Owner Culture and Pay Inequality within Firms

66 Pages Posted: 8 Apr 2022 Last revised: 1 May 2023

See all articles by Iris Wang

Iris Wang

University of British Columbia (UBC) - Sauder School of Business

Jan Bena

University of British Columbia - Sauder School of Business

Guangli Lu

Chinese University of Hong Kong, Shenzhen

Date Written: March 31, 2022

Abstract

We study the impact of national culture on within-firm pay inequality using a unique administrative dataset covering closely-held immigrant-owned firms in Canada from 2001-2017. We show that within-firm pay inequality varies significantly with a firm owner’s country of origin. Firms owned by immigrants from more individualistic countries have higher pay inequality. Using a difference-in-differences analysis, we find a significant increase in within-firm pay inequality after the firm is taken over by immigrant owners from countries with higher within-firm-pay-inequality or more individualistic cultures. Our results suggest that informal institutions are important determinants of within-firm pay inequality across countries and thereby income inequality world-wide.

Keywords: national culture, pay inequality, individualism, immigration

JEL Classification: J31, J15, Z10

Suggested Citation

Wang, Iris and Bena, Jan and Lu, Guangli, Owner Culture and Pay Inequality within Firms (March 31, 2022). Available at SSRN: https://ssrn.com/abstract=4071250 or http://dx.doi.org/10.2139/ssrn.4071250

Iris Wang (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

HOME PAGE: http://iriswang.ca

Jan Bena

University of British Columbia - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
+1 604 822 8490 (Phone)

HOME PAGE: http://www.janbena.com

Guangli Lu

Chinese University of Hong Kong, Shenzhen ( email )

Teaching Building A
2001 Longxiang Road
Shenzhen, Guangdong 518172
China
18820958236 (Phone)
518172 (Fax)

HOME PAGE: http://sites.google.com/view/guanglilu

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