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Firm Age and Wages

  • Charles Brown
  • James L. Medoff

In this paper, we analyze the relationship between how long an employer has been in business (firm age) and wages. Using data from special supplements to the Survey Research Center's monthly Survey of Consumers, we find that firms that have been in business longer pay higher wages (as previous studies have found), but pay if anything lower wages after controlling for worker characteristics. There is some evidence that the relationship is not monotonic, with wages falling and then rising with years in business. Older firms provide better fringe benefits and more stable employment, but these differences do not appear very important in understanding the age-wage relationship. Established employers do appear to make greater use of back-loaded compensation, consistent with their higher probability of remaining in business.

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File URL: http://www.nber.org/papers/w8552.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8552.

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Date of creation: Oct 2001
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Publication status: published as Brown, Charles and James L. Medoff. "Firm Age And Wages," Journal of Labor Economics, 2003, v21(3,Jul), 677-697.
Handle: RePEc:nbr:nberwo:8552
Note: LS
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