Work

Labor Supply and Firm Size

Year: 2026

Type: article

Abstract: ABSTRACT Larger firms feature (i) longer hours worked, (ii) higher wages, and (iii) smaller (larger) wage penalties for working long (short) hours. We reconcile these patterns in a general equilibrium model, which features the endogenous interaction of hours, wages, and firm size. In the model, workers willing to work longer hours sort into larger firms that offer a wage premium. Complementarities in hours generate wage penalties that increase with the distance from the usual hours. We use the model to argue that variation in average hours across firms contributes significantly to wage inequality.

Source: International Economic Review

DOI: 10.1111/iere.70094

Authors: Lin Shao, Faisal Sohail, Emircan Yurdagul

Institutions: University of North Carolina at Greensboro, The University of Melbourne, Centre for Economic Policy Research, Universidad Carlos III de Madrid

Language: English

Topic: Labor market dynamics and wage inequality

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,570