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Firm Size, Earnings, and Displacement Risk


  • Winter-Ebmer, Rudolf


Analogous to the well-documented firm size-wage differential, there also exists a differential in layoff risk according to firm size. Using Austrian data I discuss several reasons for this puzzle, including on-the-job training and workers' heterogeneity. If less stable (and also less able) workers select themselves into small, unstable, and low-paying firms, predicted layoff risk of workers can be used as a proxy for heterogeneity of workers and therefore be included in wage regressions. Doing this, one half of the size earnings premium can be explained. Copyright 2001 by Oxford University Press.

Suggested Citation

  • Winter-Ebmer, Rudolf, 2001. "Firm Size, Earnings, and Displacement Risk," Economic Inquiry, Western Economic Association International, vol. 39(3), pages 474-486, July.
  • Handle: RePEc:oup:ecinqu:v:39:y:2001:i:3:p:474-86

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    References listed on IDEAS

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    6. A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Rudolf Winter-Ebmer, 2000. "Long-term consequences of an innovative redundancy-retraining project: The Austrian Steel Foundation," Economics working papers 2000-29, Department of Economics, Johannes Kepler University Linz, Austria.
    2. Pinheiro, Roberto & Visschers, Ludo, 2015. "Unemployment risk and wage differentials," Journal of Economic Theory, Elsevier, vol. 157(C), pages 397-424.
    3. Daniel L. Millimet, 2003. "Environmental Abatement Costs and Establishment Size," Contemporary Economic Policy, Western Economic Association International, vol. 21(3), pages 281-296, July.
    4. Kristina Nyström & Gulzat Zhetibaeva Elvung, 2015. "New Firms as Employers: The Wage Penalty for Voluntary and Involuntary Job Switchers," LABOUR, CEIS, vol. 29(4), pages 348-366, December.
    5. Alfred Stiglbauer & Florian Stahl & Rudolf Winter-Ebmer & Josef Zweimüller, 2003. "Job Creation and Job Destruction in a Regulated Labor Market: The Case of Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 30(2), pages 127-148, June.
    6. Danny Leung & Alexander Ueberfeldt, 2008. "Human Capital Risk and the Firmsize Wage Premium," Staff Working Papers 08-33, Bank of Canada.
    7. Charles Brown & James L. Medoff, 2003. "Firm Age and Wages," Journal of Labor Economics, University of Chicago Press, vol. 21(3), pages 677-698, July.
    8. Boeri, Tito & Jimeno, Juan F., 2005. "The effects of employment protection: Learning from variable enforcement," European Economic Review, Elsevier, vol. 49(8), pages 2057-2077, November.
    9. Thierry Lallemand & François Rycx, 2007. "Employer Size and the Structure of Wages: A Critical Survey," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 75-87.
    10. Green, Colin & Heywood, John S. & Theodoropoulos, Nikolaos, 2017. "Employer Size and Supervisor Earnings: Evidence from Britain," GLO Discussion Paper Series 136, Global Labor Organization (GLO).
    11. Niessen, Alexandra & Ruenzi, Stefan, 2007. "Sex matters: Gender differences in a professional setting," CFR Working Papers 06-01, University of Cologne, Centre for Financial Research (CFR).
    12. P. Arocena & Imanol Núñez & Mikel Villanueva, 2007. "The Effect of Enhancing Workers’ Employability on Small and Medium Enterprises: Evidence from Spain," Small Business Economics, Springer, vol. 29(1), pages 191-201, June.
    13. Manuel Carvajal, 2006. "Economic grounds for affirmative action: The evidence on architects and engineers in South Florida," Review of Social Economy, Taylor & Francis Journals, vol. 64(4), pages 515-538.
    14. Stodder, James, 2009. "Complementary credit networks and macroeconomic stability: Switzerland's Wirtschaftsring," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 79-95, October.
    15. Contini, Bruno & Morini, Matteo, 2007. "Testing Bounded Rationality against Full Rationality in Job Changing Behavior," IZA Discussion Papers 3148, Institute for the Study of Labor (IZA).
    16. Nuno Crespo & Nádia Simões & José Castro Pinto, 2013. "Determinant factors of job quality in Europe," Working Papers Series 2 13-01, ISCTE-IUL, Business Research Unit (BRU-IUL).
    17. Kelly Edmiston, 2004. "The role of small business in economic development," Community Affairs Research Working Paper 2005-01, Federal Reserve Bank of Kansas City.
    18. Tang, Jianmin, 2006. "Competition and innovation behaviour," Research Policy, Elsevier, vol. 35(1), pages 68-82, February.
    19. Marcus Eliason & Donald Storrie, 2006. "Lasting or Latent Scars? Swedish Evidence on the Long-Term Effects of Job Displacement," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 831-856, October.
    20. repec:onb:oenbwp:y::i:78:b:1 is not listed on IDEAS

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