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Wage Inequality’s Decreasing Effect on Enterprise Operating Revenues

Author

Listed:
  • Jarle Aarstad

    (The Mohn Centre for Innovation and Regional Development, Western Norway University of Applied Sciences, P.O. Box 7030, NO-5020 Bergen, Norway)

  • Olav Andreas Kvitastein

    (The Mohn Centre for Innovation and Regional Development, Western Norway University of Applied Sciences, P.O. Box 7030, NO-5020 Bergen, Norway)

Abstract

This study assesses whether wage inequality affects enterprises’ operating revenues and whether operating revenues reversely affect wage inequality. To study our research questions, we analyze panel data from Norway and find that wage inequality decreases operating revenues. I.e., increasing high earners’ wages relative to those earning low ones—or decreasing low earners’ wages relative to those earning high ones—decreases operating revenues. It implies that wage inequality is detrimental to enterprise performance. Reversely, decreasing operating revenues increases wage inequality. I.e., low earners’ wages are reduced relatively more than those earning high ones when enterprise revenues decrease. Increasing operating revenues, on the other hand, does not decrease wage inequality.

Suggested Citation

  • Jarle Aarstad & Olav Andreas Kvitastein, 2023. "Wage Inequality’s Decreasing Effect on Enterprise Operating Revenues," Economies, MDPI, vol. 11(7), pages 1-8, June.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:7:p:178-:d:1183922
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    References listed on IDEAS

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    2. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
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