Do newly founded firms pay lower wages? First evidence from Germany
Using a linked employer-employee data set for Germany, this paper analyses wage setting in a cohort of newly founded and other establishments from 1997 to 2001. While theory provides alternative explanations for higher or lower wages in newly founded firms, we show empirically that start-ups tend to pay lower wages, ceteris paribus. On average, wages in newly founded establishments are 8 percent lower than in similar incumbent firms. This negative wage differential is substantially smaller in eastern than in western Germany. The wage differential is shown to decline over time as the newly founded firms become more mature.
|Date of creation:||2004|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.arbeitsmarkt.wiso.uni-erlangen.de/english-version/|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michelacci, Claudio & Quadrini, Vincenzo, 2005.
"Financial Markets and Wages,"
CEPR Discussion Papers
4867, C.E.P.R. Discussion Papers.
- Gernandt, Johannes & Pfeiffer, Friedhelm, 2005.
"Einstiegslöhne bei unvollkommenen Arbeitsmärkten,"
ZEW Discussion Papers
05-26, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Kölling, Arnd & Schnabel, Claus & Wagner, Joachim, 2002.
"Establishment age and wages: evidence from German linked employer-employee data,"
13, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
- Kölling, Arnd & Schnabel, Claus & Wagner, Joachim, 2002. "Establishment Age and Wages: Evidence from German Linked Employer-Employee Data," IZA Discussion Papers 679, Institute for the Study of Labor (IZA).
- Wagner, Joachim, 1994. "The Post-entry Performance of New Small Firms in German Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 141-54, June.
- repec:tpr:qjecon:v:112:y:1997:i:1:p:253-90 is not listed on IDEAS
- Brixy, Udo & Kohaut, Susanne, 1999. " Employment Growth Determinants in New Firms in Eastern Germany," Small Business Economics, Springer, vol. 13(2), pages 155-70, September.
- Dunne, T. & Roberts, M.J. & Samuelson, L., 1988.
"The Growth And Failure Of U.S. Manufacturing Plants,"
1-87-5, Pennsylvania State - Department of Economics.
- Audretsch, David B. & van Leeuwen, George & Menkveld, Bert & Thurik, Roy, 2001. "Market dynamics in the Netherlands: Competition policy and the role of small firms," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 795-821, April.
- Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
- Heyman, Fredrik, 2004. "The Employer Age-Wage Effect: Evidence from Matched Employer-Employee Data," Working Paper Series 193, Trade Union Institute for Economic Research.
- Charles Brown & James L. Medoff, 2003.
"Firm Age and Wages,"
Journal of Labor Economics,
University of Chicago Press, vol. 21(3), pages 677-698, July.
When requesting a correction, please mention this item's handle: RePEc:zbw:faulre:28. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.