Labor Demand and Unequal Payment: Does Wage Inequality matter? Analyzing the Influence of Intra-firm Wage Dispersion on Labor Demand with German Employer-Employee Data

Arnd Kölling ()
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Arnd Kölling: Berlin School of Business and Law

No 326, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

Abstract: This paper examines the relationship between intra-firm wage dispersion and establishments’ employment in a theoretical analysis and empirical regressions using German “Linked Employer-Employee Data from the IAB” (LIAB) for the years of 1996 through 2008. Therefore, fractional probit models for the panel data, recommended in Papke and Wooldridge (2008), and fixed effects regression with a log-odds transformation of the dependent variable are conducted to estimate share equations of a labor demand model. The results illustrate a negative influence of the residual wage inequality that takes into account the composition of the workforce in the establishment with employment. In addition, an increasing wage dispersion at the lower end of the wage distribution decreases labor demand of the establishment but the estimates of the overall wage dispersion becomes insignificant then.

Keywords: Labor Demand; Wage Dispersion; Share Equation (search for similar items in EconPapers)
JEL-codes: E24 J21 J23 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2014-11
New Economics Papers: this item is included in nep-lab, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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