Workforce composition, productivity and pay: The role of firms in wage inequality

Chiara Criscuolo, Alexander Hijzen, Cyrille Schwellnus, Erling Barth, Wen-Hao Chen (), Richard Fabling, Priscilla Fialho, Katarzyna Grabska-Romagosa, Ryo Kambayashi (), Timo Leidecker, Oskar Skans, Capucine Riom, Duncan Roth, Balazs Stadler, Richard Upward and Wouter Zwysen

No 241, OECD Social, Employment and Migration Working Papers from OECD Publishing

Abstract: In many OECD countries, low productivity growth has coincided with rising inequality. Widening wage and productivity gaps between firms may have contributed to both developments. This paper uses a new harmonised cross-country linked employer-employee dataset for 14 OECD countries to analyse the role of firms in wage inequality. The main finding is that, on average across countries, changes in the dispersion of average wages between firms explain about half of the changes in overall wage inequality. Two thirds of these changes in between-firm wage inequality are accounted for by changes in productivity-related premia that firms pay their workers above common market wages. The remaining third can be attributed to changes in workforce composition, including the sorting of high-skilled workers into high-paying firms.

Keywords: firm wage premium; productivity; wage inequality (search for similar items in EconPapers)
JEL-codes: D2 J31 J38 (search for similar items in EconPapers)
Date: 2020-05-01
New Economics Papers: this item is included in nep-bec, nep-eff and nep-lma
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Citations: View citations in EconPapers (5)

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https://doi.org/10.1787/0830227e-en (text/html)

Related works:
Working Paper: Workforce Composition, Productivity and Pay: The Role of Firms in Wage Inequality (2020)
Working Paper: Workforce composition, productivity and pay: the role of firms in wage inequality (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:oec:elsaab:241-en

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