2016/05 | LEM Working Paper Series | ||||||||||||||||
Innovation and within-firm wage inequalities: empirical evidence from major European countries |
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Valeria Cirillo, Matteo Sostero and Federico Tamagni |
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Keywords | |||||||||||||||||
within-firm wage inequalities, innovation, occupational wage-gap, quantile regressions, employer-employee matched data
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JEL Classifications | |||||||||||||||||
J31, O30, C21
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Abstract | |||||||||||||||||
A large literature analyses the links between wage inequality and
technology, without explicitly taking into account within-firm wage
dispersion. In this work we seek to fill this gap, exploiting a
matched employeremployee dataset from a large representative survey on
firms active in major European economies, providing several
contributions. First, we employ different measures of within-firm wage
dispersion, also accounting for wage differentials across managers
vis-a-vis lower-layers occupations. Second, we disentangle the
effects of innovation on wage dispersion within small vs. larger
firms. Finally, we compare the effect of innovation across the
spectrum between egalitarian and more unequal firms by means of
quantile regressions. Our findings, robust to controlling for
endogeneity and observed firm and workforce characteristics, suggest a
good deal of heterogeneity. Indeed, innovation effects do vary
according to the different measures of wage inequality, and also
across smaller and larger innovative firms.
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