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Working in Family Firms: Paid Less but More Secure? Evidence from French Matched Employer-Employee Data

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  • Andrea Bassanini
  • Thomas Breda
  • Eve Caroli
  • Antoine Rebérioux

Abstract

The authors study compensation packages in family-owned and nonfamily-owned firms. Using French matched employer-employee data, they first show that family firms pay on average lower wages. Part of this wage gap is attributable to low-wage workers sorting into family firms and high-wage workers sorting into nonfamily firms; however, they also find evidence that company wage policies differ according to ownership status, so that the same worker is paid differently under family and nonfamily firm ownership. In addition, family firms are characterized by lower job insecurity, as measured by lower dismissal rates. Family firms also appear to rely less on dismissals, and more on hiring reductions, than do nonfamily firms when they downsize. The authors show that compensating wage differentials account for a substantial part of the inverse relationship between the family/nonfamily gaps in wages and job security.

Suggested Citation

  • Andrea Bassanini & Thomas Breda & Eve Caroli & Antoine Rebérioux, 2013. "Working in Family Firms: Paid Less but More Secure? Evidence from French Matched Employer-Employee Data," ILR Review, Cornell University, ILR School, vol. 66(2), pages 433-466, April.
  • Handle: RePEc:sae:ilrrev:v:66:y:2013:i:2:p:433-466
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    Cited by:

    1. Pierluigi Murro & Tommaso Oliviero & Alberto Zazzaro, 2019. "Relationship Lending on Employment Decisions in Firms’ Bad Times," CSEF Working Papers 533, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 06 Apr 2020.
    2. Andrew Ellul & Marco Pagano & Fabiano Schivardi, 2018. "Employment and Wage Insurance within Firms: Worldwide Evidence," Review of Financial Studies, Society for Financial Studies, vol. 31(4), pages 1298-1340.
    3. François Belot & Timothée Waxin, 2017. "Labor Conflicts in French Workplaces: Does (the Type of) Family Control Matter?," Journal of Business Ethics, Springer, vol. 146(3), pages 591-617, December.
    4. Blanco-Mazagatos, Virginia & de Quevedo-Puente, Esther & Delgado-García, Juan Bautista, 2018. "Human resource practices and organizational human capital in the family firm: The effect of generational stage," Journal of Business Research, Elsevier, vol. 84(C), pages 337-348.
    5. Jörn H. Block & Christian O. Fisch & James Lau & Martin Obschonka & André Presse, 2019. "How Do Labor Market Institutions Influence the Preference to Work in Family Firms? A Multilevel Analysis Across 40 Countries," Entrepreneurship Theory and Practice, , vol. 43(6), pages 1067-1093, November.
    6. Block, Jörn H. & Fisch, Christian O. & Lau, James & Obschonka, Martin & Presse, André, 2016. "Who prefers working in family firms? An exploratory study of individuals’ organizational preferences across 40 countries," Journal of Family Business Strategy, Elsevier, vol. 7(2), pages 65-74.
    7. Thomas Breda, 2018. "Working in family firms," IZA World of Labor, Institute of Labor Economics (IZA), pages 434-434, April.
    8. Teresa Chu & In-Mu Haw & Simon S. M. Ho & Xu Zhang, 2020. "Labor protection, ownership concentration, and cost of equity capital: international evidence," Review of Quantitative Finance and Accounting, Springer, vol. 54(4), pages 1351-1387, May.
    9. Mirella Damiani & Fabrizio Pompei & Andrea Ricci, 2019. "The role of employee incentive pay in the competitiveness of family and non-family firms," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(3), pages 805-839, October.
    10. Fabrizio Pompei & Mirella Damiani & Andrea Ricci, 2019. "Family firms, performance-related pay, and the great crisis: evidence from the Italian case," Industrial and Corporate Change, Oxford University Press, vol. 28(5), pages 1193-1225.
    11. Noel GASTON & YOSHIMI Taiyo, 2020. "Heterogenous Job Separations and the Balassa-Samuelson Effect," Discussion papers 20032, Research Institute of Economy, Trade and Industry (RIETI).
    12. Arndt Werner & Christian Schröder & Simone Chlosta, 2018. "Driving factors of innovation in family and non-family SMEs," Small Business Economics, Springer, vol. 50(1), pages 201-218, January.
    13. Małgorzata Bartosik-Purgat & Barbara Jankowska, 2017. "The Use of Social Networking Sites in Job Related Activities: A Cross-cultural Comparison," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 5(2), pages 177-193.
    14. Bjuggren, Carl Magnus, 2015. "Sensitivity to shocks and implicit employment protection in family firms," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 18-31.
    15. Christopher Hansen & Joern Block & Matthias Neuenkirch, 2020. "Family Firm Performance Over The Business Cycle: A Meta‐Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 34(3), pages 476-511, July.
    16. Andrea Garnero, 2015. "Workforce diversity, productivity and wages in France: the role of managers vs. the proprietary structure of the firm," Working Papers CEB 15-039, ULB -- Universite Libre de Bruxelles.
    17. Jan Brzozowski, 2017. "Immigrant Entrepreneurship and Economic Adaptation: A Critical Analysis," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 5(2), pages 159-176.
    18. Jun-Koo Kang & Jungmin Kim, 2020. "Do Family Firms Invest More than Nonfamily Firms in Employee-Friendly Policies?," Management Science, INFORMS, vol. 66(3), pages 1300-1324, March.
    19. Massimo Del Gatto & Fadi Hassan & Gianmarco I.P. Ottaviano & Fabiano Schivardi, 2019. "Company Profits in Italy," European Economy - Discussion Papers 2015 - 093, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

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