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Do Smaller Firms Pay Less in the Caribbean? The Case of Trinidad and Tobago

  • Miguel Marcelle
  • Eric Strobl

This article constitutes the first study of the employer size wage effect for a Caribbean country, namely the Republic of Trinidad and Tobago. Using a rich micro-level data set we estimate the firm size wage premium in an empirical model of wage determination. Despite exploring a variety of theories, samples, estimation techniques and tests, we find that, consistent with the empirical literature, larger firms in Trinidad and Tobago pay higher wages than smaller firms, for equally productive workers.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00220380412331333199
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Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 39 (2003)
Issue (Month): 5 ()
Pages: 181-198

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Handle: RePEc:taf:jdevst:v:39:y:2003:i:5:p:181-198
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  1. Rudolf Winter-Ebmer & Josef Zweimueller, . "Firm Size Wage Differentials in Switzerland: Evidence from Job Changers," IEW - Working Papers 001, Institute for Empirical Research in Economics - University of Zurich.
  2. Schaffner, Julie Anderson, 1998. "Premiums to employment in larger establishments: evidence from Peru," Journal of Development Economics, Elsevier, vol. 55(1), pages 81-113, February.
  3. Holger Görg & Eric Strobl, 2002. "Multinational Companies and Entrant Start-up Size: Evidence from Quantile Regressions," Review of Industrial Organization, Springer, vol. 20(1), pages 15-31, February.
  4. James R. Tybout, 2000. "Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 11-44, March.
  5. Christoph Schmidt & Klaus Zimmerman, 1990. "Work Characteristics, Firm Size and Wages," Working Papers 644, Princeton University, Department of Economics, Industrial Relations Section..
  6. Velenchik, Ann D., 1997. "Government intervention, efficiency wages, and the employer size wage effect in Zimbabwe," Journal of Development Economics, Elsevier, vol. 53(2), pages 305-338, August.
  7. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March.
  8. Kenneth R. Troske & Kimberly Bayard, 1999. "Examining the Employer-Size Wage Premium in the Manufacturing, Retail Trade, and Service Industries Using Employer-Employee Matched Data," American Economic Review, American Economic Association, vol. 89(2), pages 99-103, May.
  9. Brigitte C. Madrian & Lars John Lefgren, 1999. "A Note on Longitudinally Matching Current Population Survey (CPS) Respondents," NBER Technical Working Papers 0247, National Bureau of Economic Research, Inc.
  10. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
  11. Evans, David S. & Leighton, Linda S., 1987. "Why do Smaller Firms Pay Less?," Working Papers 87-19, C.V. Starr Center for Applied Economics, New York University.
  12. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
  13. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-59, October.
  14. Albaek, Karsten & Arai, Mahmood & Asplund, Rita & Barth, Erling & Strojer Madsen, Erik, 1998. "Measuring wage effects of plant size," Labour Economics, Elsevier, vol. 5(4), pages 425-448, December.
  15. Stiglitz, Joseph E, 1974. "Alternative Theories of Wage Determination and Unemployment in LDC'S: The Labor Turnover Model," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 194-227, May.
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