pte20240927004 Company/Economy, Education/Career
According to a study by Cornell University, disparity exists due to lower wages in large companies
Ithaca (pte004/27.09.2024/06:15)
Smaller companies often offer higher starting salaries than larger companies, attracting better talent, even though the larger companies have more influence on the market. This is the conclusion of a study by Cornell University. “If the productivity of a company and the skills of the employees complement each other, we actually want better qualified employees to work in more productive companies,” says expert Thomas Jungbauer.
Mismatch in wages
“In labor markets for highly skilled workers, where there are only a limited number of workers to choose from, market power matters because vacancies in larger companies compete for workers,” the expert argues. This rivalry could lead to a disparity through lower wages in large companies.
The other key takeaway: The benefits of offering different wages for positions with the same requirements within a company are limited. “Even the small advantages of equal starting wages in order to avoid tensions and lawsuits can force companies not to offer different wages for their open positions,” said Jungbauer.
Looking at real labor markets
The scientist is concerned about the fact that most research in this area in the past has only looked at one-to-one models in which each company hires a single worker – as opposed to scenarios in which companies employ a different number of job offers and therefore differ in their market power, as is common in real labor markets.
“If I’m a large company, I’m damaging all of my other job offers if I advertise a higher salary. In equilibrium, I have less incentive to advertise high salaries than, for example, a small company with a single vacancy,” says Jungbauer, summing up his research results.
(End)
