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

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Author Info

  • Andrea Bassanini

    ()
    (ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - CNRS : UMR7017 - Université Paris II - Panthéon-Assas, IZA - Institute for the Study of Labor - IZA, OECD - OECD)

  • Thomas Breda

    (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)

  • Eve Caroli

    ()
    (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, EconomiX - CNRS : UMR7166 - Université Paris X - Paris Ouest Nanterre La Défense)

  • Antoine Rebérioux

    ()
    (EconomiX - CNRS : UMR7166 - Université Paris X - Paris Ouest Nanterre La Défense)

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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Paper provided by HAL in its series PSE Working Papers with number halshs-00564972.

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Date of creation: Nov 2010
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Handle: RePEc:hal:psewpa:halshs-00564972

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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. 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.
  2. Laszlo Goerke & Jörn Block & Jose Maria Millan & Concepcion Roman, 2014. "Family employees and absenteeism," IAAEU Discussion Papers 201402, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  3. Rebérioux, Antoine & Caroli, Eve & Breda, Thomas & Bassanini, Andrea, 2013. "Working in family firms : less paid but more secure ? Evidence from French matched employer-employee data," Economics Papers from University Paris Dauphine 123456789/7244, Paris Dauphine University.
  4. 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.
  5. 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).
  6. Bjuggren, Carl Magnus, 2014. "Sensitivity to Shocks and Implicit Employment Protection in Family Firms," Working Paper Series 1028, Research Institute of Industrial Economics.
  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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