Endogenous Choice of Firm Size and the Sturcture of Wages: A Comparison of Canada and the United States
This paper compares the Canadian and U.S. wage structures by firm size. The objective is to test for the possibility of different returns to education and experience as well as examine the role played by unmeasured skills in driving the allocation of workers across firms of different sizes. Those effects may arise if large and small firms have different working environments in which the various dimensions of workers' skills (measured and unmeasured) may not be identically productive. The analysis is performed separately for the samples of unionized and non- unionized workers in order to isolate any effects of unions on the size- wage structure. The results show evidence of non-random selection of workers into firms of different sizes for both countries in both sectors. In the non-unionized sector, the selection is found to be strongly negative in large firms in both countries and positive in smaller (strongly for the U.S.). This result implies that workers in large firms are of lower quality in terms of unmeasured aspects of skills and equivalently that large firms do not seem to reward unmeasured skills, and the contrary for small firms. In Canada, although unions are associated with the compressed wage- educational differentials relative to non-unionized employers, the wage- educational differentials are more pronounced in smaller unionized employers. Moreover, similar selection patterns as those in the non- unionized sector are found.
|Date of creation:|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (612) 624-2500
Fax: (612) 624-8360
Web page: http://www.chrls.csom.umn.edu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Richard B. Freeman, 1980.
"Unionism and the dispersion of wages,"
Industrial and Labor Relations Review,
ILR Review, Cornell University, ILR School, vol. 34(1), pages 3-23, October.
- 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.
- Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-80, June.
- Robert Gibbons & Lawrence F. Katz, 1989.
"Does Unmeasured Ability Explain Inter-Industry Wage Differentials?,"
NBER Working Papers
3182, National Bureau of Economic Research, Inc.
- Gibbons, Robert & Katz, Lawrence F, 1992. "Does Unmeasured Ability Explain Inter-industry Wage Differentials?," Review of Economic Studies, Wiley Blackwell, vol. 59(3), pages 515-35, July.
- Lemieux, Thomas, 1998. "Estimating the Effects of Unions on Wage Inequality in a Panel Data Model with Comparative Advantage and Nonrandom Selection," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 261-91, April.
- William T. Dickens & Lawrence F. Katz, 1986. "Interindustry Wage Differences and Industry Characteristics," NBER Working Papers 2014, National Bureau of Economic Research, Inc.
- Garen, John E, 1985. "Worker Heterogeneity, Job Screening, and Firm Size," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 715-39, August.
- 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.
- Idson, Todd L & Feaster, Daniel J, 1990. "A Selectivity Model of Employer-Size Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 99-122, January.
- Kevin T. Reilly, 1995. "Human Capital and Information: The Employer Size-Wage Effect," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 1-18.
- Rene Morissette, 1993. "Canadian Jobs and Firm Size: Do Smaller Firms Pay Less?," Canadian Journal of Economics, Canadian Economics Association, vol. 26(1), pages 159-74, February.
When requesting a correction, please mention this item's handle: RePEc:hrr:papers:0203. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mary Helen Walker)
If references are entirely missing, you can add them using this form.