Wage differentials by firm size : the efficiency wage test in a developing country

Tatiane Almeida de Menezes, Isabel Pessoa de Arruda Raposo

Using data from the Brazilian Labor Monthly Survey (PME/ IBGE) for the years of 2006 and 2007, the paper investigates if the wage differential by firm size in Brazil can be explained by the predictions of the Efficiency Wage Theory. It is adopted a Switching Regression Model to estimate if large size companies pay a higher wage premium for dispended labor effort, as compared to smaller enterprises. The results proved the EW predictions. Besides the positive relation between effort and wage differentials by firm size, the results also showed that such wage differences favors larger firms, as compared to smaller ones, because they tend to remunerate better more skilled employees with long term contracts.

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Year of publication:	[2011]
Authors:	Menezes, Tatiane ; Raposo, Isabel Pessoa de Arruda
Published in:	New challenges for European regions and urban areas in a globalised world : 51st ERSA Congress : 51st European Congress of the Regional Science Association International : 37th Spanish Regional Science Association Conference : 30th August - 3rd September 2011, Barcelona, Spain
Publisher:	[Louvain-la-Neuve] : European Regional Science Association
Subject:	Betriebsgröße \| Firm size \| Effizienzlohn \| Efficiency wages \| Lohnstruktur \| Wage structure \| Entwicklungsländer \| Developing countries \| Theorie \| Theory