This paper uses a manager-firm-worker matched dataset covering the entire Danish population to identify manager effects on worker wages. We show that manager-specific wage premiums are almost as important as firm-specific wage premiums in explaining betweenfirm wage inequality. Managers who pay higher wages are more likely to be replaced through acquisitions. Manager-specific wage premiums are uncorrelated with productivity and seem to stem from managers' traits and fairness views. Our results highlight the role of managers in understanding between-firm wage inequality and suggest that the managerial labor market tends to select low-paying managers and redistribute wealth from workers to shareholders.

ABSTRACT We study the causal effect of liquidity constraints on individual labor market outcomes by exploiting the 1992 mortgage reform in Denmark, which for the first time allowed homeowners to borrow against housing equity for nonhousing purposes. Following the reform, liquidity‐constrained homeowners increased debt levels and had higher earnings growth and lower employment rates. The option to borrow against housing equity enabled liquidity‐constrained individuals to move to high‐wage jobs and invest in valuable human and physical capital. The results imply that relaxing household liquidity constraints during recessions can create better job matches, potentially increasing earnings and output in the longer run.

This article studies how decentralization of wage bargaining from sector to firm level influences wage levels and wage dispersion. We use detailed panel data covering a period of decentralization in the Danish labor market. The decentralization process provides variation in the individual worker’s wage-setting system that facilitates identification of the effects of decentralization. We find a wage premium associated with firm-level bargaining relative to sector-level bargaining and that the return to skills is higher under the more decentralized wage-setting systems. Using quantile regression, we also find that wages are more dispersed under firm-level bargaining compared to more centralized wage-setting systems.