Workers Are More Productive in Large Firms

Idson, Todd L.; Oi, Walter Y.

doi:10.1257/aer.89.2.104

Cited by 203 publications

(139 citation statements)

References 5 publications

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“…First, they offer a new explanation for the differences in productivity, capital intensity and the relative demand for skilled labor across firms (see Abowd et al, 1999 for instance) even in narrowly defined industries (Baily et al, 1992 andOlley andPakes, 1996), and especially across firm-size. Inter firm-size differences in the substitution parameters between skilled and unskilled labor and capital can explain empirical evidence that large firms have a significantly higher labor productivity (see Idson andOi., 1999 andHaltiwanger et al, 1999 for instance), a larger capital to labor ratio (see Oi, 1983) and a workforce with a higher educational attainment (see Oi, 1983 andHaltiwanger et al, 1999) than small firms. An intuitive explanation of differences in the ease to substitute labor inputs across firms leans towards factors like how work is organized at the work floor and how workers are supervised since these variables systematically vary between firms and industries.…”

Section: Resultsmentioning

confidence: 99%

Elasticity of substitution and productivity, capital and skill intensity differences across firms

Dupuy

Grip

2006

Economics Letters

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Section: Resultsmentioning

confidence: 99%

Elasticity of substitution and productivity, capital and skill intensity differences across firms

Dupuy

Grip

2006

Economics Letters

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“…First, prior work on the FSWE has concentrated primarily on attempting to account for its existence (e.g., Fox 2009;Idson and Oi 1999) and/or account for its decline (e.g., Even and Macpherson 2012;Hollister 2004). In this study, we took a different approach and examined whether previously documented declines in the FSWE are concentrated among lower-and middlewage workers.…”

Section: Discussionmentioning

confidence: 99%

Growing Apart: The Changing Firm-Size Wage Premium and Its Inequality Consequences

Cobb

Lin

2017

Organization Science

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Wage inequality in the United States has risen dramatically over the past few decades, prompting scholars to develop a number of theoretical accounts for the upward trend. This study argues that large firms have been a prominent labor-market institution that mitigates inequality. By compensating their low-and middle-wage employees with a greater premium than their higher-wage counterparts, large U.S. firms reduced overall wage dispersion. Yet, broader changes to employment relations associated with the demise of internal labor markets and the emergence of alternative employment arrangements have undermined large firms' role as an equalizing institution. Using data from the Current Population Survey and the Survey of Income and Program Participation, we find that in 1989, although all private-sector workers benefited from a firm-size wage premium, the premium was significantly higher for individuals at the lower end and middle of the wage distribution compared to those at the higher end. Between 1989 and 2014, the average firm-size wage premium declined markedly. The decline, however, was exclusive to those at the lower end and middle of the wage distribution, while there was no change for those at the higher end. As such, the uneven declines in the premium across the wage spectrum could account for about 20% of rising wage inequality during this period, suggesting that firms are of great importance to the study of rising inequality.Keywords firm-size wage premium, inequality, internal labor market, employment relationship Disciplines Management Sciences and Quantitative MethodsThis journal article is available at ScholarlyCommons:

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“…74 The reliance on establishment size information might at first glance raise the concern that the observed heterogeneity in immigration effects on native wages across the segments could reflect a mechanism depending on establishment size that is independent of interacting product and labor market regulation. In particular, the employer size-wage premium literature argues that small establishments may operate, in general, under very different conditions and constraints than larger ones (see, for example, Brown and Medoff (1989), Idson and Oi (1999), and Oi and Idson (1999). 75 Moreover, wage dynamics within firms and across firms may differ and, accordingly, the composition of wage dynamics may vary across segments that are specific to different establishment size groups.…”

Section: Identifying Product Market Types and The Strength Of Labor Mmentioning

confidence: 99%

Interacting Labor and Product Market Regulation and the Impact of Immigration on Native Wages

Prantl

Spitz‐Oener

2013

SSRN Journal

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Does interacting product and labor market regulation alter the impact of immigration on wages of competing native workers? Focusing on the large, sudden and unanticipated wave of migration from East to West Germany after German reunification and allowing for endogenous immigration, we compare native wage reactions across different segments of the West German labor market: one segment without product and labor market regulation, to which standard immigration models best apply, one segment in which product and labor market regulation interact, and one segment covering intermediate groups of workers. We find that the wages of competing native West Germans respond negatively to the large influx of similar East German workers in the segment with almost free firm entry into product markets and weak worker influence on the decision-making of firms. Competing native workers are insulated from such pressure if firm entry regulation interacts with labor market institutions, implying a strong influence of workers on the decision-making of profit-making firms.

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Workers Are More Productive in Large Firms

Cited by 203 publications

References 5 publications

Elasticity of substitution and productivity, capital and skill intensity differences across firms

Elasticity of substitution and productivity, capital and skill intensity differences across firms

Growing Apart: The Changing Firm-Size Wage Premium and Its Inequality Consequences

Interacting Labor and Product Market Regulation and the Impact of Immigration on Native Wages

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