• [BdF Working paper, 2025]  [Insee Working Paper, 2023]

Abstract: We use a newly constructed and quasi-exhaustive matched employer-employee database to study the contribution of firms to wage inequality in France. We implement a simple and tractable correction for the limited mobility bias. Our analysis, covering the period 2002-2019, reveals an increase in between-firm inequality, mainly due to the growing clustering of workers with similar market value. These phenomena are associated with increasing occupational specialization at the firm level. Our results highlight the importance of bias-corrected AKM estimates in capturing the dynamics of wage inequality, and show how both observable job types and unobservable individual characteristics contribute to these patterns.

Firms create temporary jobs for different reasons: to screen candidates for permanent positions; to cope with seasonal and short-term swings in activity; to increase flexibility in the use of the workforce. We use data on the universe of temporary jobs in Italy between 2013 and 2017 to identify and characterize the firms that engage in these different strategies. Screening is not a primary driver of temporary employment: the conversion rate of fixed-term employment relationships -- 20\% on average -- is strongly predicted by unobserved firms factors and strongly positively correlated with the stated duration of the first contract, a choice that the firm makes before observing the surplus of the match. Seasonality in activity involves a limited (below 20\%) but well-identifiable share of jobs and firms. On the other hand, the use of fixed-term contracts as a buffer to meet flexibility needs is more difficult to characterize: while some firms resort to temporary employment because their revenues are highly volatile, others simply discharge part of their normal business risk onto workers. This may lead to excessive worker turnover. These results have important policy implications for the design and regulation of fixed-term employment contracts.

• Access to Italian Social Security data through VisitINPS Scholars Program

We examine the impact of Italy's 2018 reform tightening legislation on temporary contracts. Analyzing employment and wage dynamics, we find moderate disemployment effects and a significant shift in workforce composition. Exposed firms experienced a substantial reduction in the share of days worked in fixed-term contracts, offset by an increase in permanent employment, primarily through the conversion of existing temporary contracts. Notably, we document a sizeable decline in the starting wages for workers transitioning from fixed-term to permanent contracts compared to pre-reform levels. Our results suggest the existence of some degree of market power on the part of firms, with increased security for the workers being partly compensated by lower wages.

We document the contribution of firm-specific wage premiums to the gender wage gap using a harmonized research design applied to eleven matched employer-employee datasets  - ten European countries and Washington State, USA. First, we show that firm wage premiums significantly contribute to overall wage dispersion for both men and women, accounting for 3-20% of wage variance across countries. These premiums can contribute to cross-country variation in gender wage inequality if women are less likely to work at high-paying firms (sorting) or receive lower premiums than men within the same firm (pay-setting). We find that firm-specific wage premiums explain 15-32% of the gender wage gap. Importantly, firms are a key factor in explaining the variation in the gender wage gap across countries: countries with larger gender wage gaps also have larger gaps in firm-specific wage premiums. There is substantial cross-country variation in the relative importance of sorting versus pay-setting channels. Yet, several robust patterns emerge. The sorting component increases markedly over the life cycle. Women are disproportionately employed in firms with high part-time incidence that offer lower wage premiums. The pay-setting component is systematically larger in high-wage firms, where women, on average, receive 90% of the rents that men receive from firm productivity gains.