Aksel Vester Augsburg defends his PhD thesis at the Department of Economics

Candidate:

Aksel Vester Augsburg, Department of Economics, University of Copenhagen

Title:

Essays in Labor Economics: The Role of Firms in Wages, Amenities, and Employment

Supervisors:

• Nikolaj Arpe Harmon, Associate Professor, Department of Economics, University of Copenhagen

Assessment Committee:

• Morten Bennedsen, Professor, Department of Economics, University of Copenhagen
• Farzad Saidi, Professor, Department of Economics, University of Bonn
• Sydnee Caldwell, Assistant Professor, Department of Economics, University of California, Berkeley

Summary:

This thesis consists of 3 self-contained chapters. While the three chapters have different research questions, they share the topic of firms' role in the labor market. They cover implications for wages, unemployment, and inequality that stem from firm differences and competition.

Chapter 1: Persistence of Firm Wage Premia: Evidence from Denmark

I examine the persistence of the firm component of wages - the firm wage premia - as estimated in the AKM framework. I pay special attention to how choice in the sample selection affects the estimated persistence, and how it affects other applications of the AKM framework. Using data from Denmark, I compare my estimates to results in Sweden and Washington State and I find evidence that firm pay policies are less persistent in Denmark, but the model is very sensitive to changes in the sample. Efforts to focus on workers with a high labor market attachment lower the persistence of firm pay policies. The results have implications for how we should think of high- and low-wage firms over time and the sensitivity of the AKM framework.

Chapter 2: Horizontal and Vertical Competition for Workers: Evidence from Danish administrative data

with Nikolaj Harmon

When firms compete for workers in the labor market, they do it by offering different wages, job amenities and/or other employment terms. We examine the extent and nature of these differences using comprehensive Danish administrative data. To measure differences in the employment terms offered by firms, we estimate AKM firm effects for both earnings, hours and a range of other worker outcomes, capturing family-friendliness, health risks, career-advancement opportunities and job security. We then characterize the nature and extent of how these offered employment terms differ across firms. A bit more than half of the variation in offered terms reflects vertical differentiation, as some firms offer more attractive terms along all dimensions. A substantial part of the variation however also reflects horizontal differentiation, where each firm offers particularly attractive terms in some dimensions but less attractive terms in others. In particular we see evidence that some firms opt to offer both fewer health risks, better career-advancement and better job security, at the expense of offering lower short-run earnings. We also see evidence of some firms emphasizing family-friendliness at the expense of earnings and career-advancement.

Chapter 3: Restricted Credit Growth, Loan Cuts, and Employment Growth in the Great Recession

with Daniel le Maire and Fane Groes

The Great Recession limited firms' ability to finance operations and growth due to credit constraints. This paper examines how restricted credit growth and loan cuts influenced employment among Danish firms during the crisis. Using Danish administrative data linking firms to their primary banks, we find that less healthy banks reduced lending more, especially impacting small and young firms. By distinguishing between limited access to new loans and loan reductions, we show that constrained credit growth hindered employment on the intensive margin, while loan cuts seemed to raise firm closure risks. Our findings offer insights into how credit constraints affect employment and survival among small, young firms

An electronic copy of the dissertation can be requested here: lema@econ.ku.dk