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Working in family firms : less paid but more secure ? Evidence from French matched employer-employee data

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  • Rebérioux, Antoine
  • Caroli, Eve
  • Breda, Thomas
  • Bassanini, Andrea

Abstract

We study the compensation package offered by family firms. Using matched employer-employee data for a sample of French establishments in the 2000s, we first show that family firms pay on average lower wages to their workers. This family/non-family wage gap is robust to controlling for several establishment and individual characteristics and does not appear to be due either to the differential of productivity between family and non-family firms or to unobserved establishment and individual heterogeneity. Moreover, it is relatively homogeneous across workers with different gender, educational attainment and age. By contrast, the family/non-family wage gap is found to be larger for clerks and blue-collar workers than for managers, supervisors and technicians, for whom we find no significant wage gap. As a second step, we investigate why workers stay in family firms while being paid less. We show that these firms offer greater job security. We find evidence that the rate of dismissal is lower in family than in non-family firms. We also show that family firms rely less on dismissals and more on hiring reductions when they downsize. These results are confirmed by subjective data : the perceived risk of dismissal is significantly lower in family firms than in non-family ones. We speculate that our results can be explained either by a compensating wage differential story or by a model in which workers sort in different firms according to their preferences.

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Bibliographic Info

Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/7244.

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Date of creation: Apr 2013
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Publication status: Published in Industrial & Labor Relations Review, 2013, Vol. 66, no. 2. pp. 433-466.Length: 33 pages
Handle: RePEc:dau:papers:123456789/7244

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Keywords: Family firms; wages; job security; linked employer-employee data;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Family firms are like public employers
    by Economic Logician in Economic Logic on 2011-10-20 13:30:00
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Cited by:
  1. Andrea Bassanini & Thomas Breda & Eve Caroli & Antoine Rebérioux, 2010. "Working in family firms: less paid but more secure? Evidence from French matched employer-employee data," PSE Working Papers halshs-00564972, HAL.
  2. Block, Jörn & Goerke, Laszlo & Millán, José María & Román, Concepción, 2014. "Family Employees and Absenteeism," IZA Discussion Papers 7936, Institute for the Study of Labor (IZA).
  3. Bjuggren, Carl Magnus, 2014. "Sensitivity to Shocks and Implicit Employment Protection in Family Firms," Working Paper Series 1028, Research Institute of Industrial Economics.
  4. Siebert, W. Stanley & Peng, Fei & Maimaiti, Yasheng, 2011. "HRM Practices and Performance of Family-Run Workplaces: Evidence from the 2004 WERS," IZA Discussion Papers 5899, Institute for the Study of Labor (IZA).
  5. Leandro D’Aurizio & Tommaso Oliviero & Livio Romano, 2014. "Family Firms, Soft Information and Bank Lending in a Financial Crisis," CSEF Working Papers 357, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  6. Leandro D’Aurizio & Livio Romano, 2011. "Family Firms and the Great Recession: Out of Sight, Out of Mind?," Economics Working Papers ECO2011/28, European University Institute.
  7. Ferrari, Filippo, 2013. "'The employees are all equal... but some are more equals than others'. Altruism, opportunism and discrimination in family SMEs," MPRA Paper 52391, University Library of Munich, Germany.

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