Essays on Wages and Productivity: The Role of GVCs, Tenure, and Global Warming

This PhD thesis includes three original microeconomic analyses that investigate critical factors influencing workers’ wages and firm productivity, and underpinning relevant megatrends poised to reshape economic systems and lifestyles worldwide for decades to come. Specifically, the thesis explores the following dimensions: firms’ relative positioning within Global Value Chains (GVCs), organizational tenure (i.e. the length of employment in a given firm), and the economic implications of global warming. The first two analyses focus on the Belgian labor market, while the third adopts a broader European perspective. Based on matched employer-employee data relative to the Belgian manufacturing industry for the period 2002-2010 combined with a unique indicator of firm-level upstreamness (i.e. the steps before the production of a firm meets final demand), Chapter 1 shows that workers earn significantly higher wages when employed in more upstream firms. However, the benefits from upstreamness are found to be unequally shared among workers, both along the wage distribution and when considering the gender dimension of the workforce. Using rich longitudinal matched employer-employee data on Belgian firms over the period 2005-2016, Chapter 2 point to positive, but decreasing, returns to tenure. The study also finds that the impact differs widely across several firm dimensions (e.g. task routineness, job complexity, capital intensity). Using longitudinal firm-level balance-sheet data from private sector firms in 14 European countries over the period 2013-2020, combined with detailed weather data, including temperature, Chapter 3 reveals that global warming significantly and negatively impacts firms’ Total Factor Productivity (TFP). Labor productivity also declines markedly as temperatures rise, while capital productivity remains unaffected – indicating that TFP is primarily affected through the labor input channel. Such impacts appear to persist across geographical, sectoral, and firm-specific dimensions.