"National Wages" - Heather Sarsons, University of Chicago

Date
Nov 29, 1:20 pm2:35 pm
Location
Zoom Meeting
Event Description

Heather Sarsons is an assistant professor at the University of Chicago Booth School of Business.

Heather Sarsons will be presenting via Zoom.

Abstract

 

How do firms set wages across space? Using vacancy data with detailed job-level information and a survey of HR managers, we show that 35 percent of multi-establishment firms \textit{set wages nationally}, meaning they choose rigid pay structures in which they set exactly the same nominal wage for the same job in different regions. We start by showing that a significant minority of firms set identical wages within an occupation across all of their locations. This practice is widespread but most common in high-wage jobs. Next, using the pass-through of local shocks to wages in other locations of the firm, we argue that these identical wages indicate national wage setting. Our survey suggests that one reason firms set wages nationally is that nominal, rather than real, wage comparisons matter to workers.