A Service of zbw Leibniz-Informationszentrum Wirtschaft Leibniz Information Centre for Economics LIS Working Paper Series Wage Inequality and Firm Growth Wage Inequality and Firm Growth *

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in February 2015 Abstract We examine how within-firm skill premia-wage differentials associated with jobs involving different skill requirements-vary both across firms and over time. Our firm-level results mirror patterns found in aggregate wage trends, except that we find them with regard to increases in firm size. In particular, we find that wage differentials between high-and either medium-or low-skill jobs increase with firm size, while those between medium-and low-skill jobs are either invariant to firm size or, if anything, slightly decreasing. We find the same pattern within firms over time, suggesting that rising wage inequality-even nuanced patterns, such as divergent trends in upper-and lower-tail inequality-may be related to firm growth. We explore two possible channels: i) wages associated with "routine" job tasks are relatively lower in larger firms due to a higher degree of automation in these firms, and ii) larger firms pay relatively lower entry-level managerial wages in return for providing better career opportunities. Lastly, we document a strong and positive relation between within-country variation in firm growth and rising wage inequality for a broad set of developed countries. In fact, our results suggest that part of what may be perceived as a global trend toward more wage inequality may be driven by an increase in employment by the largest firms in the economy. * We thank Xavier Giroud, Claudia Goldin, and Johannes Stroebel for valuable comments and Raymond Story at Income Data Services (IDS) for help with the data. † NYU Stern School of Business, NBER, CEPR, and ECGI