Firm Age and Wages

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Although a great deal is known about how the characteristics of individuals and economic outcomes are related, much less is known about the association between characteristics of firms (other than size and unionization) and labor market phenomena. A key characteristic of firms is their age. This project will focus on the age related differences in the survival-relevant characteristics of firms as well as attributes such as firm size or industry. The project begins with an analysis of firm age and wages, including the size and sign of the relationship on average and checks for departures from this norm across settings. An attempt will be made to explain why such differentials exist and how they can persist in reasonable competitive product markets. Existing data sets will be utilized for the analysis, including the Minimum Wage Employer Survey and the British Workplace Industrial Relations Survey. However, a major part of the project will involve matching estimates of age of employer to observations in data files which lack an explicit measure of employer age but have large samples and more detail on worker characteristics. Specifically, the Dun and Bradstreet or the Bureau of Economic Analysis County Business Patterns which obtain information on average age of firm by industry size and region will be matched to individual records in the Current Population Survey. In addition, a supplement to the Survey of Consumers would include questions which would enable worker characteristics to be controlled for. This new data set would be made available through a data archive for other researchers in economics.