Research insight
Editorial from
Rui C. Silva
Assistant Professor, Nova SBE
November 16, 2022
8. Decent work and economic growth

8. Decent work and economic growth

Promote inclusive and sustainable economic growth, full and productive employment and decent work for all

Internal Labor Markets, Wage Convergence and Investment

Rui Silva joined Nova SBE as an Assistant Professor in Finance! Recently, he published "Internal labor markets, wage convergence, and investment" in the Journal of Financial and Quantitative Analysis, 56(4), 1192-1227. Click to read the abstract and access the paper.


I document wage convergence in conglomerates using detailed plant-level data: Workers in low-wage industries collect higher-than-industry wages when the diversified firm also operates in high-wage industries. I confirm this effect by exploiting the implementation of the North American Free Trade Agreement (NAFTA) and changes in minimum wages at the state level as sources of exogenous increases in wages in some plants. I then track the evolution of wages of the remaining workers of the firm, relative to workers of unaffiliated plants. Plants where workers collect higher-than-industry wages operate with higher capital intensity, suggesting that internal labor markets may affect investment decisions in internal capital markets.

Access the research paper here

Rui C. Silva
Assistant Professor, Nova SBE

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