Relationship Between Firm Size, Wage Dispersion and Firm Performance

Homero Zambrano ()
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Homero Zambrano: Tecnológico de Monterrey

Journal of Income Distribution, 2010, vol. 19, issue 2, 33-50

Abstract: A simple theoretical model explains the divergent empirical results concerning the effect of wage dispersion on firm performance. First, causality in the relationship is clarified. Then, through the model, it is shown that firm performance is non-monotonic with respect to wage dispersion. Likewise, it is shown that large firms are more likely to benefit from a dispersed wage structure than small firms.

Keywords: wage inequality; firm performance (search for similar items in EconPapers)
JEL-codes: D63 J31 (search for similar items in EconPapers)
Date: 2010
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