The Role of Unobserved Heterogeneity and On-the-Job Training in the Employer Size-Wage Effect: Evidence from Australia
AbstractThe positive relationship between employer size and wages is a ubiquitous feature of advanced industrialized economies. The purpose of the present study is to clarify the nature of the employer size-wage effect in Australia by determining the extent to which it can be explained by observed and unobserved quality differences, including difference in on-the-job training. The empirical results are based on analysis of the Household Income and Labour Dynamics in Australia (HILDA) Survey, which is a relatively new nationally representative panel data set focused on family income, employment, and well-being. Our findings indicate that for males, quality adjusted employer size-wage effects are quite small and mostly driven by lower wages for workers in the smallest firms (fewer than twenty workers). For females, size-wage effects disappear when unobserved quality differences are accounted for. We also find that accounting for differences in the incidence of job training has no effect on the structure of wage differences by employer size.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Nevada, Las Vegas , Department of Economics in its series Working Papers with number 0915.
Length: 33 pages
Date of creation: Mar 2009
Date of revision:
size wage effects; fixed effects models; panel data;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-05-16 (All new papers)
- NEP-BEC-2009-05-16 (Business Economics)
- NEP-LAB-2009-05-16 (Labour Economics)
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.:
- repec:fth:coluec:512 is not listed on IDEAS
- Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-73, May.
- Ana Ferrer & Stéphanie Lluis, 2008.
"Should Workers Care about Firm Size?,"
Industrial and Labor Relations Review,
ILR Review, Cornell University, ILR School, vol. 62(1), pages 104-125, October.
- Main, Brian G M & Reilly, Barry, 1993. "The Employer Size-Wage Gap: Evidence for Britain," Economica, London School of Economics and Political Science, vol. 60(238), pages 125-42, May.
- Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
- David S. Evans & Linda S. Leighton, 1989.
"Why Do Smaller Firms Pay Less?,"
Journal of Human Resources,
University of Wisconsin Press, vol. 24(2), pages 299-318.
- John M. Abowd & Francis Kramarz & David N. Margolis, 1994.
"High-Wage Workers and High-Wage Firms,"
CIRANO Working Papers
- Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche 9503, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- John M. Abowd & Francis Kramarz & David N. Margolis, 1994. "High Wage Workers and High Wage Firms," NBER Working Papers 4917, National Bureau of Economic Research, Inc.
- Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche 9503, Universite de Montreal, Departement de sciences economiques.
- Barron, John M & Black, Dan A & Loewenstein, Mark A, 1989. "Job Matching and On-the-Job Training," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 1-19, January.
- Brown, Charles & Medoff, James, 1989.
"The Employer Size-Wage Effect,"
Journal of Political Economy,
University of Chicago Press, vol. 97(5), pages 1027-59, October.
- Dale Belman & David I. Levine, 2004. "Size, Skill and Sorting," LABOUR, CEIS, vol. 18(4), pages 515-561, December.
- C. Jeffrey Waddoups, 2007. "Employer Size-wage Effects in Australia," LABOUR, CEIS, vol. 21(4-5), pages 809-835, December.
- Rudolf Winter-Ebmer & Josef Zweimueller, .
"Firm Size Wage Differentials in Switzerland: Evidence from Job Changers,"
IEW - Working Papers
001, Institute for Empirical Research in Economics - University of Zurich.
- Josef Zweimuller & Rudolf Winter-Ebmer, 1999. "Firm-Size Wage Differentials in Switzerland: Evidence from Job-Changers," American Economic Review, American Economic Association, vol. 89(2), pages 89-93, May.
- Miller, Paul & Mulvey, Charles, 1996. "Unions, Firm Size and Wages," The Economic Record, The Economic Society of Australia, vol. 72(217), pages 138-53, June.
- Alison L. Booth & Mark L. Bryan, 2005. "Testing Some Predictions of Human Capital Theory: New Training Evidence from Britain," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 391-394, May.
- Dan A. Black & Brett J. Noel & Zheng Wang, 1999. "On-the-Job Training, Establishment Size, and Firm Size: Evidence for Economies of Scale in the Production of Human Capital," Southern Economic Journal, Southern Economic Association, vol. 66(1), pages 82-100, July.
- Barron, John M & Black, Dan A & Loewenstein, Mark A, 1987. "Employer Size: The Implications for Search, Training, Capital Investment, Starting Wages, and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 5(1), pages 76-89, January.
- Green, Francis & Machin, Stephen & Manning, Alan, 1996. "The Employer Size-Wage Effect: Can Dynamic Monopsony Provide an Explanation?," Oxford Economic Papers, Oxford University Press, vol. 48(3), pages 433-55, July.
- Schmidt, Christoph M & Zimmermann, Klaus F, 1991. "Work Characteristics, Firm Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 705-10, November.
- Lixin Cai & C. Jeffrey Waddoups, 2011.
"Union Wage Effects in Australia: Evidence from Panel Data,"
British Journal of Industrial Relations,
London School of Economics, vol. 49(Supplemen), pages s279-s305, 07.
- Lixin Cai & C. Jeffrey Waddoups, 2009. "Union Wage Effects in Australia: Evidence from Panel Data," Working Papers 0914, University of Nevada, Las Vegas , Department of Economics.
- Lixin Cai & C. Jeffrey Waddoups, 2008. "Union Wage Effects in Australia: Evidence from Panel Data," CEPR Discussion Papers 585, Centre for Economic Policy Research, Research School of Economics, Australian National University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bill Robinson).
If references are entirely missing, you can add them using this form.