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Internal wage dispersion and firm performance: white‐collar evidence

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  • Arngrim Hunnes

Abstract

Purpose - The purpose of this paper is to investigate the net relationship between internal wage dispersion and firm performance. Design/methodology/approach - An empirical investigation of the relationship between internal wage dispersion and firm performance is performed using linked employer‐employee data for Norwegian firms from 1986 to 1997. Findings - Contrary to findings in previous empirical work of a positive relationship between internal wage dispersion and firm performance, the analysis finds no such evidence in Norwegian firms, even though internal wage dispersion has increased. Originality/value - The paper contributes to the relatively sparse empirical literature on internal wage dispersion and firm performance. Further, the analysis provides a new econometric specification for estimating internal wage dispersion that explicitly takes into account the hierarchical organization of firms. In contrast with previous work, the analysis also distinguishes between dispersion in both the fixed and variable portions of wages.

Suggested Citation

  • Arngrim Hunnes, 2009. "Internal wage dispersion and firm performance: white‐collar evidence," International Journal of Manpower, Emerald Group Publishing Limited, vol. 30(8), pages 776-796, November.
    • Handle: RePEc:eme:ijmpps:v:30:y:2009:i:8:p:776-796
    DOI: 10.1108/01437720911004425
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    Citations

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    Cited by:

    1. Simon Gächter & Daniele Nosenzo & Martin Sefton, 2012. "The Impact of Social Comparisons on Reciprocity," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(4), pages 1346-1367, December.
    2. Koelling Arnd, 2017. "Labor Demand and Unequal Payments: Does Wage Dispersion Matter? Using German Employer-Employee Data to Analyze the Influence of Intra-Firm Wage Inequality on Labor Demand," Review of Economics, De Gruyter, vol. 68(1), pages 1-39, April.
    3. Benoît Mahy & François Rycx & Mélanie Volral, 2011. "Does Wage Dispersion Make All Firms Productive?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(4), pages 455-489, September.
    4. Stoyanov Andrey & Zubanov Nick, 2022. "Skill complementarity in production technology: New empirical evidence and implications," German Economic Review, De Gruyter, vol. 23(2), pages 233-274, May.
    5. Yingchao Zhang & Oliver Fabel & Christian Thomann, 2015. "Pay inequity effects on back-office employees’ job performances: the case of a large insurance firm," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 23(2), pages 421-439, June.
    6. Arnd Kölling, 2014. "Labor Demand and Unequal Payment: Does Wage Inequality matter? Analyzing the Influence of Intra-firm Wage Dispersion on Labor Demand with German Employer-Employee Data," Working Paper Series in Economics 326, University of Lüneburg, Institute of Economics.

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