Working in Family Firms: Less Paid But More Secure? Evidence from French Matched Employer-Employee Data

52 Pages Posted: 17 Jul 2011

See all articles by Andrea Bassanini

Andrea Bassanini

Organization for Economic Co-Operation and Development (OECD); IZA Institute of Labor Economics

Eve Caroli

Université Paris Dauphine

Antoine Reberioux

Université Paris VII Denis Diderot; University Antilles Guyane - Faculty of Law and Economics

Thomas Breda

Banque de France

Abstract

We study compensation packages in family and non-family firms. Using matched employer-employee data for a representative sample of French establishments, we first show that family firms pay on average lower wages to their workers. We find that part of this wage gap is due to differences in unobserved characteristics of workers across family and non-family firms. However, we also find evidence that company wage policies differ according to ownership status, so that workers staying in the same firm enjoy on average a 3% pay increase when a family firm becomes non-family owned and suffer a similar pay drop when the ownership transition occurs the other way round. In contrast, we find evidence that family firms are characterised by lower job insecurity, as measured by dismissal rates and by the subjective risk of dismissal perceived by workers. In addition, family firms appear to rely less on dismissals – and more on hiring reductions – than non-family firms when they downsize. We show that compensating wage differentials account for a substantial part of the inverse relationship between the family/non-family gaps in wages and job security.

Keywords: family firms, wages, job security, compensating wage differentials, linked employer-employee data

JEL Classification: G34, J31, J33, J63, L26

Suggested Citation

Bassanini, Andrea and Caroli, Eve and Reberioux, Antoine and Breda, Thomas, Working in Family Firms: Less Paid But More Secure? Evidence from French Matched Employer-Employee Data. IZA Discussion Paper No. 5842. Available at SSRN: https://ssrn.com/abstract=1887528

Andrea Bassanini (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

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Paris Cedex 16, 75775
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HOME PAGE: http://https://sites.google.com/site/bassaxsite/home

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Eve Caroli

Université Paris Dauphine ( email )

Place du Maréchal de Lattre de Tassigny
75775 Paris Cedex 16
France

Antoine Reberioux

Université Paris VII Denis Diderot

2, place Jussieu
Paris, 75005
France

University Antilles Guyane - Faculty of Law and Economics ( email )

Pointe à Pitre
France

Thomas Breda

Banque de France ( email )

Paris
France

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