2010): “Wage–size relation and the structure of work-force composition in Italian manufacturing firms

In this paper we study the impact of firms ’ productivity and scale of activity on the cost of labor for Italian manufacturing firms, and we investigate how the work-force composition affects the total expenditures for wages. Our analysis reveals that once accounted for productivity differences among firms, size still retains a positive effect on cost of labor. We show that the source of this phenomenon is the relatively higher proportion of non-production workers in bigger firms, which comes together with a cost of labor for white collars that is increasing in firm size