Scandinavian Working Papers in Economics

Nationaløkonomisk tidsskrift,
Nationaløkonomisk Forening

Documenting and Improving the Hourly Wage Measure in the Danish IDA Database

2016, Volume 2016, issue 1, pp. 35

Christian Giødesen Lund () and Rune Vejlin ()
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Rune Vejlin: Department of Economics and Business, Business and Social Sciences, Aarhus University, Postal: Fuglesangs Allé 4, 8210 Aarhus V., Denmark

Abstract: This paper overhauls the hourly wage measure that is most often used in Danish research, the TIMELON variable in the IDA database. Based on a replication that we have constructed, we provide a documentation of the wage variable, the first of its kind, and then continue with a performance analysis. We find four puzzles. 1) The wages of part-timers fall steeply from 1992 to 1993, 2) the wages of full-timers fall from 2003 to 2004, 3) the level of the part-timer wages is around 12.5% higher than it should be, and 4) the wages of new hires fall steeply from the first year of employment to the second year. We analyze these puzzles in depth and solve almost all of them. Finally, we propose a new hourly wage measure that incorporates all the solutions and we show that it performs much better.

Keywords: Danish hourly wages; IDA data

JEL-codes: J00; J31

Language: English

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