Do newly founded firms pay lower wages? : first evidence from Germany
Abstract"Using a linked employer-employee data set for Germany, this paper analyses wage setting in a cohort of newly founded and other establishments from 1997 to 2001. While theory provides alternative explanations for higher or lower wages in newly founded firms, we show empirically that start-ups tend to pay lower wages, ceteris paribus. On average, wages in newly founded establishments are 8 percent lower than in similar incumbent firms. This negative wage differential is substantially smaller in eastern than in western Germany. The wage differential is shown to decline over time as the newly founded firms become more mature." (Author's abstract, IAB-Doku) ((en))
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 200404.
Length: 22 pages
Date of creation: 28 Sep 2004
Date of revision:
Publication status: published in: Small Business Economics, Vol. 29, No. 1/2 (2007), p. 161-171
IAB-Linked-Employer-Employee-Datensatz; Unternehmensgründung; Unternehmensalter; Lohnstruktur; Lohnhöhe;
Other versions of this item:
- Udo Brixy & Susanne Kohaut & Claus Schnabel, 2007. "Do Newly Founded Firms Pay Lower Wages? First Evidence from Germany," Small Business Economics, Springer, vol. 29(1), pages 161-171, June.
- Schnabel, Claus & Kohaut, Susanne & Brixy, Udo, 2004. "Do newly founded firms pay lower wages? First evidence from Germany," Discussion Papers 28, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
This paper has been announced in the following NEP Reports:
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.:
- Wagner, Joachim, 1994. "The Post-entry Performance of New Small Firms in German Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 141-54, June.
- Heyman, Fredrik, 2004. "The Employer Age-Wage Effect: Evidence from Matched Employer-Employee Data," Working Paper Series 193, Trade Union Institute for Economic Research.
- Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989.
"The Growth and Failure of U.S. Manufacturing Plants,"
The Quarterly Journal of Economics,
MIT Press, vol. 104(4), pages 671-98, November.
- Dunne, T. & Roberts, M.J. & Samuelson, L., 1988. "The Growth And Failure Of U.S. Manufacturing Plants," Papers 1-87-5, Pennsylvania State - Department of Economics.
- Charles Brown & James L. Medoff, 2001.
"Firm Age and Wages,"
NBER Working Papers
8552, National Bureau of Economic Research, Inc.
- Johannes Gernandt & Friedhelm Pfeiffer, 2006.
"Einstiegslöhne bei unvollkommenen Arbeitsmärkten,"
Perspektiven der Wirtschaftspolitik,
Verein für Socialpolitik, vol. 7(2), pages 147-172, 05.
- Brixy, Udo & Kohaut, Susanne, 1999. " Employment Growth Determinants in New Firms in Eastern Germany," Small Business Economics, Springer, vol. 13(2), pages 155-70, September.
- Claudio Michelacci & Vincenzo Quadrini, 2004.
"Financial Markets and Wages,"
2004 Meeting Papers
116, Society for Economic Dynamics.
- Kölling, Arnd & Schnabel, Claus & Wagner, Joachim, 2002.
"Establishment age and wages: evidence from German linked employer-employee data,"
13, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
- Kölling, Arnd & Schnabel, Claus & Wagner, Joachim, 2002. "Establishment Age and Wages: Evidence from German Linked Employer-Employee Data," IZA Discussion Papers 679, Institute for the Study of Labor (IZA).
- Doms, Mark & Dunne, Timothy & Troske, Kenneth R, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 253-90, February.
- Audretsch, David B. & van Leeuwen, George & Menkveld, Bert & Thurik, Roy, 2001. "Market dynamics in the Netherlands: Competition policy and the role of small firms," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 795-821, April.
- Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (IAB, Geschäftsbereich Dokumentation und Bibliothek).
If references are entirely missing, you can add them using this form.