Firm Dynamics: The Size and Growth Distribution of Firms - Ratio

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City size, employer concentration, and wage income inequality

Halvarsson, D., & Korpi, M.

Publication year

2025

Published in

Institute for Evaluation of Labour Market and Education Policy (IFAU)

Abstract

This study investigates the relationship between the urban wage premium and employer concentration using Swedish full population employer-employee data. Departing from an AKM modeling framework to distinguish worker from firm specific heterogeneity – a measure of rent-sharing – we then measure the urban wage premium using differences in the estimated firm fixed effects at the level of local industries, nested within local labor markets. Our results suggest that labor market employer concentration, as calculated using the Hirschman-Herfindahl index and a leave-one-out instrumental variable design, can account for a significant share of the estimated urban wage premium (UWP). Addressing city-level wage income inequality by applying our model to different segments of the local labor market income distribution, we find that while the UWP pertains to all income segments, it is largest for top-income levels (above the 90th percentile), and within this segment employer concentration also has the largest explanatory power. Thus, while being an important explanatory factor for all percentiles of the local income distribution, a relatively lower employer concentration within larger cities, and vice versa, higher concentration within smaller cities, primarily help explain the variance of top wages within these cities/labor markets.

Ratio Working Paper No. 374: The Impact of High-Skilled Migration on Productivity in Swedish Firms

Publication year

2024

Published in

Ratio Working paper series.

Abstract

The migration of highly skilled labor has received increasing attention due to its role in fostering innovation and productivity. This study explores the impact of foreign experts on the productivity of Swedish companies. Utilizing a difference-in-difference model with comprehensive register data from 1996 to 2015, the analysis reveals that Swedish companies hiring foreign experts experience a significant productivity increase of 6 to 11 percent within two to three years post-hiring. This effect is particularly pronounced in small and medium-sized enterprises and is slightly enhanced when excluding returning Swedish-born experts. Additionally, the study finds that both labor and capital productivity rise, along with a modest increase in wage incomes for other employees, estimated at 1.5 to 2 percent. However, the wage effects are less robust compared to productivity impacts. The findings underscore the importance of attracting foreign talent to bolster productivity. This research fills a crucial gap in the literature by focusing on the specific effects of foreign experts on total factor productivity in a small, knowledge-oriented economy like Sweden’s.

Article (with peer review)

Do gender norms travel within corporations? The impact of foreign subsidiaries on the home country’s gender wage gap

Halvarsson, D., Lark, O., Tingvall, P. G., Vahter, P., & Videnord, J.

Publication year

2024

Published in

Applied Economics Letters, 1-5.

Abstract

In this note we study how the share of workers in a corporation located in a high gender wage gap country impacts the wage gap in their home country operations. Our findings support the hypothesis that firms with strong intra-firm linkages to a high gender wage gap country also display a relatively large gender wage gap at home.

Firm Dynamics: The Size and Growth Distribution of Firms - Ratio