The Disappearing Large-Firm Wage Premium
AEA Papers and Proceedings
vol. 108,
May 2018
(pp. 317-22)
Abstract
Large firms have paid significantly higher wages for over a century. Based on administrative data we document that the large-firm wage premium (LFWP) has declined steadily over the last 30 years. Decomposing pay into worker and firm fixed effects, we then document that the LFWP can be largely explained by a rise in firm effects with firm size. The dramatic decline is due a reduction in these firm effects at large firms. These changes have been concentrated at very large employers. In contrast, worker composition has changed little. We also find the majority of the change occurs within industries.Citation
Bloom, Nicholas, Fatih Guvenen, Benjamin S. Smith, Jae Song, and Till von Wachter. 2018. "The Disappearing Large-Firm Wage Premium." AEA Papers and Proceedings, 108: 317-22. DOI: 10.1257/pandp.20181066Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- J31 Wage Level and Structure; Wage Differentials
- L25 Firm Performance: Size, Diversification, and Scope