Establishment Size and the Dispersion of Wages: Evidence from European Countries

Thierry Lallemand and Francois Rycx

No 1778, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We investigate how the wage distribution differs among small and large establishments in four European countries. Findings show that within-establishment wage dispersion rises with size because large employers have a more diverse workforce. They also suggest that screening and monitoring costs imply a lower sensitivity of wages to ability in larger establishments. Smaller establishments are found to rely more on incentive-based pay mechanisms, particularly in countries with a low trade union coverage rate. Further results indicate that between-establishment wage dispersion decreases with employer size because smaller establishments are technologically more diversified and hence exhibit greater diversity in average workforce skills.

Keywords: decomposition of wages; establishment size; wage structure; Europe (search for similar items in EconPapers)
JEL-codes: J21 J31 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2005-09
New Economics Papers: this item is included in nep-bec, nep-eec, nep-ent and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Published - published in: Applied Economics Quarterly, 2006, 52 (4), 309-336

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Related works:
Journal Article: Establishment Size and the Dipsersion of Wages: Evidence from european Countries (2006)
Working Paper: Establishment size and the dispersion of wages: evidence from European Countries (2006)
Working Paper: Establishment size and the dispersion of wages: evidence from European Countries (2006)
Working Paper: Establishment size and the dispersion of wages: evidence from European Countries (2005)
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