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Wage dispersion and firm performance: evidence from Kazakhstan

Author

Listed:
  • Dinara Alpysbayeva

    (Norwegian University of Life Sciences, School of Economics and Business)

  • Jozef Konings

    (Nazarbayev University, Graduate School of Business)

  • Venkat Subramanian

    (Nazarbayev University, Graduate School of Business)

  • Aigerim Yergabulova

    (Nazarbayev University, Graduate School of Business)

Abstract

This paper studies within-firm pay inequality and its impact on firm performance in Kazakhstan. We measure within-firm pay inequality as the wage differential between the top- and the bottom-level job occupations. First, we report that wage inequality is higher in larger firms. This finding is consistent with the theories of differentiated pay schemes and the scope of control. Further, we explore to what extent a rise in firm inequality affects firm performance. Although a higher wage dispersion may serve as a signal to attract more productive or talented workers, we find no evidence to support the idea that incentive-based pay can boost overall firm performance. The negative impact points to rent extraction by top job occupations.

Suggested Citation

  • Dinara Alpysbayeva & Jozef Konings & Venkat Subramanian & Aigerim Yergabulova, 2022. "Wage dispersion and firm performance: evidence from Kazakhstan," Working Papers 2022/01, Nazarbayev University, Graduate School of Business.
    • Handle: RePEc:asx:nugsbw:2022-01
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    More about this item

    Keywords

    Pay inequality; Job occupations; Performance; Firm size;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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