Molina-Domene, Maria (2018) Specialization matters in the firm size-wage gap. CEP Discussion Papers (CEPDP1545). London School of Economics and Political Science. Centre for Economic Performance, London, UK.
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Abstract
This study applies the O-ring theory to explain the firm-size wage premium. It focuses on the joint role of the division of labor and employee characteristics. Including the firm heterogeneity of occupations in a standard wage regression with individual fixed effect shrinks the size coefficient by a third. Labor productivity follows a similar pattern as wages. The intuition is that individuals who work for large firms focus on a limited number of tasks become more efficient and productive, and earn higher wages. Additional predictions originating from the labor specialization hypothesis receive support from the data.
| Item Type: | Monograph (Discussion Paper) |
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| Official URL: | http://cep.lse.ac.uk/ |
| Additional Information: | © 2018 The Authors |
| Divisions: | Centre for Economic Performance |
| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management |
| JEL classification: | J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L23 - Organization of Production |
| Date Deposited: | 26 Jun 2018 16:22 |
| Last Modified: | 15 Sep 2023 23:44 |
| Funders: | Economic and Social Research Council |
| URI: | http://eprints.lse.ac.uk/id/eprint/88696 |
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