Seniority wages and establishment characteristics

► Seniority wages are positively correlated with establishment size, profitability, collective bargaining coverage, works councils, reduced working time for older employees. ► Seniority wages are negatively related with share of foreigners, females and initial wage levels for job entrants. ► Correlations support an agency based motivation for seniority wages. ► Representative linked employer-employee panel data set. ► Innovative two-step estimation strategy.