Firm-Size Wage Gaps, Job Responsibility, and Hierarchical Matching

I present the fact that wage gaps due to firm size increase with job responsibility. I use Swedish data to determine whether wage gaps increase with a direct measure of job responsibility, to compare the age patterns of the wage gaps for blue- and white-collar workers, and to compare wages by job responsibility and spans of control. With U.S. data, I compare supervisory to nonsupervisory occupations and find that wage gaps increase with job responsibility for most occupational ladders. This fact is consistent with hierarchical matching models in which the larger number of subordinates amplifies managerial talent. (c) 2009 by The University of Chicago.