Is firm performance driven by fairness or tournaments? Evidence from Brazilian matched data

Luiz Esteves and Pedro Martins

No 16, Working Papers from Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research

Abstract: Theory and evidence are ambiguous about the effect of within-firm wage inequality on firm performance. This paper tests empirically this relationship drawing on detailed Brazilian matched employer-employee panel data, considering alternative measures of inequality and performance and different estimation methods. We find overwhelming evidence of a positive relationship between wage dispersion and firm performance when using cross-section analysis, especially in manufacturing. However, this relationship is weakened when controlling for firm time-invariant heterogeneity.

Keywords: Tournaments; Incentives; Equity; Wage Dispersion (search for similar items in EconPapers)
JEL-codes: D31 J31 J33 J41 J53 (search for similar items in EconPapers)
Date: 2008-07
New Economics Papers: this item is included in nep-lab and nep-lam
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Persistent link: https://EconPapers.repec.org/RePEc:cgs:wpaper:16

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