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Intra-firm wage inequality and firm performance - First evidence from German linked employer-employee-data

  • Economic theory suggests both positive and negative relationships between intra-firm wage inequality and productivity. This paper contributes to the growing empirical literature on this subject. We combine German employer-employee-data for the years 1995-2005 with inequality measures using the whole wage distribution of a firm and rely on dynamic panel-data estimators to control for unobserved heterogeneity, simultaneity problems and possible state dependence. Our results indicate a relative minor influence of intra-firm wage inequality on firm productivity. If anything, they provide some support for a view suggesting that some inequality may be beneficial, while too much leads to a detrimental effect on productivity.

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Author:Nils Braakmann (Dr. rer. pol.)ORCiDGND
ISBN:1860 - 5508
Document Type:ResearchPaper
Year of Completion:2008
Date of Publication (online):2008/02/26
Release Date:2008/02/26
Tag:Wage dispersion; labor productivity
GND Keyword:Lohnniveau; Lohndifferenzierung; Produktivität
Institutes:Fak 2 - Wirtschaft und Gesellschaft (alt) / VWL
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft