. Theory • Human capital (Mincer, 1974) • Efficiency wage (Lazear, 1979) • Job search (Stigler,1970; Pissarides 2001)

  5. Data • BSPS SME data from 2007 • The subsample: • 426 enterprises • 753 employees • 392 production workers • 76 managers

  6. 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.

  7. Dependent variable

  8. Explanatory variables - employee Traditional wage determinants • Education • Experience (years in firm, age) • Gender • Union membership • Occupation • Recruitment ties

  9. Occupation and ties

  10. Explanatory variables - firm • Size • Legal status • Sector • Province • Manager education • Share of professional workers • Share of female workers • Other labour costs

  11. Results – employee characteristics

  12. Results – informal recruitment

  13. How do ties affect wages? Manager tie Employee and firm char. Wage Occupation Worker tie

  14. Sensitivity analysis • Sensitivity analysis • Occupation* • Sector • Location*

  15. Occupation

  16. Location

  17. Location – urban provinces only

  18. 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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