cause: The difference that just eight paragraphs can make' (Paper)
Abstract: This paper provides
evidence about the effects of dismissals-for-cause requirements, a
specific component of employment protection legislation that has
received little attention despite its potential relevance. We study a
quasi-natural experiment generated by a law introduced in Portugal
in 1989: out of the 12 paragraphs in the law that dictated the costly
procedure required for dismissals for cause, eight did not apply to
firms employing 20 or fewer workers. Using detailed matched
employer-employee longitudinal data and difference-in-differences
matching methods, we examine the impact of that differentiated change
in firing costs upon several variables, measured from 1991 to 1999.
Unlike predicted by theory, we do not find robust evidence of effects
on worker flows. However, firm performance improves considerably while
wages fall. Overall, the results suggest that firing costs of the type
studied here decrease workers' effort and increase their bargaining
in Wage Premiums and Firm Performance' (Paper)
Abstract: Using matched
employer-employee panel data, we estimate measures of pay dispersion
per firm-year that take into account both firm and worker unobserved
heterogeneity. Unlike research that controls only for differences in
observables, we find that within-firm pay inequality is significantly
associated to lower firm performance.
'The Impact of
Exporting on Firm Productivity: A Meta-Analysis', with Yong Yang
Abstract: We conduct a
meta-analysis of more than 30 papers that study the causal relationship
between exporting and firm productivity. Our results, robust to
different specifications and to different weights for each observation,
indicate that the impact of exporting upon productivity is higher 1) at
developing economies (when compared to developed economies); 2) in the
first year that firms start exporting (compared to later years); 3)
with other estimators than OLS; and 4) when the sample used in the
paper is not restricted to matched firms. Moreover, we find no evidence
of publication bias.
Churning and Firms' Wage Policies' (Paper)
International Journal of Manpower (special issue: "The impact of
compensation policies within firms: Evidence from linked
employer-employee data"), forthcoming, 2008.
a random firm were to increase its wages, would that decrease the firm’s churning
reallocation)? Although the trade-off between wage and churning costs
has received attention in both the labour and HRM literatures, there seems
to be no evidence about the causal impact of
wages upon churning. This paper seeks to fill that gap by considering
matched employer-employee panel data and different identification
presenting comprehensive evidence about job and worker flows and
find that even models based on within-firm time differences do still
negative association between wages and turnover found in most research.
However, that result no longer holds when we consider instrumental
based on minimum wages determined by collective bargaining
possible interpretation of our finding is that workers’ effort may not
sufficiently sensitive to wages: employers may replace workers priced
the labour market with more skilled individuals, so that churning does
Real Wage Cyclicality' (Paper)
Scottish Journal of Political
Economy, 54(5), forthcoming, 2007.
Abstract:This paper presents evidence that real wage cyclicality
can be a particularly heterogeneous parameter, depending on different
worker characteristics and also on the specific stage of the business
cycle. Using matched employer-employee panel data for Portugal covering
the period 1986-2004, real wages are shown to be considerably more
procyclical during recessions than during expansions, resulting in
relatively moderate overall levels of cyclicality (about -0.6).
However, most of the procyclicality during downturns is shown to be
driven by the younger employees, as older workers appear to be
insulated from the business cycle. Moreover, movers between firms
typically display higher cyclicality than workers that stay in the same
firm, regardless of whether the latter move or not between job levels.
Most results also hold when considering basic wages instead of total
wages, except that the procyclicality of movers during downturns is
Worker Mobility, Wages and International Spillovers'
Rent Sharing in Developing Countries? Matched Panel Evidence
evidence about the determinants of the
wage structures of developing countries by examining the case of Brazil .
specific question is whether Brazil ’s
dramatic income and wage differentials can be explained by the division
rents between firms and their employees, unlike in competitive labour
detailed individual-level matched panel data, covering a large share of
manufacturing firms and more than 30 million workers between 1997 and
2002, we consider
the endogeneity of profits, by adopting different measures of profits
instruments and by controlling for spell fixed effects. Our results,
different specifications and tests, indicate no evidence of rent
sharing. This conclusion
contrasts with findings for most developed countries, even those with
labour markets. Possible explanations for the lack of rent sharing
weakness of labour-market institutions, the high levels of worker
turnover and the
macroeconomic instability faced by the country.
and Wage Spillovers of Foreign Firms'.
Bank of Portugal, Conference Proceedings, 2004. (Paper)
evaluate the impact of Foreign Direct Investment on the Portuguese
labour market using a matched employer-employee panel covering the
manufacturing sector between 1991-99. Wage differentials are found to
be negligible when considering methods such as propensity score
matching and difference-indifferences. Using OLS, the multinational
premium also falls substantially when firm and/or worker
characteristics are added and does not vary monotonically with foreign
control. Spillover effects (from foreign presence to wages paid by
domestic firms) are significantly positive, even when one accounts for
unobserved heterogeneity, endogeneity and the domestic industry size.
Foreign-presence elasticities of domestic wages range between 2% and 3%.
Dispersion: Evidence from the Wage Distribution'.
Economics Letters, 83(2),
Abstract: We argue that, under
the unobserved quality explanation of
industry wage differentials, industries with high average premia are
more likely to have even higher premia among higher wage workers. Using
quantile regression, we find, however, that the OLS premia correctly
illustrate the industry impact across the entire wage distribution.
Education and Wage Equations', with Pedro T. Pereira.
Applied Economics, 36(6), 525-531, 2004. (Paper)
Abstract: The paper shows why
considering a number of education-dependent covariates in a wage
equation decreases the coefficient of education in that equation. This
result is illustrated empirically with a meta-analysis for Portugal.
The education coefficient decreases when covariates are used that can
be considered post-education decisions; on the other hand, it is
independent of sample size, tenure and whether hourly or monthly wages
are used. These results support the use of a simple specification of
the Mincer equation for the study of the total returns to education.
Reduce Wage Inequality? Quantile Regressions Evidence
From Sixteen Countries', with Pedro T. Pereira.
Labour Economics, 11(3), 355-371, 2004. (Paper)
Abstract: Quantile regression
estimates of returns to education are used to address the relation
between schooling and wage inequality. Empirical evidence for male
workers from 16 countries for the mid-1990s suggests a robust stylised
fact: Returns to schooling are higher for the more skilled individuals,
conditional on their observable characteristics. This suggests that
schooling has a positive impact upon within-levels wage inequality.
Factors such as over-education, ability–schooling interactions and
school quality or different fields of study
may be driving this result.
Differentials in a Competitive Industry: Some Matched
International Journal of Manpower, 24(4),
336-346, 2003. (Paper)
Abstract: Studies wage
dispersion across firms and time in a specific industry that exhibits
competitive features: the Portuguese clothing industry in the 1991-1994
period. By drawing on a large matched employer-employee panel, obtains
the following results: the workers’ firm affliation plays an important
role in wage determination; there is a sizeable and persistent
dispersion of firm fixed effects, which is also similar for workers of
different tenure levels and occupations; workers in high-turnover firms
are generally paid less. It is believed
that these findings are not consistent with a simple competitive labour
'Is There A
Return-Risk Link in Education?', with Pedro T.
Economics Letters, 75(1), 31-37, 2002. (Paper)
Abstract: Using results for 16
countries, the positive relationship between return to education and
the risk involved in this investment is studied. It seems that most of
the countries fit the pattern well: higher risk–higher return and the
tradeoff is rather large.
Earnings in Portugal', with Pedro T.
Bank of Portugal, Conference Proceedings, 2002. (Paper)
Abstract: This report presents evidence on
the returns to education in Portugal. We find that, at 11%, Portugal exhibits a considerably large
microeconomic return to education. This has been increasing since the
1980s up until the mid-1990s but has decreased since then.
Although the average return to education is large, the marginal return differs
substantially as it generally increases with the schooling level. We
find that Engineering is the best rewarded degree, while Human and Social
Sciences (except Economics) reap the lowest returns. Some evidence suggests that
holders of technical degrees have out-performed holders of similar degrees but
of a more academic nature and that the private returns to some currently
offered types of vocational schooling are very low. As to differences between
gross and net returns to education, the latter are systematically lower. Wage
dispersion is higher for workers of high schooling attainment levels. No evidence
of signalling or selectivity in the returns to education is found.
Our policy suggestions focus on the role of the schools’ governance
structure upon students’ performance. While Portugal
would certainly benefit from a more qualified workforce, the evidence
suggesting low quality or inefficiency in the teaching/learning process
should also be acknowledged. The efficiency and performance of the system may
benefit from a gradual shift in the role of the government in education, from
that of a provider and a producer to that of a provider and a regulator.
Dynamics, Cohort Effects and Limited Commitment Models', with
Andy Snell and Jonathan Thomas
of the European
Economic Association, Papers and
Proceedings, 3(2/3), 350-359,
paper re-examines a problem first studied by Beaudry and DiNardo
(1991), who derived testable implications of three models of wage formation and found
support for an implicit contract model in which workers are perfectly mobile. We
analyse a model in which firms cannot pay discriminate based on year of entry to
the firm, and argue that the wage dynamics are similar to the Beaudry and
DiNardo model. Since in the latter model worker (under a hiring condition)
mobility/commitment does not affect the optimal contract, it is argued
that existing empirical research does not discriminate between different
models of worker commitment.
and Educational Production: A Case-Study of the Effect of Class
Attendance', with Ian Walker
Abstract: We examine the empirical determinants of
student achievement in higher education, focusing our attention on its
small-group teaching component (classes or seminars) and on the role of
attendance, number of students per class, peers, and tutors. The
empirical analysis is based on longitudinal administrative data from a
major undergraduate program where students are allocated to class
groups in a systematic way, but one which is plausibly uncorrelated
with ability. Although, in simple specifications, we find positive
returns to attendance and sizeable differences in the effectiveness of
teaching assistants, most effects are not significant in specifications
that include student fixed effects. We conclude that unobserved
heterogeneity amongst students, even in an institution that imposes
rigorous admission criteria and so has little observable heterogeneity,
is apparently much more important than observable variation in inputs
in explaining student outcomes.
'External Hirings and Firm Productivity',
with Francisco Lima (Paper)
Applied Economics Letters,
13(14), 911-915, 2006
the context of
tournament theory, and drawing on a panel data set of several firms and
their employees, we present evidence of a negative relationship between the
share of external recruitments for top management positions and firm
Firms Really Pay Higher Wages? Evidence from Different Estimators'
Abstract: We contribute to the
literature on Foreign Direct Investment and labour markets by examining
between domestic and foreign firms, drawing on a large Portuguese
matched employeremployee panel. Using OLS, the foreign-firm premium is
large and significantly positive but falls substantially when firm and
worker controls are added. Moreover, the premium also does not vary
monotonically with foreign control, increases along the wage
distribution and is generally insignificant when using propensity score
matching (PSM). Finally, using differences-in- differences (DID), we
find lower wage growth for workers in domestic firms that are acquired
by foreign investors, a result that holds when combining DID and PSM.
Overall, our evidence suggests that the commonly-documented OLS premium
cannot be interpreted as a causal impact.
to university degrees: the students’ perspectives' (Paper)
Abstract: Drawing on a large
survey of Portuguese undergraduate students, we test two key
assumptions of Becker’s human capital theory: 1) financial returns play
an important role in students’ choice of university degrees and 2)
students understand how such differ across degrees. We find that
expected wages matter in degree choice but preferences for degree
content are at least as
important. Moreover, many factors also shape students’ wage
expectations besides the degree type: the schooling of parents, the
student’s gender and whether
they have a job. Finally, our evidence suggests students overestimate
their future wages by about 10%.
Sharing and Foreign Ownership' (Paper)
Abstract: Rent sharing is
perceived as an important explanation for the stylised fact that
foreign firms pay higher wages. Using a matched panel of large firms
based in Portugal, we find rent sharing to be insignificant for foreign
firms, unlike for their domestic counterparts.
Social Returns to Education' (Paper)
Before and After the Wage Bill' (Paper)
biases plague the estimation of rent sharing in labour markets. Using a
Portuguese matched employer-employee panel, these biases are addressed
paper in three complementary ways: 1) Controlling directly for the fact
firms that share more rents will, ceteris
paribus, have lower net-of-wages profits. 2) Instrumenting profits
interactions between the exchange rate and the share of exports in
of firms. 3) Considering firm or firm/worker spell fixed effects and
highlighting the role of downward wage rigidity. These approaches
conflicting findings in the literature and result, in our preferred
specification, in a Lester range of pay dispersion of 56%, also shown
robust to a number of competitive interpretations.
Inter-Industry Wage Structure of US Multinationals'
10(1), 1-12, 2005
is known about wage determination by multinational firms, despite the
much-discussed role of globalisation upon wage dispersion. We
this topic by examining industry- and host-country-specific 1998 data
compensation of foreign affiliates of US firms and by comparing that
labour market data. We find substantial differences in employment
distributions, that the inter-industry wage structure of US affiliates
dispersed than the same structure in the US
and that the two industry wage premia are
moderately correlated. These findings are consistent with the vertical
FDI but but do not support claims that multinationals increase wage
and Unobserved Skills: Evidence from a
Matched Panel' (Paper)
the wage implications of schooling/occupation mismatches, motivated by
of a poor synchronisation between education systems and labour markets.
contribution is in studying the role of unobserved heterogeneity in
under-education, drawing on a matched employer-employee panel. Although
identification of the key parameters is difficult due to the lack of
variability in the regressors, some interesting results include the
of selectivity in the transitions experienced by workers and of a
interpretation of schooling mismatches.
da Microeconomia: Uma Comparação entre a Nova e Warwick'
[In Portuguese] (with J-P Gomes) (Paper)
vários aspectos das disciplinas de Microeconomia (nível
introdutório/intermédio) em duas universidades europeias,
com vista a establecer padrões de “benchmarking”. Constatamos um
grande leque de diferenças, em características como:
carga horária, dimensão das turmas práticas,
método de condução das aulas práticas
(orientação teórica/prática e
participação dos alunos), exigência da
avaliação e resultados finais/aproveitamento dos alunos.
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