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Why Do Big Firms Pay Higher Wages? Evidence from an International Database

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Author Info

  • John Gibson

    (Department of Economics, University of Waikato)

  • Steven Stillman

    (Motu Economic and Public Policy Research)

Abstract

Bigger firms pay higher wages. This note reports tests of the hypothesis that this big-firm premium (BFP) occurs because workers in big firms are more skilled. We use the International Adult Literacy Survey, which gives richer skill measures than those typically available in labor market surveys, to measure the BFP in nine countries with and without controls for worker skill. The results show that the BFP is not as universal as is often suggested, but in countries where it exists controlling for skills does little to reduce the size of the BFP. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 91 (2009)
Issue (Month): 1 (February)
Pages: 213-218

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Handle: RePEc:tpr:restat:v:91:y:2009:i:1:p:213-218

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Web page: http://mitpress.mit.edu/journals/

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Cited by:
  1. 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).
  2. Rui Baptista & Francisco Lima & Miguel Preto, 2013. "Entrepreneurial skills and workers’ wages in small firms," Small Business Economics, Springer, Springer, vol. 40(2), pages 309-323, February.
  3. Vincenzo Scoppa, 2012. "Firm Size And Wages In Italy: Evidence From Exogenous Job Displacements," Working Papers, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica) 201201, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).
  4. John Gibson, 2009. "The public sector pay premium, compensating differentials and unions: propensity score matching evidence from Australia, Canada, Great Britain and the United States," Economics Bulletin, AccessEcon, vol. 29(3), pages 2325-2332.
  5. Yongjin Wang & Laixun Zhao, 2013. "Saving Good Jobs under Global Competition by Rewarding Quality and Efforts," Discussion Paper Series, Research Institute for Economics & Business Administration, Kobe University DP2013-17, Research Institute for Economics & Business Administration, Kobe University, revised May 2013.

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