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Internal Wage Structures and Organizational Performance


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  • P. B. Beaumont
  • R. I. D. Harris


This paper considers whether a hierarchical or compressed wage structure is positively associated with relatively high levels of organizational performance. To date, there has been little empirical research in this area (especially in the UK). Thus we present an operational measure of a compressed/hierarchical wage structure, using UK manufacturing micro-data in five industrial sectors, and examine its relationship with labour productivity. We find that the wage compression argument holds in one sector but not for the majority of sectors and that taking into account other, intra-industry characteristics, namely size and ownership differences, further weakens the relationship. Copyright Blackwell Publishing Ltd/London School of Economics 2003.

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Bibliographic Info

Article provided by London School of Economics in its journal British Journal of Industrial Relations.

Volume (Year): 41 (2003)
Issue (Month): 1 (03)
Pages: 53-70

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Handle: RePEc:bla:brjirl:v:41:y:2003:i:1:p:53-70

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  1. repec:lan:wpaper:3619 is not listed on IDEAS
  2. Benoît Mahy & François Rycx & Mélanie Volral, 2011. "Does Wage Dispersion Make All Firms Productive?," Scottish Journal of Political Economy, Scottish Economic Society, Scottish Economic Society, vol. 58(4), pages 455-489, 09.
  3. Christian Grund & Niels Westergaard-Nielsen, 2005. "The Dispersion of Employees' Wage Increases and Firm Performance," Bonn Econ Discussion Papers, University of Bonn, Germany bgse3_2005, University of Bonn, Germany.
  4. Egon Franck & Stephan Nüesch, 2007. "Wage Dispersion and Team Performance - An Empirical Panel Analysis," Working Papers, University of Zurich, Institute for Strategy and Business Economics (ISU) 0073, University of Zurich, Institute for Strategy and Business Economics (ISU).
  5. repec:lan:wpaper:4012 is not listed on IDEAS
  6. repec:lan:wpaper:3727 is not listed on IDEAS
  7. Nils Braakmann, 2008. "Intra-firm wage inequality and firm performance – First evidence from German linked employer-employee-data," Working Paper Series in Economics, University of Lüneburg, Institute of Economics 77, University of Lüneburg, Institute of Economics.
  8. repec:lan:wpaper:3621 is not listed on IDEAS
  9. A I Petrescu & R Simmons & S Bradley, 2004. "The impacts of human resource management practices and pay inequality on workers' job satisfaction," Working Papers 542602, Lancaster University Management School, Economics Department.


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