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The Employer Size-Wage Effect

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  • Charles Brown
  • James L. Medoff

Abstract

We consider six explanations for the positive relationship between employer size and wages -- large employers (1) hire higher quality workers; (2) offer inferior working conditions; (3) make more use of high wages to forestall unionization; (4) have more ability to pay high wages; (5) face smaller pools of applicants relative to vacancies; (6) are less able to monitor their workers. We find some support for the first of these, but there remains a significant wage premium for those working for large employers.

Suggested Citation

  • Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:2870
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    1. Harry Holzer & Lawrence Katz & Alan Krueger, 1988. "Job Queues and Wages: New Evidence on the Minimum Wage and Inter-Industry Wage Structure," Working Papers 610, Princeton University, Department of Economics, Industrial Relations Section..
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