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Employer Size or Skill-Group Size Effect on Wages?

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  • Barth, Erling

    (Institute for Social Research, Oslo)

  • Dale-Olsen, Harald

    (Institute for Social Research, Oslo)

Abstract

It turns out that the employer-size effect on individual wages dwindles away once one control for the number of workers of the same skill-group (educational type) as the observed individual within the establishment. The skill-group size effect on wages is substantial. The main results, a dwindling employer size effect and a significant group size effect, remain after controlling for both individual and establishment specific heterogeneity. This observation rejects most of the proposed explanations for the employer-size effect, while it lends considerable support for the notion that there are frictions in the labor market and that each establishment faces an upward sloping supply curve for each type of labor.

Suggested Citation

  • Barth, Erling & Dale-Olsen, Harald, 2005. "Employer Size or Skill-Group Size Effect on Wages?," IZA Discussion Papers 1888, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1888
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    Cited by:

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    2. Binnur Balkan & Semih Tumen, 2016. "Firm-Size Wage Gaps along the Formal-Informal Divide: Theory and Evidence," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 235-266, April.
    3. Jan Kluge & Michael Weber, 2015. "Decomposing the German East-West wage gap," ifo Working Paper Series 205, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    4. Vincenzo Scoppa, 2014. "Firm Size and Wages in Italy: Evidence from Exogenous Job Displacements," Manchester School, University of Manchester, vol. 82(6), pages 677-700, December.
    5. Jaakko Pehkonen & Sampo Pehkonen & Matthias Strifler & Mika Maliranta, 2017. "Profit Sharing and the Firm-Size Wage Premium," LABOUR, CEIS, vol. 31(2), pages 153-173, June.
    6. Jaakko Pehkonen & Sampo Pehkonen & Matthias Strifler, 2017. "Wage Effects of Firm Size: Evidence from Linked Employer-Employee Panel," Finnish Economic Papers, Finnish Economic Association, vol. 28(1), pages 1-9, Autumn.
    7. Pehkonen, Jaakko, 2014. "Establishment size and task-specific wages: Evidence from historical contract data," Economics Letters, Elsevier, vol. 124(1), pages 48-50.
    8. Jan Kluge & Michael Weber, 2018. "Decomposing the German East–West wage gap," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(1), pages 91-125, January.

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    More about this item

    Keywords

    wage differentials; size wage effect;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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