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Evidence on the Employer Size-Wage Premium from Worker-Establishment Matched Data

Evidence on the Employer Size-Wage Premium from Worker-Establishment Matched Data In spite of the large and growing importance of the employer size-wage premium, previous attempts to account for this premium using observable worker or employer characteristics have had limited success. The problem is that, while most theoretical explanations for the size-wage premium are based on the matching of employers and employees, previous empirical work has relied on either worker surveys with little information about the employer, or establishment surveys with little information about the workers. In contrast, this study uses the newly created Worker-Establishment Characteristic Database, which contains linked employer-employee data for a large sample of U.S. manufacturing workers and establishments, to examine seven explanations for the employer size-wage premium. A number of the explanations can account for some of the observed cross-sectional variation in worker wages. However, none of the explanations can fully account for the employer size-wage premium. In the end there remains a large, significant, and unexplained premium paid to workers of large employers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Economics and Statistics MIT Press

Evidence on the Employer Size-Wage Premium from Worker-Establishment Matched Data

The Review of Economics and Statistics , Volume 81 (1): 12 – Feb 1, 1999

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Publisher
MIT Press
Copyright
© 1999 President and Fellows of Harvard College and the Massachusetts Institute of Technology
ISSN
0034-6535
eISSN
1530-9142
DOI
10.1162/003465399557950
Publisher site
See Article on Publisher Site

Abstract

In spite of the large and growing importance of the employer size-wage premium, previous attempts to account for this premium using observable worker or employer characteristics have had limited success. The problem is that, while most theoretical explanations for the size-wage premium are based on the matching of employers and employees, previous empirical work has relied on either worker surveys with little information about the employer, or establishment surveys with little information about the workers. In contrast, this study uses the newly created Worker-Establishment Characteristic Database, which contains linked employer-employee data for a large sample of U.S. manufacturing workers and establishments, to examine seven explanations for the employer size-wage premium. A number of the explanations can account for some of the observed cross-sectional variation in worker wages. However, none of the explanations can fully account for the employer size-wage premium. In the end there remains a large, significant, and unexplained premium paid to workers of large employers.

Journal

The Review of Economics and StatisticsMIT Press

Published: Feb 1, 1999

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