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The establishment-size wage premium: evidence from European countries

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  • Thierry Lallemand
  • Robert Plasman
  • François Rycx

Abstract

This study examines the magnitude and determinants of the establishment-size wage premium in five European countries using a unique harmonised matched employer-employee data set (the 1995 European Structure of Earnings Survey). This data set enables to test the validity of various traditional explanations of the size wage gap (i.e. the labour quality hypothesis, the theory of compensating wage differentials, the role of monitoring and institutions) and of more recent hypotheses (i.e. size differences in job stability and in the concentration of skilled workers). We find some support for traditional explanations, but there remains a significant wage premium for workers employed in large establishments. Further results indicate that the magnitude of this premium fluctuates substantially across countries and appears to be negatively correlated with the degree of corporatism.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series ULB Institutional Repository with number 2013/8735.

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Date of creation: 2007
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Publication status: Published in: Empirica (2007) v.34 n° 5,p.427-451
Handle: RePEc:ulb:ulbeco:2013/8735

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