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The Division of Unexpected Revenue Shocks

Author

Listed:
  • Paulo Bastos

    (World Bank)

  • Natália P. Monteiro

    (Department of Economics/NIPE, University of Minho)

  • Odd Rune Straume

    (Department of Economics/NIPE, University of Minho and Department of Economics, University of Bergen)

Abstract

We estimate the effects of unexpected revenue shocks on worker compensation. We propose a new methodology to identify the unexpected component of demand shocks at the firm-level, which uses gaps between observed and recently forecasted GDP growth in export destinations (weighted by the initial share of destinations in firms' total sales). Using employer-employee panel data, we find that unexpected demand shocks are partly transmitted to workers in the form of higher average wages, with most of the rises occurring close to the top of the within-firm wage distribution. We find little evidence of adjustments in the skill composition of the workforce. The unequal average distribution of rents is mainly driven by wage effects in firms managed by high-skilled managers, and by changes in overtime and other pay. This suggests that different types of managers implement different pay systems in the firm.

Suggested Citation

  • Paulo Bastos & Natália P. Monteiro & Odd Rune Straume, 2021. "The Division of Unexpected Revenue Shocks," NIPE Working Papers 13/2021, NIPE - Universidade do Minho.
    • Handle: RePEc:nip:nipewp:13/2021
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    File URL: https://repositorium.sdum.uminho.pt/handle/1822/74638
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    More about this item

    Keywords

    Unexpected revenue shocks; firm performance; exports; rent sharing; managers.;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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