Wage dispersion and technology: A firm-level analysis on European data

Within-firm wage dispersion represents a relevant dimension of the overall wage inequality. A large stream of literature has analysed the wage-technology link without explicitly taking into account within-firm wage dispersion. In this work we aim to empirically investigate how technology affects within-firm wage dispersion and how it changes according to employer size. By exploiting employer-employee data from a survey of European firms (Eurostat's Structure of Earnings Survey - 2010) matched with information on sector innovation derived from the Community Innovation Survey, we look at the impact of innovation across small and medium-large firms, both on the average wages paid by firms and on the degree of within-firm wage inequality. Furthermore, we distinguish between high-paying and low-paying firms and more equal and unequal firms by means of a quantile regression approach.