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Relationship Between Firm Size, Wage Dispersion and Firm Performance

Author

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  • Homero Zambrano

    (Tecnológico de Monterrey)

Abstract

A simple theoretical model explains the divergent empirical results concerning the effect of wage dispersion on firm performance. First, causality in the relationship is clarified. Then, through the model, it is shown that firm performance is non-monotonic with respect to wage dispersion. Likewise, it is shown that large firms are more likely to benefit from a dispersed wage structure than small firms.

Suggested Citation

  • Homero Zambrano, 2010. "Relationship Between Firm Size, Wage Dispersion and Firm Performance," Journal of Income Distribution, Ad libros publications inc., vol. 19(2), pages 33-50, June.
    • Handle: RePEc:jid:journl:y:2010:v:19:i:2:p:33-50
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    File URL: http://jid.journals.yorku.ca/index.php/jid/article/view/30579
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    More about this item

    Keywords

    wage inequality; firm performance;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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