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Erscheinungsjahr: 
2005
Schriftenreihe/Nr.: 
Bonn Econ Discussion Papers No. 3/2005
Verlag: 
University of Bonn, Bonn Graduate School of Economics (BGSE), Bonn
Zusammenfassung: 
In this contribution we examine the interrelation between intra-firm wage increases and firm performance. Previous studies have focused on the dispersion of wages in order to examine for the empirical dominance of positive monetary incentive effects compared to adverse effects due to fairness considerations. We argue that the dispersion of wage increases rather than wage levels is a crucial measure for monetary incentives in firms. The larger the dispersion of wage increases the higher the amount of monetary incentives in firms. In contrast, huge wage inequality without any promotion possibilities does not induce any monetary incentives. Evidence from unique Danish linked employer employee data shows that large dispersion of wage growth within firms is generally connected with low firm performance. The results are mainly driven by white collar rather than blue collar workers.
Schlagwörter: 
Fairness
Firm performance
Inequality
Monetary Incentives
Wage increases
Wage Dispersion
JEL: 
M52
J31
L25
Dokumentart: 
Working Paper

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