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Careers and Wages in Family Firms: Evidence from Matched Employer-Employee Data

Author

Listed:
  • Edoardo Di Porto
  • Marco Pagano
  • Vincenzo Pezone
  • Raffaele Saggio
  • Fabiano Schivardi

Abstract

We investigate compensation policies in family and non-family firms using a novel employer-employee matched dataset comprising nearly the universe of Italian incorporated firms and ownership information. Family firms pay significantly lower wages and offer slower and less rewarding careers. Differences in worker sorting account for half of the wage gap while productivity differences and compensating differentials explain little of the residual gap. The wage distribution in family firms is more compressed, with infrequent promotions. We rationalize this evidence with a model where family owners seek to maintain control, creating a “glass ceiling” that limits their employees’ career progression.

Suggested Citation

  • Edoardo Di Porto & Marco Pagano & Vincenzo Pezone & Raffaele Saggio & Fabiano Schivardi, 2024. "Careers and Wages in Family Firms: Evidence from Matched Employer-Employee Data," NBER Working Papers 33219, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33219
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    More about this item

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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