Scandinavian Working Papers in Economics

Working Paper Series,
Stockholm University, Swedish Institute for Social Research

No 12/2007: Which Wage Dispersion Matters to Firms' Performance?

Per Lundborg ()
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Per Lundborg: Swedish Institute for Social Research, Stockholm University, Postal: SE-106 91 Stockholm, Sweden

Abstract: Research on wage dispersion and firm performance focuses on intra-firm and inter firm effects irrespective of workers’ profession. We extend the analysis by considering dispersion within professions, within and across firms and within professions economy-wide. We find that the intra-firm dispersion of wages, which research so far has focused on, has limited effects on productivity compared to the economy-wide wage dispersion within the professions. As Swedish firms have differentiated wages among employees during the last 10-15 years also the economy-wide dispersion within professions has increased thus contributing considerably to the strong performance of the Swedish economy in the late 1990's.

Keywords: -

16 pages, November 30, 2007

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