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Is Bigger Still Better? The Decline of the Wage Premium at Large Firms

  • Even, William E.

    ()

    (Miami University)

  • Macpherson, David A.

    ()

    (Trinity University)

This study shows that the wage premium paid by large firms fell over the past 20 years and that the decline in the size premium has been most pronounced among the least educated work force. Empirical evidence supports several explanations for the decline in the size premium. First, there has been a convergence in the returns to worker characteristics at large and small firms over time. Second, there has been a convergence in the types of workers employed at small and large firms. Particularly important have been changes in the distribution of workers across industries and the greater rate of decline in unionism at large firms.

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File URL: http://ftp.iza.org/dp4082.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4082.

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Length: 29 pages
Date of creation: Mar 2009
Date of revision:
Publication status: published in: Southern Economic Journal, 2012, 78(4), 1181-1201
Handle: RePEc:iza:izadps:dp4082
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  1. Mellow, Wesley, 1982. "Employer Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 495-501, August.
  2. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
  3. Dale Belman & David I. Levine, 2004. "Size, Skill and Sorting," LABOUR, CEIS, vol. 18(4), pages 515-561, December.
  4. Yu, Li & Hurley, Terrance M. & Kliebenstein, James & Orazem, Peter, 2012. "Firm Size, Technical Change and Wages in the Pork Sector, 1990-2005," Staff General Research Papers 35971, Iowa State University, Department of Economics.
  5. Bollinger, Christopher R. & Hirsch, Barry, 2005. "Match Bias from Earnings Imputation in the Current Population Survey: The Case of Imperfect Matching," IZA Discussion Papers 1846, Institute for the Study of Labor (IZA).
  6. Tan, Hong & Batra, Geeta, 1997. "Technology and Firm Size-Wage Differentials in Colombia, Mexico, and Taiwan (China)," World Bank Economic Review, World Bank Group, vol. 11(1), pages 59-83, January.
  7. 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.
  8. 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.
  9. Thierry Lallemand & Robert Plasman & François Rycx, 2005. "Why do large firms pay higher wages? evidence from matched worker-firm data," ULB Institutional Repository 2013/8743, ULB -- Universite Libre de Bruxelles.
  10. Kostiuk, Peter F, 1990. "Compensating Differentials for Shift Work," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1054-75, October.
  11. Dunne, Timothy & Schmitz, James A, Jr, 1995. "Wages, Employment Structure and Employer Size-Wage Premia: Their Relationship to Advanced-Technology Usage at US Manufacturing Establishments," Economica, London School of Economics and Political Science, vol. 62(245), pages 89-107, February.
  12. Meagher, Kieron J. & Wilson, Hugh, 2004. "Different firm size effects on wages for supervisors and workers," Economics Letters, Elsevier, vol. 84(2), pages 225-230, August.
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