Decomposing the large firm wage premium in Germany

Arbeitspapier

We use an extensive,matched employer-employee dataset to analyze the employer-size wage relation and its contribution to wage inequality in Germany. Applying models with additive fixed effects for workers and establishments, we document that the large firm wage premium, which has risen over 25 years, has only recently started to decrease. Our estimates show that the recent decline is due to a decrease in the variation of establishment-specific wage premiums both across establishment size groups and within. This decline together with decreasing worker segregation at small firms account for an overall reversal in the trend of increasing wage dispersion.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IAB-Discussion Paper ; No. 10/2020

Classification and Topics

• Classification: Wirtschaft ; Labor and Demographic Economics: General ; Labor Force and Employment, Size, and Structure ; Wage Level and Structure; Wage Differentials ; Particular Labor Markets: General
• Subject: firm size ; wage inequality ; wage premiums ; fixed-effect wage models ; firm and worker heterogeneity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lochner, Benjamin ; Seth, Stefan ; Wolter, Stefanie
• Event: Veröffentlichung
• (who): Institut für Arbeitsmarkt- und Berufsforschung (IAB)
• (where): Nürnberg
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/222395
• Last update: 10.03.2025, 11:43 AM CET