Wage Dispersion and Firm Productivity in Different Working Environments
AbstractThis paper investigates the impact of wage dispersion on firm productivity in different working environments. More precisely, it examines the interaction with: i) the skills of the workforce, using a more appropriate indicator than the standard distinction between white- and blue collar-workers, and ii) the uncertainty of the firm economic environment, which has, to our knowledge, never been explored on an empirical basis. Using detailed LEED for Belgium, we find a hump-shaped relationship between (conditional) wage dispersion and firm productivity. This result suggests that up to (beyond) a certain level of wage dispersion, the incentive effects of “tournaments” dominate (are dominated by) “fairness” considerations. Findings also show that the intensity of the relationship is stronger for highly skilled workers and in more stable environments. This might be explained by the fact that monitoring costs and production-effort elasticity are greater for highly skilled workers and that in the presence of high uncertainty workers have less control over their effort-output relation and associate higher uncertainty with more unfair environments.
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Bibliographic InfoPaper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 09-012.RS.
Length: 27 p.
Date of creation: 2009
Date of revision:
Publication status: Published by:
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More information through EDIRC
Wage dispersion; labour productivity; working environments; personnel economics; linked employer-employee data.;
Other versions of this item:
- Benoît Mahy & François Rycx & Mélanie Volral, 2011. "Wage Dispersion and Firm Productivity in Different Working Environments," British Journal of Industrial Relations, London School of Economics, vol. 49(3), pages 460-485, 09.
- Benoît Mahy & François Rycx & Mélanie Volral, 2009. "Wage Dispersion and Firm Productivity in Different Working Environments," DULBEA Working Papers 09-07.RS, ULB -- Universite Libre de Bruxelles.
- Mahy, Benoît & Rycx, Francois & Volral, Mélanie, 2009. "Wage Dispersion and Firm Productivity in Different Working Environments," IZA Discussion Papers 4044, Institute for the Study of Labor (IZA).
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-03-07 (All new papers)
- NEP-BEC-2009-03-07 (Business Economics)
- NEP-HRM-2009-03-07 (Human Capital & Human Resource Management)
- NEP-LAB-2009-03-07 (Labour Economics)
- NEP-LTV-2009-03-07 (Unemployment, Inequality & Poverty)
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- Mahy, Benoît & Rycx, Francois & Volral, Mélanie, 2011.
"Does Wage Dispersion Make All Firms Productive?,"
IZA Discussion Papers
5791, Institute for the Study of Labor (IZA).
- Kampelmann, Stephan & Rycx, François, 2012.
"The impact of educational mismatch on firm productivity: Evidence from linked panel data,"
Economics of Education Review,
Elsevier, vol. 31(6), pages 918-931.
- Stephan Kampelmann & François Rycx, 2012. "The Impact of Educational Mismatch on Firm Productivity: Evidence from Linked Panel Data," Working Papers CEB 12-038, ULB -- Universite Libre de Bruxelles.
- Kampelmann, Stephan & Rycx, Francois, 2012. "The Impact of Educational Mismatch on Firm Productivity: Evidence from Linked Panel Data," IZA Discussion Papers 7093, Institute for the Study of Labor (IZA).
- Stephan Kampelmann & François Rycx, 2012. "The Impact of Educational Mismatch on Firm Productivity: Evidence from Linked Panel Data," DULBEA Working Papers 12-05, ULB -- Universite Libre de Bruxelles.
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