Wage Structure and Firm Productivity in Belgium

Thierry Lallemand, Robert Plasman and Francois Rycx

No 12978, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The objective of this paper is twofold. First, we analyse the structure of wages within and between Belgian firms. Next, we examine how the productivity of these firms is influenced by their internal wage dispersion. To do so, we use a large matched employer-employee data set (i.e., a combination of the 1995 'Structure of Earnings' and 'Structure of Business' Surveys). On the basis of the methodology developed by Winter-Ebmer and Zweimuller (1999), we find that within-firm wage dispersion has a positive and significant effect on firm productivity. This result is robust to controls for individual and firm characteristics as well as to instrumenting the wage inequality variable. Findings also suggest that the intensity of this effect is stronger within firms with: i) a majority of blue-collar workers, and ii) a high degree of monitoring. These results are more in line with the 'tournament' models than with the 'fairness, morale and cohesiveness' models.

JEL-codes: J24 J31 J41 (search for similar items in EconPapers)
Date: 2007-03
New Economics Papers: this item is included in nep-bec, nep-eff and nep-lab
Note: LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

Published as Lazear, Edward P. and Kathryn L. Shaw (eds.) The Structure of Wages: An International Comparison, A National Bureau of Economic Research Conference Report. Chicago and London: University of Chicago Press
Published as Wage Structure and Firm Productivity in Belgium , Thierry Lallemand, Robert Plasman, François Rycx. in The Structure of Wages: An International Comparison , Lazear and Shaw. 2008

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Related works:
Chapter: Wage Structure and Firm Productivity in Belgium (2009)
Working Paper: Wage structure and firm productivity in Belgium (2009)
Working Paper: Wage structure and firm productivity in Belgium (2005)
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