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Establishment wage differentials
Julia I. Lane, Laurie A. Salmon, and James R. Spletzer
Economists have long known that individual wages depend on a combination of employee and employer characteristics, as well as the interaction of the two. Although understanding establishment wage differentials is important for labor economics and theories of the firm, little is known about the magnitude of these wage differentials. Primarily this stems from the lack of microdata linking individuals to the establishments where they work, but also it reflects the technical difficulties associated with separating out employee and employer effects. This article provides new findings using microdata from the Occupational Employment Statistics program at the Bureau of Labor Statistics that permit both of these issues to be addressed. The data used for the research contain information from more than half a million establishments, in all sectors of the economy, with wages reported for over 34 million individuals in more than 800 occupations. This article contributes to the growing body of literature analyzing the impact of firms’ compensation policies, and specifically, that which explores the topic of employer effects on wages.
This excerpt is from an article published in the April 2007 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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