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Wage dispersion and firm performance: evidence from Kazakhstan

Author

Listed:
  • Aigerim Yergabulova
  • Dinara Alpysbayeva
  • Venkat Subramanian

Abstract

Purpose - The aim of the paper is to explore within-firm vertical pay inequality and its relation to firm size and firm performance. Design/methodology/approach - Using firm-level microdata for Kazakhstan, the authors measure within-firm pay inequality as the wage differential between the top- and the bottom-level job occupations. The authors carry out their analysis based on panel regression models. Findings - The authors find that within-firm pay inequality increases as firms grow. Further, they identify that this trend is mainly driven by top-occupation workers receiving more significant wage increases compared to lower-level workers as firms expand. Once the authors address concerns about endogeneity, they find that pay inequality is negatively associated with firm performance. Practical implications - Developing strategies and policies that prioritize fairness and transparency in compensation practices is crucial during the expansion process of firms. By actively discouraging rent-seeking behavior, firms can create a work environment that promotes productivity and sustainability, ultimately leading to improved firm performance. The research findings highlight the importance of implementing context-specific interventions, recognizing that different environments may require tailored approaches to address pay inequality effectively. Originality/value - This study contributes to the study of within-firm pay inequality, firm size and performance in an emerging economy, an area that has been largely overlooked in previous empirical research. The contrasting findings show the importance of the structural and industrial characteristics of emerging markets that contribute to broader and deeper impact of pay inequality compared to developed economies.

Suggested Citation

  • Aigerim Yergabulova & Dinara Alpysbayeva & Venkat Subramanian, 2023. "Wage dispersion and firm performance: evidence from Kazakhstan," International Journal of Manpower, Emerald Group Publishing Limited, vol. 45(3), pages 425-448, July.
  • Handle: RePEc:eme:ijmpps:ijm-11-2022-0542
    DOI: 10.1108/IJM-11-2022-0542
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    More about this item

    Keywords

    Pay inequality; Job occupations; Performance; Firm size; J31; L25; M52;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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