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Abstract 5/7/2019 Earnings dynamics and firm-level shocks

We use matched employer-employee data from Sweden to study the role of the firm in aff ecting the stochastic properties of wages. Our model accounts for endogenous participation and mobility decisions. We find that fi rm-specifi c permanent productivity shocks transmit to individual wages, but the e ffect is mostly concentrated among the high-skilled workers; fi rm-specifi c temporary shocks mostly aff ect the low-skilled. The updates to worker- firm specifi c match effects over the life of a firm-worker relationship are small. Substantial growth in earnings variance over the life cycle for high-skilled workers is driven by firms accounting for 44% of cross-sectional variance by age 55.

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Published by:

Sofia Malmer