Do Newly Founded Firms Pay Lower Wages? First Evidence from Germany
AbstractUsing a linked employer–employee data set for Germany, this paper analyses wage setting in a cohort of newly founded and other establishments from 1997 to 2001. While theory provides alternative explanations for higher or lower wages in newly founded firms, we show empirically that start-ups tend to pay lower wages, ceteris paribus. On average, wages in newly founded establishments are 8% lower than in similar incumbent firms. This negative wage differential is substantially smaller in eastern than in western Germany. The wage differential is shown to decline over time as the newly founded firms become more mature. Copyright Springer 2007
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Bibliographic InfoArticle provided by Springer in its journal Small Business Economics.
Volume (Year): 29 (2007)
Issue (Month): 1 (June)
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Web page: http://www.springerlink.com/link.asp?id=100338
Wages; newly founded firms; linked employer-employee data; D21; J30;
Other versions of this item:
- Schnabel, Claus & Kohaut, Susanne & Brixy, Udo, 2004. "Do newly founded firms pay lower wages? First evidence from Germany," Discussion Papers 28, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
- Brixy, Udo & Kohaut, Susanne & Schnabel, Claus, 2004. "Do newly founded firms pay lower wages? : first evidence from Germany," IAB Discussion Paper 200404, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
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