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Recent Canadian Evidence on Job Quality by Firm Size

  • Drolet, Marie
  • Morissette, Rene
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    We provide recent evidence on job characteristics by firm size in Canada. Using a variety of household surveys, we assemble a wide set of facts on wages, fringe benefits and work schedules in small and large firms. We show that the wage gap between small and large firms has reamined fairly stable over the past decade. After controlling for observable worker characteristics and industry-specific effects, large firms pay 15-20% more than small firms. Pension plan coverage remains at least four times higher in large firms than in small firms. While the gap in pension coverage between small and large firms has not increased over time for men, there is some evidence that it has increased for women. We assess the extent to which work schedules vary between small and large firms. Our results indicate that compared to workers in large firms, employees of small firms work at least as many weekly hours. Furthermore, they are more likely to work more than five days per week. This implies that the firm size wage premium cannot be explained by a longer workweek in large firms. As long as workers prefer working during the day, the greater frequency of shift work in large, goods-producing companies is one dimension along which work schedules are less desirable in large firms. According to the theory of compensating differentials, the size-wage differential may partially reflect the willingness of large firms to compensate workers for shift work. We test this hypothesis and conclude that shift work has virtually no effect on the firm size wage premium. Our results emphasize the need to look at several dimensions of work to assess how job quality varies between small and large firms.

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    File URL: http://www5.statcan.gc.ca/olc-cel/olc.action?ObjId=11F0019M1998128&ObjType=46&lang=en&limit=0
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    Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 1998128e.

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    Date of creation: 13 Nov 1998
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    Handle: RePEc:stc:stcp3e:1998128e
    Contact details of provider: Postal: Tunney's Pasture, Ottawa, Ontario, K1A 0T6
    Web page: http://www.statcan.gc.ca

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    1. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
    2. William E. Even & David A. Macpherson, 1996. "Employer size and labor turnover: The role of pensions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 49(4), pages 707-728, July.
    3. Idson, Todd L & Feaster, Daniel J, 1990. "A Selectivity Model of Employer-Size Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 99-122, January.
    4. Oi, Walter Y, 1983. "Heterogeneous Firms and the Organization of Production," Economic Inquiry, Western Economic Association International, vol. 21(2), pages 147-71, April.
    5. Baldwin, John R., 1996. "Were Small Producers the Engines of Growth in the Canadian Manufacturing Sector in the 1980s?," Analytical Studies Branch Research Paper Series 1996088e, Statistics Canada, Analytical Studies Branch.
    6. Steven J. Davis & John Haltiwanger & Scott Schuh, 1993. "Small Business and Job Creation: Dissecting the Myth and Reassessing theFacts," NBER Working Papers 4492, National Bureau of Economic Research, Inc.
    7. Daniel S. Hamermesh, 1996. "Workdays, Workhours, and Work Schedules: Evidence for the United States and Germany," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number www, June.
    8. Christoph Schmidt & Klaus Zimmerman, 1990. "Work Characteristics, Firm Size and Wages," Working Papers 644, Princeton University, Department of Economics, Industrial Relations Section..
    9. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
    10. Evans, David S. & Leighton, Linda S., 1987. "Why do Smaller Firms Pay Less?," Working Papers 87-19, C.V. Starr Center for Applied Economics, New York University.
    11. Rene Morissette, 1993. "Canadian Jobs and Firm Size: Do Smaller Firms Pay Less?," Canadian Journal of Economics, Canadian Economics Association, vol. 26(1), pages 159-74, February.
    12. Jeremy I. Bulow & Lawrence H. Summers, 1985. "A Theory of Dual Labor Markets with Application to Industrial Policy, Discrimination and Keynesian Unemployment," NBER Working Papers 1666, National Bureau of Economic Research, Inc.
    13. Picot, Garnett & Dupuy, Richard & Baldwin, John R., 1994. "Have Small Firms Created a Disproportionate Share of New Jobs in Canada? A Reassessment of the Facts," Analytical Studies Branch Research Paper Series 1994071e, Statistics Canada, Analytical Studies Branch.
    14. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March.
    15. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
    16. Kostiuk, Peter F, 1990. "Compensating Differentials for Shift Work," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1054-75, October.
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