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Minimum wages alter the allocation of firm-idiosyncratic risk across workers. To establish this result, we focus on Italy, and leverage employer-employee data matched to firm balance sheets and hand-collected wage floors. We find a relatively larger pass-through of firm-specific labor-demand...
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empirical relationship between uncertainty and investment. We develop a model in which the manager, compensated with an equity …-based contract, makes investment decisions for a firm that faces time-varying volatility. The contract creates incentives that affect … compensation data to quantify this predicted investment response for a large panel of firms. Our estimates help explain the …
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