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Wage structure and firm productivity in Belgium

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Author Info
Thierry Lallemand () (DULBEA, Université libre de Bruxelles, Brussels)
Robert Plasman () (DULBEA, Université libre de Bruxelles, Brussels)
François Rycx () (DULBEA, Université libre de Bruxelles, Brussels)

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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 Zweimüller (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.

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Paper provided by Université libre de Bruxelles, Department of Applied Economics (DULBEA) in its series Working Papers DULBEA with number 05-14.RS.

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Length: 33 pages
Date of creation: May 2005
Date of revision:
Publication status: Forthcoming in E. Lazear and K. Shaw (eds.), The Structure of Wages within Firms. Europe and the United States, University of Chicago Press.
Handle: RePEc:dul:wpaper:05-14rs

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Related research
Keywords: Wage structure; Personnel economics; Matched employer-employee data.;

Other versions of this item:

Find related papers by JEL classification:
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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