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Firm Age and Wages

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Author Info
Charles Brown
James L. Medoff

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Abstract

In this paper, we analyze the relationship between how long an employer has been in business (firm age) and wages. Using data from special supplements to the Survey Research Center's monthly Survey of Consumers, we find that firms that have been in business longer pay higher wages (as previous studies have found), but pay if anything lower wages after controlling for worker characteristics. There is some evidence that the relationship is not monotonic, with wages falling and then rising with years in business. Older firms provide better fringe benefits and more stable employment, but these differences do not appear very important in understanding the age-wage relationship. Established employers do appear to make greater use of back-loaded compensation, consistent with their higher probability of remaining in business.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8552.

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Date of creation: Oct 2001
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Handle: RePEc:nbr:nberwo:8552

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J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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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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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. Brixy, Udo & Kohaut, Susanne & Schnabel, Claus, 2004. "Do newly founded firms pay lower wages? : first evidence from Germany," IAB Discussion Paper 200404, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]. [Downloadable!]
    Other versions:
  2. Marie Leclair & Pascale Petit, 2004. "Présence syndicale dans les établissements : quel effet sur les inégalités salariales entre les hommes et les femmes ?," Cahiers de la Maison des Sciences Economiques v04084, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  3. Feng, Shuaizhang, 2009. "Return to Training and Establishment Size: A Reexamination of the Size-Wage Puzzle," IZA Discussion Papers 4143, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Måns Söderbom & Francis Teal & Anthony Wambugu, 2004. "Does firm size really affect earnings?," Development and Comp Systems 0409011, EconWPA. [Downloadable!]
  5. Peter Thompson & Mihaela Pintea, 2008. "Sorting, Selection, and Industry Shakeouts," Review of Industrial Organization, Springer, vol. 33(1), pages 23-40, August. [Downloadable!] (restricted)
    Other versions:
  6. Claudio Michelacci & Vincenzo Quadrini, 2005. "Financial Markets and Wages," NBER Working Papers 11050, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Koji Sakai & Iichiro Uesugi & Tsutomu Watanabe, 2005. "Firm Age and the Evolution of Borrowing Costs: Evidence from Japanese Small Firms," Discussion papers 05026, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  8. Park, Timothy A., 2008. "Evaluating Labor Productivity in Food Retailing," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(2), October. [Downloadable!]
    Other versions:
  9. Elizabeth Davis & Matthew Freedman & Julia Lane & Brian McCall & Nicole Nestoriak & Timothy Park, . "Product Market Competition and Human Resource Practices: An Analysis of the Retail Food Sector," Working Papers 0905, Industrial Relations Center, University of Minnesota (Twin Cities Campus). [Downloadable!]
    Other versions:
  10. C. Praag & Peter Versloot, 2007. "What is the value of entrepreneurship? A review of recent research," Small Business Economics, Springer, vol. 29(4), pages 351-382, December. [Downloadable!] (restricted)
    Other versions:
  11. Koelling, Arnd & Schnabel, Claus & Wagner, Joachim, 2002. "Establishment Age and Wages: Evidence from German Linked Employer-Employee Data," IZA Discussion Papers 679, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  12. Brixy, Udo & Kohaut, Susanne & Schnabel, Claus, 2005. "How fast do newly founded firms mature? : empirical analyses on job quality in start-ups," IAB Discussion Paper 200502, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]. [Downloadable!]
    Other versions:
  13. Bayo-Moriones, Alberto & Galdón-Sánchez, José Enrique & Martinez-de Moretin, Sara, 2008. "What Are the Factors Behind Pay Settlements? Evidence from Spanish and British Data," IZA Discussion Papers 3401, Institute for the Study of Labor (IZA). [Downloadable!]
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