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Is Bigger Still Better? The Decline of the Wage Premium at Large Firms

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Author Info

  • Even, William E.

    ()
    (Miami University)

  • Macpherson, David A.

    ()
    (Trinity University)

Abstract

This study shows that the wage premium paid by large firms fell over the past 20 years and that the decline in the size premium has been most pronounced among the least educated work force. Empirical evidence supports several explanations for the decline in the size premium. First, there has been a convergence in the returns to worker characteristics at large and small firms over time. Second, there has been a convergence in the types of workers employed at small and large firms. Particularly important have been changes in the distribution of workers across industries and the greater rate of decline in unionism at large firms.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4082.

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Length: 29 pages
Date of creation: Mar 2009
Date of revision:
Publication status: published in: Southern Economic Journal, 2012, 78(4), 1181-1201
Handle: RePEc:iza:izadps:dp4082

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Keywords: firm size; fringe benefits; wages;

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References

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  1. Yu, Li & Hurley, Terrance M. & Kliebenstein, James B. & Orazem, Peter F., 2012. "Firm Size, Technical Change, and Wages in the Pork Sector, 1990-2005," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, Western Agricultural Economics Association, vol. 37(2), August.
  2. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
  3. Kostiuk, Peter F, 1990. "Compensating Differentials for Shift Work," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(5), pages 1054-75, October.
  4. Meagher, Kieron J. & Wilson, Hugh, 2004. "Different firm size effects on wages for supervisors and workers," Economics Letters, Elsevier, Elsevier, vol. 84(2), pages 225-230, August.
  5. Christopher R. Bollinger & Barry T. Hirsch, 2006. "Match Bias from Earnings Imputation in the Current Population Survey: The Case of Imperfect Matching," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 24(3), pages 483-520, July.
  6. Tan, Hong & Batra, Geeta, 1997. "Technology and Firm Size-Wage Differentials in Colombia, Mexico, and Taiwan (China)," World Bank Economic Review, World Bank Group, World Bank Group, vol. 11(1), pages 59-83, January.
  7. Dunne, Timothy & Schmitz, James A, Jr, 1995. "Wages, Employment Structure and Employer Size-Wage Premia: Their Relationship to Advanced-Technology Usage at US Manufacturing Establishments," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 62(245), pages 89-107, February.
  8. Thierry Lallemand & Robert Plasman & François Rycx, 2005. "Why do large firms pay higher wages? evidence from matched worker-firm data," ULB Institutional Repository 2013/8743, ULB -- Universite Libre de Bruxelles.
  9. Mellow, Wesley, 1982. "Employer Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 495-501, August.
  10. Dale Belman & David I. Levine, 2004. "Size, Skill and Sorting," LABOUR, CEIS, CEIS, vol. 18(4), pages 515-561, December.
  11. Kevin T. Reilly, 1995. "Human Capital and Information: The Employer Size-Wage Effect," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 1-18.
  12. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
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Cited by:
  1. Rios-Avila, Fernando & Hirsch, Barry, 2012. "Unions, Wage Gaps, and Wage Dispersion: New Evidence from the Americas," IZA Discussion Papers 6757, Institute for the Study of Labor (IZA).
  2. Edison Roy César & François Vaillancourt, 2010. "Does a Specific Union Impact on Wage Increases? Evidence from Canada, 1985-2007," CIRANO Working Papers, CIRANO 2010s-09, CIRANO.

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