Vertical and horizontal wage inequality and mobility outcomes: evidence from the swedish microdata
2016 (English)Report (Other academic)
Using employer–employee matched data from Sweden between 2001 and 2008, we test hypotheses designed to assess the contingent nature of the relationship between wage inequality and cross-firm mobility. Whereas past research has mostly established that wage inequality increases inter-firm mobility, we investigate the conditions under which pay variance might have an opposite effect, serving to retain workers. We propose that the effect of wage inequality is contingent on organizational rank and that it depends on whether wages are dispersed vertically (between job levels) or horizontally (within the same job level). We find that vertical wage inequality suppresses cross-firm mobility because it is associated with outcomes beneficial for employees, such as attractive advancement opportunities. In contrast, horizontal wage dispersion increases cross-firm mobility because it is associated with outcomes harmful for employees, such as inequity concerns or job dissatisfaction. We further find that the vertical-inequality effect is amplified (mitigated) for bottom (top) different-level wage earners, consistent with the notion that bottom wage earners have the most to gain from climbing job ladders. Similarly, the horizontalinequality effect is amplified (mitigated) for bottom (top) same-level wage earners, consistent with the notion that bottom wage earners are most subject to negative consequences of this inequality. More broadly, the study contributes to our understanding of the relationship between wage inequality and cross-firm mobility.
Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2016. , 45 p.
The IAS Working Paper Series, 2016:6
IdentifiersURN: urn:nbn:se:liu:diva-132716OAI: oai:DiVA.org:liu-132716DiVA: diva2:1048233