Discussion paper
DP19224 National Wage Setting
How do firms set wages across space? We document four facts using job-level vacancies and matched employer-employee data. First, firms rather than locations explain most of the variation in wages within a job. Second, nominal wages within the firm vary little with local prices. Third, firms most strongly influence wage growth across locations. Fourth, local wage shocks impact wages in the rest of the firm, but only for jobs that initially pay identical wages. We argue these patterns indicate national wage setting, in which firms choose to set the same nominal wage for a job across all their establishments.
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