Journal Article

Wage–size relation and the structure of work-force composition in Italian manufacturing firms

Giulio Bottazzi and Marco Grazzi

in Cambridge Journal of Economics

Published on behalf of Cambridge Political Economy Society

Volume 34, issue 4, pages 649-669
Published in print July 2010 | ISSN: 0309-166X
Published online September 2009 | e-ISSN: 1464-3545 | DOI: https://dx.doi.org/10.1093/cje/bep046
Wage–size relation and the structure of work-force composition in Italian manufacturing firms

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  • Manufacturing
  • Wages, Compensation, and Labour Costs
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In this paper we study the impact of firms’ productivity and scale of activity on the cost of labour for Italian manufacturing firms, investigating how the work-force composition affects the total expenditures for wages. Our analysis reveals that once productivity differences among firms are accounted for, size still retains a positive effect on cost of labour. We show that the source of this phenomenon is the relatively higher proportion of non-production workers in bigger firms, which results in a cost of labour for white collar workers that increases with increasing firm size.

Keywords: Wage–size relation; Work force composition; Hierarchy theory of the firm; Labour productivity; D21; J31; L11; L60

Journal Article.  7371 words.  Illustrated.

Subjects: Manufacturing ; Wages, Compensation, and Labour Costs ; Production and Organizations ; Market Structure, Firm Strategy, and Market Performance

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