Discussion Paper

No. 2014-28 | July 04, 2014
An Estimation of Worker and Firm Effects with Censored Data

Abstract

In this paper, the authors develop a new estimation method that is suitable for censored models with two high-dimensional fixed effects and that is based on a sequence of least squares regressions, yielding significant savings in computing time and hence making it applicable to frameworks in which standard estimation techniques become unfeasible. The authors analyze its theoretical properties and evaluate its practical performance in small samples through a detailed Monte Carlo study. Finally, using a longitudinal match employer-employee dataset from Spain, they show that the biases encountered when ignoring censored issues can be significant to the role of firms in terms of wage dispersion: individual heterogeneity explains more than 60% of wage dispersion.

Data Set

Data sets for articles published in "Economics" are available at Dataverse. Please have a look at our repository.

The data set for this article can be found at: http://dx.doi.org/10.7910/DVN/26657

JEL Classification

I21 I24 J16 J31

Cite As

Ainara González de San Román and Yolanda F. Rebollo-Sanz (2014). An Estimation of Worker and Firm Effects with Censored Data. Economics Discussion Papers, No 2014-28, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2014-28

Assessment



Comments and Questions


Anonymous - Invited Reader Comment 1
July 29, 2014 - 10:47

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Anonymous - Referee Report 1
August 05, 2014 - 09:26

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Anonymous - Referee Report 2
August 13, 2014 - 09:30

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Anonymous - Referee Report 3
September 01, 2014 - 10:35

see attached file