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Canadian Jobs and Firm Size: Do Smaller Firms Pay Less?

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Author Info
Rene Morissette
Abstract

Even after controlling for observable workers' characteristics and for occupation and industry-specific effects, a substantial wage differential remains between large and small firms. What underlies the remaining wage differential is unclear. Direct evidence on pension plan coverage and on lay-off rates by firm size is inconsistent with the "bad working conditions" hypothesis. The union avoidance hypothesis does not seem to explain an important portion o f the wage differential. As suggested by efficiency wage models, part of the remaining wage differential may be due to firms' heterogeneity. Similarly, perhaps large firms pay higher wages simply (partly) beca use they employ workers with more unobserved abilities. Because differen t explanations of the wage differential may lead to different policy implications, determining the source of the wage-firm size effect is an important question for future research.

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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 26 (1993)
Issue (Month): 1 (February)
Pages: 159-74
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Handle: RePEc:cje:issued:v:26:y:1993:i:1:p:159-74

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  1. Mark Wooden, 2000. "Union Wage Effects in the Presence of Enterprise Bargaining," Melbourne Institute Working Paper Series wp2000n07, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
    Other versions:
  2. Lixin Cai & Amy Y.C. Liu, 2007. "Union Wage Effects in Australia: Are There Variations in Distribution?," Melbourne Institute Working Paper Series wp2007n017, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  3. Drolet, Marie & Morissette, René, 1998. "Recent Canadian Evidence on Job Quality by Firm Size," Analytical Studies Branch Research Paper Series 1998128e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  4. Drolet, Marie & Morissette, René, 1999. "The Evolution of Pension Coverage of Young and Prime-aged Workers in Canada," Analytical Studies Branch Research Paper Series 1999138e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  5. Dupuy, Richard & Picot, Garnett, 1997. "Job Creation by Company Size Class: Concentration and Persistence of Job Gains and Losses in Canadian Companies," Analytical Studies Branch Research Paper Series 1996093e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  6. Marie Drolet, 2002. "Can the Workplace Explain Canadian Gender Pay Differentials?," Canadian Public Policy, University of Toronto Press, vol. 28(s1), pages 41-63, May. [Downloadable!] (restricted)
  7. Drolet, Marie & Morissette, René, 1999. "L'évolution de la protection offerte par les pensions aux travailleurs jeunes et plus âgés au Canada," Direction des études analytiques : documents de recherche 1999138f, Statistics Canada, Direction des études analytiques. [Downloadable!]
  8. Thierry Lallemand & Robert Plasman & François Rycx, 2005. "The Establishment-Size Wage Premium: Evidence from European Countries," IZA Discussion Papers 1569, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  9. S. Dobbelaere, 2003. "Ownership, Firm Size and Rent Sharing in a Transition Country," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/170, Ghent University, Faculty of Economics and Business Administration. [Downloadable!]
  10. Ana Ferrer & Stephanie Lluis, . "Should Workers Care About Firm Size?," Working Papers 0204, Industrial Relations Center, University of Minnesota (Twin Cities Campus). [Downloadable!]
    Other versions:
  11. Kelly Edmiston, 2004. "The small business role in economic development," Community Affairs Research Working Paper 2005-01, Federal Reserve Bank of Kansas City. [Downloadable!]
  12. Catalina Amuedo-Dorantes, 2005. "Work Contracts and Earnings Inequality: The Case of Chile," The Journal of Development Studies, Taylor and Francis Journals, vol. 41(4), pages 589-616, May. [Downloadable!] (restricted)
  13. Lixin Cai & Amy Y.C. Liu, 2008. "Public-Private Wage Gap in Australia: Variation Along the Distribution," CEPR Discussion Papers 581, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
  14. Stephanie Lluis, . "Endogenous Choice of Firm Size and the Sturcture of Wages: A Comparison of Canada and the United States," Working Papers 0203, Industrial Relations Center, University of Minnesota (Twin Cities Campus). [Downloadable!]
  15. Lin, Zhengxi & Picot, Garnett & Pyper, Wendy & Zhengxi, Lin, 1997. "Permanent Layoffs in Canada: Overview and Longitudinal Analysis," Analytical Studies Branch Research Paper Series 1997103e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
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