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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)

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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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Publisher 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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Related research
Keywords: Wage dispersion; labor productivity;

Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  12. Rycx, François & Plasman, Robert & Lallemand, Thierry, 2004. "Intra-firm wage dispersion and firm performance: evidence from linked employer-employee data," Economic Literature ULB 2013-781, Université libre de Bruxelles, Libraries. [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gächter, Simon & Nosenzo, Daniele & Sefton, Martin, 2008. "The Impact of Social Comparisons on Reciprocity," IZA Discussion Papers 3639, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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