IDEAS home Printed from https://ideas.repec.org/a/bxr/bxrceb/y2003v46i4p5-29.html
   My bibliography  Save this article

Intra-firm wage dispersion and fîrm performance: a review and empirical tests on Belgian data

Author

Listed:
  • Thierry Lallemand
  • Robert Plasman
  • François Rycx

Abstract

The objective of this paper is twofold. First, we survey the theoretical and empirical literature regarding the impact of intra-firm wage dispersion on firm performance. Next, we examine the nature of this relationship in the Belgian private sector, using a unique combination of two large-scale data sets (i.e. the 1995 "Structure of Earnings Survey" and "Structure of Business Survey"). We measure firm performance both in financial and productivity terms. Moreover, three unconditional indicators are used to estimate intrafirm wage dispersion. Empirical results support the existence of a significant and positive relationship between wage inequality and firm performance, even when controlling for the composition of the workforce and firm characteristics. These findings are more in line with the "tournament" models (Lazear and Rosen, 1981) than with the "fairness, morale and cohesiveness" models (Akerlof and Yellen, 1990; Levine, 1991). Results also suggest that the magnitude of the elasticity between wage dispersion and firm performance depends upon the sectoral affiliation of the firm and the composition of the workforce.

Suggested Citation

  • Thierry Lallemand & Robert Plasman & François Rycx, 2003. "Intra-firm wage dispersion and fîrm performance: a review and empirical tests on Belgian data," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 46(4), pages 5-30.
  • Handle: RePEc:bxr:bxrceb:y:2003:v:46:i:4:p:5-29
    as

    Download full text from publisher

    File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/11883/1/ber-0263.pdf
    File Function: ber-0263
    Download Restriction: no
    ---><---

    Citations

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


    Cited by:

    1. Thierry Lallemand & Robert Plasman & François Rycx, 2005. "La dispersion salariale stimule-t-elle la performance d'une firme ?," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 63-70.
    2. Christian Pfeifer & Joachim Wagner, 2014. "Age and gender effects of workforce composition on productivity and profits: Evidence from a new type of data for German enterprises," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 8(1), March.
    3. Christian Pfeifer & Joachim Wagner, 2012. "Age and gender composition of the workforce, productivity and profits: Evidence from a new type of data for German enterprises," Working Paper Series in Economics 232, University of Lüneburg, Institute of Economics.

    More about this item

    Keywords

    Wage dispersion; Personnel economies; Matched employer-employee data;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

    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:bxr:bxrceb:y:2003:v:46:i:4:p:5-29. 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: Benoit Pauwels (email available below). General contact details of provider: https://edirc.repec.org/data/dulbebe.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.