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Wage Policy of Firms: An Empirical Investigation


  • Stéphanie Lluis


This paper analyzes the dynamics of wages and workers' mobility within firms with a hierarchical structure of job levels. The theoretical model proposed by Gibbons and Waldman (1999), that combines the notions of human capital accumulation, job rank assignments based on comparative advantage and learning about workers' abilities, is implemented empirically to measure the importance of these elements in explaining the wage policy of firms. Survey data from the GSOEP (German Socio-Economic Panel) are used to draw conclusions on the common features characterizing the wage policy of firms from a large sample of firms. The GSOEP survey also provides information on the worker's rank within his firm which is usually not available in other surveys. The results are consistent with non-random selection of workers onto the rungs of a job ladder. There is no direct evidence of learning about workers' unobserved abilities but the analysis reveals that unmeasured ability is an important factor driving wage dynamics. Finally, job rank effects remain significant even after controlling for measured and unmeasured characteristics. Cet article étudie la dynamique des salaires et la mobilité des travailleurs dans les entreprises caractérisées par une structure hiérarchique des postes. L'objectif est d'établir une spécialisation empirique et de tester le modèle théorique de Gibbons et Waldman (1999) qui combine les notions de capital humain, d'avantage comparatif dans l'attribution des postes aux travailleurs et d'apprentissage, afin de mesurer l'importance de ces éléments dans la politique salariale des entreprises. Afin d'établir des conclusions générales sur les caractéristiques communes de la politique de rémunération d'un ensemble représentatif d'entreprises, l'estimation est appliquée aux données de l'enquête GSOEP (German Socio-Economic Panel). Un autre avantage du GSOEP est qu'il fournit le rang du travailleur dans son entreprise, information qui n'est généralement pas disponible dans les données d'enquête. Les résultats de l'estimation confirment la présence d'une répartition non aléatoire des travailleurs dans les différents niveaux de l'échelle des postes dans l'entreprise. Bien que l'habileté non observée constitue un facteur déterminant dans ce mécanisme de répartition et dans la politique salariale résultante, les résultats ne montrent pas d'évidence directe du rôle de l'apprentissage (de l'entreprise et du travailleur) de cette habileté non observée. Finalement, les effets de rang restent importants même après contrôle des caractéristiques mesurables et non mesurables du travailleur.

Suggested Citation

  • Stéphanie Lluis, 2001. "Wage Policy of Firms: An Empirical Investigation," CIRANO Working Papers 2001s-47, CIRANO.
  • Handle: RePEc:cir:cirwor:2001s-47

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    References listed on IDEAS

    1. Ann P. Bartel & George J. Borjas, 1981. "Wage Growth and Job Turnover: An Empirical Analysis," NBER Chapters,in: Studies in Labor Markets, pages 65-90 National Bureau of Economic Research, Inc.
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    More about this item


    Wage dynamics; intra-firm mobility; human capital accumulation; unobserved heterogeneity; learning; Dynamique des salaires; mobilité dans l'entreprise; accumulation de capital humain; hétérogénéité non observée; apprentissage;

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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