Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/28189 
Authors: 
Year of Publication: 
2008
Series/Report no.: 
Working Paper Series in Economics No. 77
Publisher: 
Leuphana Universität Lüneburg, Institut für Volkswirtschaftslehre, Lüneburg
Abstract: 
Economic theory suggests both positive and negative relationships between intra-firm wage inequality and productivity. This paper contributes to the growing empirical literature on this subject. We combine German employer-employee-data for the years 1995-2005 with inequality measures using the whole wage distribution of a firm and rely on dynamic panel-data estimators to control for unobserved heterogeneity, simultaneity problems and possible state dependence. Our results indicate a relative minor influence of intra-firm wage inequality on firm productivity. If anything, they provide some support for a view suggesting that some inequality may be beneficial, while too much leads to a detrimental effect on productivity.
JEL: 
J31
M52
Document Type: 
Working Paper

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