Do newly founded firms pay lower wages? First evidence from Germany

Brixy U, Kohaut S, Schnabel C (2007)

Publication Type: Journal article

Publication year: 2007

Journal

Small Business Economics Springer Verlag (Germany)

Publisher: Springer Verlag (Germany)

Book Volume: 29

Pages Range: 161-171

Abstract

Using a linked employer-employee data set for Germany, this paper analyses wage setting in a cohort of newly founded and other establishments from 1997 to 2001. While theory provides alternative explanations for higher or lower wages in newly founded firms, we show empirically that start-ups tend to pay lower wages, ceteris paribus. On average, wages in newly founded establishments are 8 percent lower than in similar incumbent firms. This negative wage differential is substantially smaller in eastern than in western Germany. The wage differential is shown to decline over time as the newly founded firms become more mature.

Authors with CRIS profile

Claus Schnabel Lehrstuhl für Volkswirtschaftslehre, insbesondere Arbeitsmarkt- und Regionalpolitik

Related research project(s)

Löhne und Lohndifferenziale Jan. 1, 2000 - Jan. 1, 2003

Involved external institutions

Institut für Arbeitsmarkt- und Berufsforschung (IAB) der Bundesagentur für Arbeit (BA) DE Germany (DE)

How to cite

APA:

Brixy, U., Kohaut, S., & Schnabel, C. (2007). Do newly founded firms pay lower wages? First evidence from Germany. Small Business Economics, 29, 161-171.

MLA:

Brixy, Udo, Susanne Kohaut, and Claus Schnabel. "Do newly founded firms pay lower wages? First evidence from Germany." Small Business Economics 29 (2007): 161-171.

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