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Abstract:

Journal article
The Productivity-Wage Premium: Does Size Still Matter in a Service Economy?
Giuseppe Berlingieri, Sara Calligaris and Chiara Criscuolo March 2018

AEA Papers and Proceedings 108, 2018
DOI: 10.1257/pandp.20181068

The literature has established two robust stylized facts: (i) the existence of a firm size-wage premium and (ii) a positive relationship between firm size and productivity. However, the existing evidence is mainly based on manufacturing, which nowadays accounts for a small share of the economy. Using a unique micro-aggregated dataset covering 17 countries over 1994–2012, this paper compares these relationships across sectors. While the size-wage and size-productivity premia are significantly weaker in market services compared to manufacturing, the link between wages and productivity is stronger. In a service economy the stylized fact is a "productivity-wage premium" rather than a "size-wage premium."

DOI: 10.1257/pandp.20181068