Vertical and Horizontal Wage Dispersion and Mobility Outcomes: Evidence from the Swedish Microdata
Year: 2018
Type: article
Study design: Observational Study
Abstract: 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 dispersion and cross-firm mobility. Whereas past research has mostly established that dispersed wages increase interfirm mobility, we investigate the conditions under which pay variance might have the opposite effect, serving to retain workers. We propose that the effect of wage dispersion 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 dispersion suppresses cross-firm mobility because it is associated with outcomes beneficial for employees, such as attractive advancement opportunities. By contrast, horizontal wage dispersion increases cross-firm mobility because it is associated with outcomes harmful for employees, such as inequity concerns. We further find that the vertical-dispersion effect is amplified (mitigated) for bottom (top) different-level wage earners because bottom (top) wage earners have the most (least) to gain from climbing the job ladder. Similarly, the horizontal-dispersion effect is amplified (mitigated) for bottom (top) same-level wage earners because bottom (top) wage earners are most (least) subject to negative consequences of this dispersion. More broadly, this study contributes to our understanding of the relationship between wage dispersion and cross-firm mobility. The online appendix is available at https://doi.org/10.1287/orsc.2017.1169 .
Source: Organization Science
Institutions: London Business School, Linköping University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
Awards: Advancing Analytical Sociology, G2109279595, G3207356259, G393177772, G4777498468, G488436430, G492983887, G5702163051, G6522721181, Segregation: Micro mechanisms and macro-level dynamics, Dynamics of School Segregation: A Register-based Research Program, G8543646461, Analytical Sociology: Theoretical Developments and Empirical Research
OpenAlex ID: W2551937181