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Recent Canadian Evidence on Job Quality by Firm Size

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  • Drolet, Marie
  • Morissette, Rene
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    Abstract

    We provide recent evidence on job characteristics by firm size in Canada. Using a variety of household surveys, we assemble a wide set of facts on wages, fringe benefits and work schedules in small and large firms. We show that the wage gap between small and large firms has reamined fairly stable over the past decade. After controlling for observable worker characteristics and industry-specific effects, large firms pay 15-20% more than small firms. Pension plan coverage remains at least four times higher in large firms than in small firms. While the gap in pension coverage between small and large firms has not increased over time for men, there is some evidence that it has increased for women. We assess the extent to which work schedules vary between small and large firms. Our results indicate that compared to workers in large firms, employees of small firms work at least as many weekly hours. Furthermore, they are more likely to work more than five days per week. This implies that the firm size wage premium cannot be explained by a longer workweek in large firms. As long as workers prefer working during the day, the greater frequency of shift work in large, goods-producing companies is one dimension along which work schedules are less desirable in large firms. According to the theory of compensating differentials, the size-wage differential may partially reflect the willingness of large firms to compensate workers for shift work. We test this hypothesis and conclude that shift work has virtually no effect on the firm size wage premium. Our results emphasize the need to look at several dimensions of work to assess how job quality varies between small and large firms.

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    File URL: http://www5.statcan.gc.ca/olc-cel/olc.action?ObjId=11F0019M1998128&ObjType=46&lang=en&limit=0
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    Bibliographic Info

    Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 1998128e.

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    Date of creation: 13 Nov 1998
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    Handle: RePEc:stc:stcp3e:1998128e

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    Keywords: Business performance and ownership; Employment and unemployment; Hours of work and work arrangements; Labour; Non-wage benefits; Small and medium-sized businesses; Wages; salaries and other earnings;

    References

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    1. Evans, David S. & Leighton, Linda S., 1987. "Why do Smaller Firms Pay Less?," Working Papers, C.V. Starr Center for Applied Economics, New York University 87-19, C.V. Starr Center for Applied Economics, New York University.
    2. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(5), pages 1027-59, October.
    3. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 97(4), pages 543-69, November.
    4. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, American Economic Association, vol. 74(3), pages 433-44, June.
    5. William E. Even & David A. Macpherson, 1996. "Employer size and labor turnover: The role of pensions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 49(4), pages 707-728, July.
    6. Jeremy I. Bulow & Lawrence H. Summers, 1985. "A Theory of Dual Labor Markets with Application to Industrial Policy, Discrimination and Keynesian Unemployment," NBER Working Papers 1666, National Bureau of Economic Research, Inc.
    7. Oi, Walter Y, 1983. "Heterogeneous Firms and the Organization of Production," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 21(2), pages 147-71, April.
    8. Picot, Garnett & Dupuy, Richard & Baldwin, John R., 1994. "Have Small Firms Created a Disproportionate Share of New Jobs in Canada? A Reassessment of the Facts," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 1994071e, Statistics Canada, Analytical Studies Branch.
    9. Baldwin, John R., 1996. "Were Small Producers the Engines of Growth in the Canadian Manufacturing Sector in the 1980s?," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 1996088e, Statistics Canada, Analytical Studies Branch.
    10. Kostiuk, Peter F, 1990. "Compensating Differentials for Shift Work," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(5), pages 1054-75, October.
    11. Rene Morissette, 1993. "Canadian Jobs and Firm Size: Do Smaller Firms Pay Less?," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 26(1), pages 159-74, February.
    12. Davis, Steven J & Haltiwanger, John & Schuh, Scott, 1996. " Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Small Business Economics, Springer, Springer, vol. 8(4), pages 297-315, August.
    13. Christoph Schmidt & Klaus Zimmerman, 1990. "Work Characteristics, Firm Size and Wages," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 644, Princeton University, Department of Economics, Industrial Relations Section..
    14. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, American Economic Association, vol. 69(1), pages 117-25, March.
    15. Idson, Todd L & Feaster, Daniel J, 1990. "A Selectivity Model of Employer-Size Wage Differentials," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 8(1), pages 99-122, January.
    16. Daniel S. Hamermesh, 1996. "Workdays, Workhours, and Work Schedules: Evidence for the United States and Germany," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, W.E. Upjohn Institute for Employment Research, number www.
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    Cited by:
    1. Drolet, Marie & Morissette, Rene, 1999. "L'evolution de la protection offerte par les pensions aux travailleurs jeunes et plus ages au Canada," Direction des etudes analytiques : documents de recherche, Statistics Canada, Direction des etudes analytiques 1999138f, Statistics Canada, Direction des etudes analytiques.
    2. Drolet, Marie & Morissette, Rene, 1999. "The Evolution of Pension Coverage of Young and Prime-aged Workers in Canada," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 1999138e, Statistics Canada, Analytical Studies Branch.

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