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The Large-Firm Wage Premium in Developing Economies

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  • Reed,Tristan
  • Tran,Trang Thu

Abstract

Large firms pay higher wages. In developing economies, the large-firm wage premium is comparable to the average gap between male and female wages, or two-thirds of the gap between urban and rural wages. There is substantial variation across countries in the share of the premium that is explained by sorting of human capital into large firms. The average large-firm wage premium declines in national income and has declined over time. Across industries, it is highest in public utilities and commerce. These stylized facts suggest several hypotheses about differences between labor markets in developing and advanced economies.

Suggested Citation

  • Reed,Tristan & Tran,Trang Thu, 2019. "The Large-Firm Wage Premium in Developing Economies," Policy Research Working Paper Series 8997, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8997
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    Cited by:

    1. Barthelmess Benedikt & Langlois Jean, 2020. "SME Financing in MENA: A Quantitative and Qualitative Analysis of Multilateral and Bilateral Development Lenders’ Intermediated Lending Practices," Review of Middle East Economics and Finance, De Gruyter, vol. 16(3), pages 1-032, December.
    2. Vanessa Boese & Markus Eberhardt, 2021. "Democracy doesn't always happen overnight: Regime change in stages and economic growth," Discussion Papers 2021-01, University of Nottingham, GEP.
    3. Nezih Guner & Alessandro Ruggieri, 2021. "Misallocation and inequality," Discussion Papers 2021/01, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).

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