Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33476
Authors: 
Lallemand, Thierry
Rycx, François
Year of Publication: 
2005
Series/Report no.: 
IZA Discussion Papers 1778
Abstract: 
We investigate how the wage distribution differs among small and large establishments in four European countries. Findings show that within-establishment wage dispersion rises with size because large employers have a more diverse workforce. They also suggest that screening and monitoring costs imply a lower sensitivity of wages to ability in larger establishments. Smaller establishments are found to rely more on incentive-based pay mechanisms, particularly in countries with a low trade union coverage rate. Further results indicate that between-establishment wage dispersion decreases with employer size because smaller establishments are technologically more diversified and hence exhibit greater diversity in average workforce skills.
Subjects: 
wage structure
establishment size
decomposition of wages
Europe
JEL: 
J21
J31
Document Type: 
Working Paper

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