Is there a relationship between intra-firm wage dispersion and productivity? Evidence from a Belgian linked employer-employee panel data

This paper examines the impact of wage dispersion on firm performance, measured by value-added per worker, in 2,354 Belgian firms of at least 25 workers. Using a matched employer-employee unbalanced panel data from 2002 to 2010, a conditional indicator of intra-firm wage dispersion is computed following the Winter-Ebmer and Zweimüller’s (1999) methodology. The results support the existence of a positive and hump-shaped relationship between wage dispersion and firm performance. The potential issue of simultaneity between the productivity and conditional dispersion is addressed to limit the end... Mehr ...