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Establishment Size and the Dipsersion of Wages: Evidence from european Countries


  • Therry Lallemand
  • François Rycx


We investigate how the wage distribution differs among small and large establishments in four European countries (i.e. Belgium, Ireland, Italy and Spain). To do so, we implement the Juhn, Murphy and Pierce (1993) decomposition of wages following the methodology suggested by Lemieux (2002). Findings show that within-establishment wage dispersion rises with size because large employers have a more diverse workforce. In addition they also suggest that smaller establishments more closely link pay to performance. Further results indicate that between-establishment wage dispersion decreases with employer size because smaller establishments are technologically more diversified and hence exhibit greater diversity in average workforce skills.

Suggested Citation

  • Therry Lallemand & François Rycx, 2006. "Establishment Size and the Dipsersion of Wages: Evidence from european Countries," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 52(4), pages 309-336.
  • Handle: RePEc:aeq:aeqaeq:v52_y2006_i4_q4_p309-336

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    References listed on IDEAS

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    Cited by:

    1. Stephan Kampelmann & François Rycx, 2016. "Wage discrimination against immigrants: measurement with firm-level productivity data," IZA Journal of Migration, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-24, December.
    2. Steven J. Davis & Magnus Henrekson, 2010. "Economic Performance and Market Work Activity in Sweden After the Crisis of the Early 1990s," NBER Chapters,in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 225-252 National Bureau of Economic Research, Inc.
    3. Oscar Bernal Diaz, 2006. "Do interactions between political authorities and central banks influence FX interventions? Evidence from Japan," DULBEA Working Papers 06-03.RS, ULB -- Universite Libre de Bruxelles.
    4. Steven J. Davis & Magnus Henrekson, 2006. "Economic Performance and Work Activity in Sweden after the Crisis of the Early 1990s," NBER Working Papers 12768, National Bureau of Economic Research, Inc.
    5. Bernal, Oscar & Oosterlinck, Kim & Szafarz, Ariane, 2010. "Observing bailout expectations during a total eclipse of the sun," Journal of International Money and Finance, Elsevier, vol. 29(7), pages 1193-1205, November.
    6. Susana Iranzo & Fabiano Schivardi & Elisa Tosetti, 2008. "Skill Dispersion and Firm Productivity: An Analysis with Employer-Employee Matched Data," Journal of Labor Economics, University of Chicago Press, vol. 26(2), pages 247-285, April.
    7. Pierre-Guillaume Méon & Laurent Weill, 2006. "Does financial intermediation matter for macroeconomic efficiency?," DULBEA Working Papers 06-13.RS, ULB -- Universite Libre de Bruxelles.
    8. Astrid Pennerstorfer & Ulrike Schneider, 2010. "What Determines the (Internal) Wage Distribution in Non-Profit Organizations?," Kyklos, Wiley Blackwell, vol. 63(4), pages 580-596, November.
    9. Jérôme De Henau & Leila Maron & Danièle Meulders & Sile Padraigin O'Dorchai, 2007. "Travail et maternité en Europe: conditions de travail et politiques publiques," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 50(1), pages 63-88.
    10. Charles Plaigin, 2009. "Exploratory study on the presence of cultural and institutional growth spillovers," DULBEA Working Papers 09-03.RS, ULB -- Universite Libre de Bruxelles.
    11. Ilan Tojerow, 2008. "Industry Wage Differentials Rent Sharing and Gender in Belgium," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(3), pages 55-65.
    12. Robert Plasman & François Rycx & Ilan Tojerow, 2007. "Wage differentials in Belgium: the role of worker and employer characteristics," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 50(1), pages 11-40.
    13. Herrera, Santiago & Badr, Karim, 2011. "Why does the productivity of education vary across individuals in Egypt ? firm size, gender, and access to technology as sources of heterogeneity in returns to education," Policy Research Working Paper Series 5740, The World Bank.

    More about this item


    Wage structure; establishment size; decomposition of wages; Europe;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials


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