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The hiring decisions and compensation structures of large firms

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  • Luojia Hu

Abstract

This paper investigates differences between large and small firms in new hires' ages and in compensation structures. An analysis of data from the Benefits Supplement to the Current Population Survey (CPS) shows that large firms hired younger workers than small firms and awarded starting wages that discriminated less between young and older workers. Most strikingly, the well-known wage premium associated with employment in large firms did not obtain for white-collar workers who were hired at age 35 or older, due to large firms' preference for younger new hires. Another finding is that wage growth in large firms equaled or exceeded that in small firms. The author argues that these findings accord with firm-specific human capital theory. Finally, limited evidence from the 1995 BLS Survey of Employer-Provided Training and the CPS suggests that industries that train more also hire younger workers. (Author's abstract.) (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

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Bibliographic Info

Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 56 (2003)
Issue (Month): 4 (July)
Pages: 663-681

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Handle: RePEc:ilr:articl:v:56:y:2003:i:4:p:663-681

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Cited by:
  1. Majumdar, Sumit K., 2010. "Institutional changes, firm size and wages in the telecommunications sector," Information Economics and Policy, Elsevier, vol. 22(3), pages 201-217, July.
  2. Emanuele Bacchiega & Paolo Garella, 2006. "Disclosing vs. Withholding Technology Knowledge in a Duopoly," Working Papers 0609, University of Crete, Department of Economics.
  3. Ana Ferrer & Stéphanie Lluis, 2008. "Should Workers Care about Firm Size?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 62(1), pages 104-125, October.
  4. Feng, Shuaizhang, 2009. "Return to Training and Establishment Size: A Reexamination of the Size-Wage Puzzle," IZA Discussion Papers 4143, Institute for the Study of Labor (IZA).
  5. Song, Younghwan, 2007. "Recall bias in the displaced workers survey: Are layoffs really lemons?," Labour Economics, Elsevier, vol. 14(3), pages 335-345, June.
  6. Ilmakunnas, Pekka & Ilmakunnas, Seija, 2011. "Hiring older employees: Do incentives of early retirement channels matter?," MPRA Paper 30885, University Library of Munich, Germany.
  7. Kelly Edmiston, 2004. "The role of small business in economic development," Community Affairs Research Working Paper 2005-01, Federal Reserve Bank of Kansas City.
  8. Daniel, Kirsten & Heywood, John S., 2007. "The determinants of hiring older workers: UK evidence," Labour Economics, Elsevier, vol. 14(1), pages 35-51, January.
  9. Zwick, Thomas, 2011. "Seniority wages and establishment characteristics," Labour Economics, Elsevier, vol. 18(6), pages 853-861.
  10. Christian Pfeifer, 2009. "Adjustment of Deferred Compensation Schemes, Fairness Concerns, and Hiring of Older Workers," Working Paper Series in Economics 151, University of Lüneburg, Institute of Economics.
  11. Pfeifer, Christian, 2009. "An Intra-Firm Perspective on Wage Profiles and Employment of Older Workers with Special Reference to Human Capital and Deferred Compensation," Hannover Economic Papers (HEP) dp-413, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.

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