Small Employers, Large Employers and the Skill Premium
8 Pages Posted: 25 Jul 2015 Last revised: 21 Mar 2016
Date Written: January 24, 2016
I document the comovement of the skill premium with the differential employer size wage premium between high- and low-skill workers in U.S. manufacturing during the postwar era. For the baseline specification, i.e., establishments with at least 500 employees categorized as large employers and non-production workers as high-skilled, I obtain a correlation coefficient of 0.87. Exploiting variations across subindustries while controlling for other potentially relevant factors, I estimate that an increase by ten log-points in the differential size premium is associated with an increase in the skill premium by three log-points.
Keywords: skill premium, employer size wage premium, differential employer size wage premium, wage inequality
JEL Classification: J00, I26, J31
Suggested Citation: Suggested Citation