NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Wage Inequality and Firm Growth

Holger M. Mueller, Paige P. Ouimet, Elena Simintzi

NBER Working Paper No. 20876
Issued in January 2015
NBER Program(s):Labor Studies

We examine how within-firm skill premia–wage differentials associated with jobs involving different skill requirements–vary both across firms and over time. Our firm-level results mirror patterns found in aggregate wage trends, except that we find them with regard to increases in firm size. In particular, we find that wage differentials between high- and either medium- or low-skill jobs increase with firm size, while those between medium- and low-skill jobs are either invariant to firm size or, if anything, slightly decreasing. We find the same pattern within firms over time, suggesting that rising wage inequality–even nuanced patterns, such as divergent trends in upper- and lower-tail inequality–may be related to firm growth. We explore two possible channels: i) wages associated with “routine” job tasks are relatively lower in larger firms due to a higher degree of automation in these firms, and ii) larger firms pay relatively lower entry-level managerial wages in return for providing better career opportunities. Lastly, we document a strong and positive relation between within-country variation in firm growth and rising wage inequality for a broad set of developed countries. In fact, our results suggest that part of what may be perceived as a global trend toward more wage inequality may be driven by an increase in employment by the largest firms in the economy.

download in pdf format
   (335 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20876

Published: Holger M. Mueller & Paige P. Ouimet & Elena Simintzi, 2017. "Wage Inequality and Firm Growth," American Economic Review, vol 107(5), pages 379-383.

Users who downloaded this paper also downloaded* these:
Barth, Bryson, Davis, and Freeman w20447 It's Where You Work: Increases in Earnings Dispersion across Establishments and Individuals in the U.S.
Song, Price, Guvenen, Bloom, and von Wachter w21199 Firming Up Inequality
García-Gómez, Jimenez-Martin, and Vall Castelló w21973 Health Capacity to Work at Older Ages: Evidence from Spain
Stiglitz w21192 New Theoretical Perspectives on the Distribution of Income and Wealth among Individuals: Part IV: Land and Credit
Courtemanche, Pinkston, Ruhm, and Wehby w20892 Can Changing Economic Factors Explain the Rise in Obesity?
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us