IDEAS home Printed from https://ideas.repec.org/a/bla/scotjp/v58y2011i4p455-489.html

Does Wage Dispersion Make All Firms Productive?

Author

Listed:
  • Benoît Mahy
  • François Rycx
  • Mélanie Volral

Abstract

This article puts the relationship between wage dispersion and firm productivity to an updated test, taking advantage of access to detailed Belgian linked employer-employee panel data. Controlling for simultaneity issues, time-invariant workplace characteristics and dynamics in the adjustment process of productivity, empirical results reveal the existence of a positive impact from conditional intra-firm wage dispersion to firm productivity (measured by the average value added per hour worked), which however decreases for higher dispersion levels. Findings thus suggest that the incentive effect of wage dispersion, predicted for instance by the ‘tournament’ model, dominates ‘fairness’ and/or ‘sabotage’ considerations. Further results reveal that the influence of wage dispersion on firm productivity is stronger among firms with a larger proportion of highly skilled workers but does not depend on whether wages are collectively renegotiated at the firm level.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Benoît Mahy & François Rycx & Mélanie Volral, 2011. "Does Wage Dispersion Make All Firms Productive?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(4), pages 455-489, September.
    • Handle: RePEc:bla:scotjp:v:58:y:2011:i:4:p:455-489
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pfeifer, Christian, 2013. "Intra-firm Wage Compression and Cost Coverage of Training: Evidence from Linked Employer-Employee Data," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80030, Verein für Socialpolitik / German Economic Association.
    2. 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.
    3. Mowczan, Damian & Sztaudynger, Jan Jacek, . "Związek zróżnicowania płac z produktywnością w ujęciu terytorialnym," Gospodarka Narodowa-The Polish Journal of Economics, Szkoła Główna Handlowa w Warszawie / SGH Warsaw School of Economics, vol. 2022(4).
    4. François Rycx & Yves Saks & Ilan Tojerow, 2015. "Does Education Raise Productivity and Wages Equally? The Moderating Roles of Age, Gender and Industry," Working Paper Research 281, National Bank of Belgium.
    5. Jens Mohrenweiser & Christian Pfeifer, 2023. "Wage Structures, Fairness Perceptions, and Job Satisfaction: Evidence from Linked Employer-Employee Data," Journal of Happiness Studies, Springer, vol. 24(7), pages 2291-2308, October.
    6. Romina Giuliano & Benoit Mahy & François Rycx, 2020. "Quels effets les contrats de travail à durée déterminée ont-ils, au plan global et sectoriel, sur la productivité, les salaires et les profits des firmes belges?," ULB Institutional Repository 2013/384858, ULB -- Universite Libre de Bruxelles.
    7. Dai, Yunhao & Kong, Dongmin & Xu, Jin, 2017. "Does fairness breed efficiency? Pay gap and firm productivity in China," International Review of Economics & Finance, Elsevier, vol. 48(C), pages 406-422.
    8. Bias, Daniel & Chen, Lin & Lochner, Benjamin & Schmid, Thomas, 2020. "Measuring workers' financial incentives," FAU Discussion Papers in Economics 07/2020, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    9. Benoit Mahy & François Rycx & Mélanie Volral, 2020. "Comment l'inégalité salariale intra-firme influence-t-elle la productivité et l'absentéisme pour maladie dans le secteur privé belge?," ULB Institutional Repository 2013/384857, ULB -- Universite Libre de Bruxelles.
    10. Dalenda Ben Ahmed, 2020. "Behavioral effects of employee stock ownership: French case," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 10(2), pages 53-64, February.
    11. Mohrenweiser, Jens & Pfeifer, Christian, 2019. "Firms' Wage Structures, Workers' Fairness Perceptions, Job Satisfaction and Turnover Intentions: Evidence from Linked Employer-Employee Data," IZA Discussion Papers 12821, Institute of Labor Economics (IZA).
    12. Stoyanov Andrey & Zubanov Nick, 2022. "Skill complementarity in production technology: New empirical evidence and implications," German Economic Review, De Gruyter, vol. 23(2), pages 233-274, May.
    13. Bisht, Nidhi S. & Mohebshahedin, Mahmood & Tripathy, Arun Kumar & Mahajan, Ashish & Gupta, Amit Kumar, 2025. "On the relevance of mandatory executive pay ratio disclosure: Evidence from India," Journal of Business Research, Elsevier, vol. 196(C).
    14. Damian Mowczan & Jan Jacek Sztaudynger, 2022. "Związek zróżnicowania płac z produktywnością w ujęciu terytorialnym," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 4, pages 60-73.
    15. Arnd Kölling, 2014. "Labor Demand and Unequal Payment: Does Wage Inequality matter? Analyzing the Influence of Intra-firm Wage Dispersion on Labor Demand with German Employer-Employee Data," Working Paper Series in Economics 326, University of Lüneburg, Institute of Economics.

    More about this item

    JEL classification:

    • 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
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:scotjp:v:58:y:2011:i:4:p:455-489. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/sesssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.