Abstract

Increasingly, the existence of firm-level wage differences is explained by the rentsharing hypothesis. A necessary condition for rent-sharing is the assumption that firms are acting on imperfect product markets such that they can achieve quasi-monopolistic rents. In particular, 10 literature is emphasizing the role of innovative products for the market performance of a firm. For a better understanding of the causal chain between product market competition and the firm specific wage level, the DIW Berlin suggest an analysis on the relationship between product diversification, including the introduction of new products, success of firms and firm level wages. lt is suggested, to do this analysis by applying econometric panel methods on micro level data for German manufacturing enterprises. For this objective, it is necessary to create a linked product-producer-employer-employee-database. This affords the merging of three different datasets of the system of surveys in manufacturing for Germany. The eaming survey supplies information on individual firm specific wages, the cost structure survey supplies inforrnation on the operating surplus of individual firms, while the production survey supplies the information on the goods produced by these firrns.