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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

  • Bassanini, Andrea

    ()
    (OECD)

  • Caroli, Eve

    ()
    (Université Paris-Dauphine)

  • Rebérioux, Antoine

    ()
    (University Paris Ouest-Nanterre)

  • Breda, Thomas

    ()
    (Paris School of Economics)

Abstract

We study compensation packages in family and non-family firms. Using matched employer-employee data for a representative sample of French establishments, we first show that family firms pay on average lower wages to their workers. We find that part of this wage gap is due to differences in unobserved characteristics of workers across family and non-family firms. However, we also find evidence that company wage policies differ according to ownership status, so that workers staying in the same firm enjoy on average a 3% pay increase when a family firm becomes non-family owned and suffer a similar pay drop when the ownership transition occurs the other way round. In contrast, we find evidence that family firms are characterised by lower job insecurity, as measured by dismissal rates and by the subjective risk of dismissal perceived by workers. In addition, family firms appear to rely less on dismissals – and more on hiring reductions – than non-family firms when they downsize. We show that compensating wage differentials account for a substantial part of the inverse relationship between the family/non-family gaps in wages and job security.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5842.

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Length: 52 pages
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:iza:izadps:dp5842

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Keywords: wages; job security; linked employer-employee data; family firms; compensating wage differentials;

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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. Andrew Ellul & Marco Pagano & Fabiano Schivardi, 2014. "Employment and Wage Insurance within Firms: Worldwide Evidence," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 369, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  2. 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.
  3. Laszlo Goerke & Jörn Block & Jose Maria Millan & Concepcion Roman, 2014. "Family employees and absenteeism," IAAEU Discussion Papers, Institute of Labour Law and Industrial Relations in the European Union (IAAEU) 201402, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  4. Leandro D’Aurizio & Livio Romano, 2011. "Family Firms and the Great Recession: Out of Sight, Out of Mind?," Economics Working Papers, European University Institute ECO2011/28, European University Institute.
  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. 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.
  7. Bjuggren, Carl Magnus, 2014. "Sensitivity to Shocks and Implicit Employment Protection in Family Firms," Working Paper Series, Research Institute of Industrial Economics 1028, Research Institute of Industrial Economics.
  8. Leandro D’Aurizio & Tommaso Oliviero & Livio Romano, 2014. "Family Firms, Soft Information and Bank Lending in a Financial Crisis," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 357, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

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