Intra-Firm Wage Dispersion and Firm Performance - Is There a Uniform Relationship?

23 Pages Posted: 2 May 2007

See all articles by Uwe Jirjahn

Uwe Jirjahn

University of Trier - Faculty of Economics

Kornelius Kraft

University of Dortmund - Department of Economics; IZA Institute of Labor Economics

Abstract

Empirical studies examining the impact of intra-firm wage dispersion on firm performance report extremely mixed results. Yet, almost all of the studies implicitly assume that there is a uniform relationship between wage dispersion and firm performance across all types of firms. In contrast, we argue that the effects of wage dispersion depend on the industrial relations regime and the type of incentive scheme employed. Using data on a sample of manufacturing establishments in Germany, our findings confirm that wage dispersion interacts with internal promotions, individual and group piece rates, works council presence and collective bargaining coverage. This strongly supports the notion that moderating factors play an important role in the relationship between intra-firm wage dispersion and productivity.

Suggested Citation

Jirjahn, Uwe and Kraft, Kornelius, Intra-Firm Wage Dispersion and Firm Performance - Is There a Uniform Relationship?. Kyklos, Vol. 60, No. 2, pp. 231-253, May 2007, Available at SSRN: https://ssrn.com/abstract=982711 or http://dx.doi.org/10.1111/j.1467-6435.2007.00370.x

Uwe Jirjahn (Contact Author)

University of Trier - Faculty of Economics ( email )

Trier, 54286
Germany

Kornelius Kraft

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany
+49 231 755-3152 (Phone)
+49 231 755-3155 (Fax)

IZA Institute of Labor Economics

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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
26
Abstract Views
758
PlumX Metrics