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Wage Inequality and Firm Growth

Holger M. Mueller¹; Paige P. Ouimet²; Elena Simintzi³

¹ Stern School of Business, New York University, 44 West Fourth Street, New York, NY 10012, NBER, CEPR, and ECGI (e-mail: ) · ² Kenan-Flagler Business School, University of North Carolina at Chapel Hill, Campus Box 3490, McColl Building, Chapel Hill, NC 27599 (e-mail: ) · ³ Sauder School of Business, University of British Columbia, 2053 Main Mall, Vancouver, BC, V6T 1Z2, Canada (e-mail: )

We discuss firm-level evidence based on UK data showing that within-firm pay inequality--wage differentials between top- and bottom-level jobs--increases with firm size. Moreover, within-firm pay inequality rises as firms grow larger over time. Lastly, using wage data from 15 developed countries, we document a positive association between aggregate wage inequality at the country level and growth by the largest firms in the country. We conclude that part of what may be perceived as a global trend toward more wage inequality may be driven by an increase in the size of the largest firms in the economy.

DOI

10.1257/aer.p20171014

Volume

107 (5)

Pages

379-383

Language

en

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