Intra-firm Wage Dispersion and Firm Performance

Rudolf Winter-Ebmer and Josef Zweimueller
Authors registered in the RePEc Author Service: Josef Zweimüller

No 8, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: Personnel economics has put forward conflicting arguments concerning the impact of increased wage dispersion within a firm on the productivity of its workers. Besides giving more incentives, bigger wage differentials might also give rise to less co-operation and more politicking amongst workers resulting in worse outcomes. We try to shed light on these issues using panel data for Austrian firms. As indicators for firm performance we use standardised wages. For white-collar wages the following picture emerges: more dispersion leads to higher earnings up to some point where the relation changes its direction. For blue-collar wages we find a positive association between dispersion and standardised wages between firms, but no relation within firms over time.

Keywords: wage dispersion; incentives; firm productivity (search for similar items in EconPapers)
JEL-codes: D31 J33 J53 (search for similar items in EconPapers)
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Citations: View citations in EconPapers (36)

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Related works:
Journal Article: Intra‐firm Wage Dispersion and Firm Performance (1999)
Working Paper: Intra-firm Wage Dispersion and Firm Performance (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:iewwpx:008

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