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Documenting and Improving the Hourly Wage Measure in the Danish IDA Database

Author

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  • Christian Giødesen Lund

    (Copenhagen Economics A/S)

  • Rune Vejlin

    (Department of Economics and Business Economics, Aarhus University, Denmark)

Abstract

This paper overhauls the hourly wage measure that is most often used in Danish research, the TIMELON variable in the IDA database. Based on a replication that we have constructed, we provide a documentation of the wage variable, the first of its kind, then continue with a performance analysis. We find four puzzles. 1) The wages of part-timers fall steeply from 1992 to 1993, 2) the wages of full-timers fall from 2003 to 2004, 3) the level of the part-timer wages is around 12.5% higher than it should be, and 4) the wages of new hires fall steeply from the first year of employment to the second year. We analyse these puzzles in depth and solve almost all of them. Finally, we propose a new hourly wage measure that incorporates all the solutions and we show that it performs much better.

Suggested Citation

  • Christian Giødesen Lund & Rune Vejlin, 2015. "Documenting and Improving the Hourly Wage Measure in the Danish IDA Database," Economics Working Papers 2015-06, Department of Economics and Business Economics, Aarhus University.
    • Handle: RePEc:aah:aarhec:2015-06
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    References listed on IDEAS

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    1. I. Sebastian Buhai & Miguel A. Portela & Coen N. Teulings & Aico van Vuuren, 2014. "Returns to Tenure or Seniority?," Econometrica, Econometric Society, vol. 82(2), pages 705-730, March.
    2. Jesper Bagger & Francois Fontaine & Fabien Postel-Vinay & Jean-Marc Robin, 2014. "Tenure, Experience, Human Capital, and Wages," SciencePo Working papers Main hal-01301431, HAL.
    3. Lund, Christian Giødesen & Vejlin, Rune, 2016. "Documenting and Improving the Hourly Wage Measure in the Danish IDA Database," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2016(1), pages 1-35.
    4. repec:hal:spmain:info:hdl:2441/7rep5mp5ij95l94ec64n5tdclp is not listed on IDEAS
    5. Jesper Bagger & Fran?ois Fontaine & Fabien Postel-Vinay & Jean-Marc Robin, 2014. "Tenure, Experience, Human Capital, and Wages: A Tractable Equilibrium Search Model of Wage Dynamics," American Economic Review, American Economic Association, vol. 104(6), pages 1551-1596, June.
    6. Christopher Taber & Rune Vejlin, 2020. "Estimation of a Roy/Search/Compensating Differential Model of the Labor Market," Econometrica, Econometric Society, vol. 88(3), pages 1031-1069, May.
    7. repec:hal:spmain:info:hdl:2441/eu4vqp9ompqllr09j0045h4bh is not listed on IDEAS
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    Citations

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    Cited by:

    1. Eckert, Fabian & Hejlesen, Mads & Walsh, Conor, 2022. "The return to big-city experience: Evidence from refugees in Denmark," Journal of Urban Economics, Elsevier, vol. 130(C).
    2. Bagger, Jesper & Moen, Espen R. & Vejlin, Rune Majlund, 2021. "Equilibrium Worker-Firm Allocations and the Deadweight Losses of Taxation," IZA Discussion Papers 14865, Institute of Labor Economics (IZA).
    3. Bagger, Jesper & Fontaine, Francois & Galenianos, Manolis & Trapeznikova, Ija, 2022. "Vacancies, employment outcomes and firm growth: Evidence from Denmark," Labour Economics, Elsevier, vol. 75(C).
    4. Jinkins, David & Morin, Annaïg, 2018. "Job-to-job transitions, sorting, and wage growth," Labour Economics, Elsevier, vol. 55(C), pages 300-327.
    5. Fabian Eckert & Conor Walsh & Mads Hejlesen, 2018. "The Return to Big City Experience: Evidence from Danish Refugees," 2018 Meeting Papers 1214, Society for Economic Dynamics.
    6. Bagger, Jesper & Maliranta, Mika & Määttänen, Niku & Pajarinen, Mika, 2016. "Innovator Mobility in Finland and Denmark," ETLA Reports 48, The Research Institute of the Finnish Economy.
    7. Christopher Taber & Rune Vejlin, 2020. "Estimation of a Roy/Search/Compensating Differential Model of the Labor Market," Econometrica, Econometric Society, vol. 88(3), pages 1031-1069, May.
    8. Lund, Christian Giødesen & Vejlin, Rune, 2016. "Documenting and Improving the Hourly Wage Measure in the Danish IDA Database," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2016(1), pages 1-35.
    9. Schroeder, Christofer & Hviid, Simon Juul, 2024. "Real effects of credit supply shocks: evidence from Danish banks, firms, and workers," Working Paper Series 3001, European Central Bank.
    10. Jesper Bagger & Mads Hejlesen & Kazuhiko Sumiya & Rune Vejlin, 2018. "Income Taxation and the Equilibrium Allocation of Labor," Economics Working Papers 2018-06, Department of Economics and Business Economics, Aarhus University.
    11. Jesper Bagger & Espen Moen & Rune Vejlin, 2018. "Optimal Taxation with On-the-Job Search," 2018 Meeting Papers 805, Society for Economic Dynamics.
    12. Hanno Foerster, 2019. "Untying the Knot: How Child Support and Alimony Affect Couples' Decisions and Welfare," CRC TR 224 Discussion Paper Series crctr224_2019_115v2, University of Bonn and University of Mannheim, Germany.
    13. Hanno Foerster, 2019. "The Impact of Post-Marital Maintenance on Dynamic Decisions and Welfare of Couples," Boston College Working Papers in Economics 982, Boston College Department of Economics.
    14. Bødker, Jonas Ehn & Maibom, Jonas & Vejlin, Rune Majlund, 2018. "Decomposing the Exporter Wage Gap: Selection or Differential Returns?," IZA Discussion Papers 11998, Institute of Labor Economics (IZA).
    15. Labanca, Claudio & Pozzoli, Dario, 2022. "Hours Constraints and Wage Differentials across Firms," IZA Discussion Papers 14992, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Danish hourly wages; IDA data;

    JEL classification:

    • J00 - Labor and Demographic Economics - - General - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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