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Establishment size and the dispersion of wages: evidence from European Countries

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  • Thierry Lallemand
  • François Rycx

Abstract

This paper investigates how the distribution of wages differs between small and large establishments in four European countries. Findings show that within-establishment wage dispersion rises with size because large employers have a more diverse workforce. They also suggest that screening and monitoring costs imply a lower sensitivity of wages to ability in larger establishments. Smaller establishments are found to rely more on incentive-based pay mechanisms, particularly in countries with a low trade union coverage rate. Further results indicate that between-establishment wage dispersion decreases with employer size because smaller establishments are technologically more diversified and therefore exhibit greater diversity in average workforce skills.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series DULBEA Working Papers with number 05-18.RS.

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Date of creation: Sep 2005
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Handle: RePEc:dul:wpaper:05-18rs

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Keywords: Wage structure; establishment size; decomposition of wages; Europe.;

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Citations

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Cited by:
  1. Steven J. Davis & Magnus Henrekson, 2006. "Economic Performance and Work Activity in Sweden after the Crisis of the Early 1990s," NBER Working Papers 12768, National Bureau of Economic Research, Inc.
  2. Bernal, Oscar & Oosterlinck, Kim & Szafarz, Ariane, 2010. "Observing bailout expectations during a total eclipse of the sun," Journal of International Money and Finance, Elsevier, Elsevier, vol. 29(7), pages 1193-1205, November.
  3. Davis, Steven J. & Henrekson, Magnus, 2007. "Economic Perfomance and Market Work Activity in Sweden after the Crisis of the Early 1990s," Working Paper Series, Research Institute of Industrial Economics 687, Research Institute of Industrial Economics.
  4. Pierre-Guillaume Méon & Laurent Weill, 2006. "Does financial intermediation matter for macroeconomic efficiency?," DULBEA Working Papers, ULB -- Universite Libre de Bruxelles 06-13.RS, ULB -- Universite Libre de Bruxelles.
  5. Jérôme De Henau & Leila Maron & Danièle Meulders & Sile Padraigin O'Dorchai, 2007. "Travail et maternité en Europe: conditions de travail et politiques publiques," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 50(1), pages 63-88.
  6. Ilan Tojerow, 2008. "Industry wage differential, rent sharing and gender in Belgium," DULBEA Working Papers, ULB -- Universite Libre de Bruxelles 08-20.RS, ULB -- Universite Libre de Bruxelles.
  7. Oscar Bernal Diaz, 2006. "Do interactions between political authorities and central banks influence FX interventions? Evidence from Japan," DULBEA Working Papers, ULB -- Universite Libre de Bruxelles 06-03.RS, ULB -- Universite Libre de Bruxelles.
  8. Charles Plaigin, 2009. "Exploratory study on the presence of cultural and institutional growth spillovers," DULBEA Working Papers, ULB -- Universite Libre de Bruxelles 09-03.RS, ULB -- Universite Libre de Bruxelles.
  9. Herrera, Santiago & Badr, Karim, 2011. "Why does the productivity of education vary across individuals in Egypt ? firm size, gender, and access to technology as sources of heterogeneity in returns to education," Policy Research Working Paper Series 5740, The World Bank.
  10. Robert Plasman & François Rycx & Ilan Tojerow, 2007. "Wage differentials in Belgium: the role of worker and employer characteristics," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 50(1), pages 11-40.

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