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

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Author Info

  • 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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  19. François Rycx & Thierry Lallemand & Robert Plasman, 2004. "Intra-firm wage dispersion and firm performance: evidence from linked employer-employee data," ULB Institutional Repository 2013/781, ULB -- Universite Libre de Bruxelles.
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Cited by:
  1. Simon Gächter & Daniele Nosenzo & Martin Sefton, 2012. "The Impact of Social Comparisons on Reciprocity," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(4), pages 1346-1367, December.
  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.
  3. repec:dul:wpaper:2013/89489 is not listed on IDEAS

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