The Roles of Employer and Employee Characteristics for Plant Productivity

Using a matched worker-plant data from Finnish manufacturing, the relationships of worker characteristics, wages, and productivity are examined. The process of linking various registers on employees and plants is described in detail. The final data set includes the characteristics of plants and their employees. The plant panel data is used for estimating productivity and wage profiles according to age and seniority. At low seniority productivity increases fast, but starts to decline early. Wage profiles are not related to productivity profiles, but continue to increase with seniority. These results support the hypothesis that human capital is not firm specific, and seniority related wages are used for incentive reasons. Various components of worker turnover have an impact on productivity growth. 1 1.