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Ownership and wages: spatial econometric approach

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  • Marko Ogorevc
  • Miroslav VerbiÄ

Abstract

The aim of our paper is to disentangle the relationship between ownership and wages using cross-section data for Slovenian medium size and large companies, where we account for spatial dependencies in wage determination. Space here is not considered in geographical context, but as a set of relations between firms originating from the same owner. Using a detailed database on Slovenian ownership, we apply a spatial econometric approach to detect any ownership-based wage spillovers, while accounting for different standard factors, such as size, capital intensity and productivity, and also some ownership-based variables, such as ownership concentration and ratio of cash-flow to control rights. Our results indicate that ownership is an important factor in explaining differences in wage levels. Many large owners divert cash-flow into their own pockets which has a detrimental effect on wages and indicates that this behaviour induced by owners is not sustainable.

Suggested Citation

  • Marko Ogorevc & Miroslav VerbiÄ, 2013. "Ownership and wages: spatial econometric approach," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 5(2), pages 207-224.
    • Handle: RePEc:ids:ijsuse:v:5:y:2013:i:2:p:207-224
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    More about this item

    Keywords

    spatial econometrics; business ownership; wage differentials; wages; cross-section data; Slovenia; large companies; small and medium-sized enterprises; SMEs; spatial dependencies; wage determination; space; ownership-based spillovers; wage spillovers; standard factors; firm size; capital intensity; productivity; ownership-based variables; ownership concentration; cash-flow ratios; control rights; wage levels; large owners; sustainability; sustainable development; sustainable economy.;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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