Decomposing the large firm wage premium in Germany

Benjamin Lochner, Stefan Seth and Stefanie Wolter

No 02/2020, FAU Discussion Papers in Economics from Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics

Abstract: We use an extensive, matched employer-employee dataset to analyze the employersize wage relation and its contribution to wage inequality in Germany. Applying models with additive fixed effects for workers and establishments, we document that the large firm wage premium, which has risen over 25 years, has only recently started to decrease. Our estimates show that the recent decline is due to a decrease in the variation of establishment-specific wage premiums both across establishment size groups and within. This decline together with decreasing worker segregation at small firms account for an overall reversal in the trend of increasing wage dispersion.

Keywords: firm size; wage inequality; wage premiums; fixed-effect wage models; firm andworker heterogeneity (search for similar items in EconPapers)
JEL-codes: J00 J21 J31 J40 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-bec and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Decomposing the large firm wage premium in Germany (2020)
Working Paper: Decomposing the large firm wage premium in Germany (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwqwdp:022020

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