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The Employer Size-Wage Effect

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Author Info
Brown, Charles
Medoff, James

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Abstract

The authors consider six explanations for the positive relationship between employer size and wages: large employers (1) hire higher-quality workers, (2) offer inferior working conditions, (3) make more use of high wages to forestall unionization, (4) have more ability to pay high wages, (5) face smaller pools of applicants relative to vacancies, and (6) are less able to monitor their workers. They find some support for the first of these, but there remains a significant wage premium for those working for large employers. Copyright 1989 by University of Chicago Press.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 97 (1989)
Issue (Month): 5 (October)
Pages: 1027-59
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Handle: RePEc:ucp:jpolec:v:97:y:1989:i:5:p:1027-59

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Harry J. Holzer & Lawrence F. Katz & Alan B. Krueger, 1988. "Job Queues and Wages: New Evidence on the Minimum Wage and Inter-Industry Wage Structure," NBER Working Papers 2561, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Pugel, Thomas A, 1980. "Profitability, Concentration and the Interindustry Variation in Wages," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 248-53, May. [Downloadable!] (restricted)
  3. Weiss, Andrew & Landau, Henry J, 1984. "Wages, Hiring Standards, and Firm Size," Journal of Labor Economics, University of Chicago Press, vol. 2(4), pages 477-99, October. [Downloadable!] (restricted)
  4. Garen, John E, 1985. "Worker Heterogeneity, Job Screening, and Firm Size," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 715-39, August. [Downloadable!] (restricted)
  5. Zvi Griliches & Jerry A. Hausman, 1984. "Errors in Variables in Panel Data," NBER Technical Working Papers 0037, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Dennis J. Aigner & Glen G. Cain, 1977. "Statistical theories of discrimination in labor markets," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 30(2), pages 175-187, January.
  7. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May. [Downloadable!] (restricted)
  8. James E. Pearce, 1985. "Specific training, unions, and the relationship between employer size and wages," Working Papers 85-04, Federal Reserve Bank of Dallas. [Downloadable!]
  9. Lazear, Edward P, 1986. "Salaries and Piece Rates," Journal of Business, University of Chicago Press, vol. 59(3), pages 405-31, July. [Downloadable!] (restricted)
  10. Yellen, Janet L, 1984. "Efficiency Wage Models of Unemployment," American Economic Review, American Economic Association, vol. 74(2), pages 200-205, May. [Downloadable!] (restricted)
  11. Masters, Stanley H, 1969. "An Interindustry Analysis of Wages and Plant Size," The Review of Economics and Statistics, MIT Press, vol. 51(3), pages 341-45, August. [Downloadable!] (restricted)
  12. Evans, David S. & Leighton, Linda S., 1987. "Why do Smaller Firms Pay Less?," Working Papers 87-19, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  13. Mellow, Wesley, 1982. "Employer Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 495-501, August. [Downloadable!] (restricted)
  14. Richard B. Freeman, 1981. "The effect of unionism on fringe benefits," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 34(4), pages 489-509, July.
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