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Evidence on the Employer Size-Wage Premium From Worker-Establishment Matched Data

  • Kenneth R. Troske

    (University of Missouri-Columbia)

In spite of the large and growing importance of the employer size-wage premium, previous attempts to account for this premium using observable worker or employer characteristics have met with limited success. The problem is that, while most theoretical explanations for the size-wage premium are based on the matching of employers and employees, previous empirical work has relied on either worker surveys with little information about a worker's employer, or establishment surveys with little information about workers. In contrast, this study uses the newly created Worker-Establishment Characteristic Database, which contains linked employer-employee data for a large sample of U.S. manufacturing workers and establishments, to examine seven explanations for the employer size-wage premium. A number of the explanations can account for some of the observed cross-sectional variation in worker wages. However, none of the explanations can fully account for the employer size-wage premium. In the end there remains a large, significant, and unexplained premium paid to workers of large employers.

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Paper provided by EconWPA in its series Labor and Demography with number 9807001.

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Length: 34 pages
Date of creation: 14 Jul 1998
Date of revision:
Handle: RePEc:wpa:wuwpla:9807001
Note: 34 pages (title page, abstract page, 22 numbered pages, 10 table pages), WordPerfect 8.0
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Kenneth R Troske & William J Carrington, 1992. "Gender Segregation Small Firms," Working Papers 92-13, Center for Economic Studies, U.S. Census Bureau, revised May 1993.
  2. Walter Oi, 1983. "The Fixed Employment Costs of Specialized Labor," NBER Chapters, in: The Measurement of Labor Cost, pages 63-122 National Bureau of Economic Research, Inc.
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