Firm Size , Earnings , and Displacement Risk
نویسنده
چکیده
Analogous to the well-documented firm size-wage differential there also exists a differential in layoff risk according to firm size. Using Austrian data I discuss several reasons for this puzzle, including on-the-job training and workers' heterogeneity. If less stable (and also less able) workers select themselves into small, unstable and low paying firms, predicted layoff risk of workers can be used as a proxy for heterogeneity of workers and therefore be included in wage regressions. Doing this, one-third of the size earnings premium can be explained. JEL: J31, J63
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