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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. Andrea Bassanini & Eve Caroli & Antoine Rebérioux & Thomas Breda, 2011. "Working in family firms: less paid but more secure? Evidence from French matched employer-employee data," EconomiX Working Papers 2011-38, University of Paris West - Nanterre la Défense, EconomiX.
  2. Leandro DÂ’Aurizio & Livio Romano, 2013. "Family firms and the Great Recession: out of sight, out of mind?," Temi di discussione (Economic working papers) 905, Bank of Italy, Economic Research and International Relations Area.
  3. Block, Jörn & Goerke, Laszlo & Millán, José María & Román, Concepción, 2014. "Family Employees and Absenteeism," IZA Discussion Papers 7936, Institute for the Study of Labor (IZA).
  4. Bjuggren, Carl Magnus, 2014. "Sensitivity to Shocks and Implicit Employment Protection in Family Firms," Working Paper Series 1028, Research Institute of Industrial Economics.
  5. 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.
  6. 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.
  7. 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).

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