published in: Applied Economics, 2009, 41(17), 2133-2151
Many biases plague the estimation of rent sharing in labour markets. Using a Portuguese
matched employer-employee panel, these biases are addressed in this paper in three
complementary ways: 1) Controlling directly for the fact that firms that share more rents will,
ceteris paribus, have lower net-of-wages profits. 2) Instrumenting profits via interactions
between the exchange rate and the share of exports in firms’ total sales. 3) Considering firm
or firm/worker spell fixed effects and highlighting the role of downward wage rigidity. These
approaches clarify conflicting findings in the literature and result, in our preferred
specification, in a Lester range of pay dispersion of 56%, also shown to be robust to a
number of competitive interpretations.
We use cookies to provide you with an optimal website experience. This includes cookies that are necessary for the operation of the site as well as cookies that are only used for anonymous statistical purposes, for comfort settings or to display personalized content. You can decide for yourself which categories you want to allow. Please note that based on your settings, you may not be able to use all of the site's functions.
Cookie settings
These necessary cookies are required to activate the core functionality of the website. An opt-out from these technologies is not available.
In order to further improve our offer and our website, we collect anonymous data for statistics and analyses. With the help of these cookies we can, for example, determine the number of visitors and the effect of certain pages on our website and optimize our content.