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GEE Estimation of a Two-Equation Panel Data Model: An Analysis of Wage Dynamics and the Incidence of Profit-Sharing in West Germany

We propose a generalized estimating equations approach to the analysis of the mean and the covariance structure of a bivariate time series process of panel data with mixed continuous and discrete dependent variables. The approach is used to jointly analyze wage dynamics and the incidence of profit-sharing in West Germany. Our findings reveal a significantly positive conditional correlation of wages and the incidence of profit-sharing. Furthermore, they indicate that permanent unobserved individual ability is comparatively more important in the profit-sharing than in the wage equation and show that shocks have a long-lasting effect on transitory wages but not on the incidence of profit-sharing. Hence, the results support theoretical predictions that selection into profit-sharing is mostly due to unobservable ability and that profit-sharing ties wages more closely to productivity.
Year of publication:
2007
Authors: Pannenberg, Markus ; Spiess, Martin
Publisher: Berlin : Deutsches Institut für Wirtschaftsforschung (DIW)
Subject: Zeitreihenanalyse | Panel | Varianzanalyse | Reallohn | Erfolgsbeteiligung | Schätzung | Deutschland | generalized estimating equations | covariance structure | longitudinal data | real wages | variable pay
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Type of publication: Book / Working Paper
Type of publication (narrower categories): Working Paper
Language: English
Other identifiers:
523980418 [GVK]
hdl:10419/18395 [Handle]
RePEc:diw:diwwpp:dp663 [RePEc]
Classification: J33 - Compensation Packages; Payment Methods ; J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc ; C35 - Discrete Regression and Qualitative Choice Models ; C33 - Models with Panel Data ; D31 - Personal Income, Wealth and Their Distributions
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Persistent link: https://www.econbiz.de/10010260895
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