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Intra-firm wage inequality and firm performance – First evidence from German linked employer-employee-data

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  • Nils Braakmann

    ()
    (Institute of Economics, Leuphana University of Lüneburg)

Abstract

Economic theory suggests both positive and negative relationships between intra- firm wage inequality and productivity. This paper contributes to the growing empirical literature on this subject. We combine German employer-employee-data for the years 1995-2005 with inequality measures using the whole wage distribution of a firm and rely on dynamic panel-data estimators to control for unobserved heterogeneity, simultaneity problems and possible state dependence. Our results indicate a relative minor influence of intra-firm wage inequality on firm productivity. If anything, they provide some support for a view suggesting that some inequality may be beneficial, while too much leads to a detrimental eect on productivity.

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Bibliographic Info

Paper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 77.

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Length: 31 pages
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:lue:wpaper:77

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Web page: http://leuphana.de/institute/ivwl.html

Related research

Keywords: Wage dispersion; labor productivity;

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References

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  13. Thierry Lallemand & Robert Plasman & François Rycx, 2004. "Intra-Firm Wage Dispersion and Firm Performance: Evidence from Linked Employer-Employee Data," Kyklos, Wiley Blackwell, vol. 57(4), pages 533-558, November.
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Cited by:
  1. Simon Gaechter & Daniele Nosenzo & Martin Sefton, 2008. "The Impact of Social Comparisons on Reciprocity," Discussion Papers 2008-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. Benoît Mahy & François Rycx & Mélanie Volral, 2011. "Does Wage Dispersion Make All Firms Productive?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(4), pages 455-489, 09.

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