This paper estimates a wage equation with three high-dimensional fixed effects, using a longitudinal matched employer …-employee dataset covering virtually all Portuguese wage earners over a little more than two decades. The variation in log real hourly … unobserved) and a residual component. It is found that worker permanent heterogeneity is the most important source of wage …

This paper estimates a wage equation that includes worker- and firm fixed effects simultaneously, using a longitudinal … heterogeneity is the most important source of wage variation (46.2 percent), due in roughly equal parts to the unobserved component …’ observed characteristics do play an important role (14.8) in explaining wage differentials. …