, Volume 34, Issue 5, pp 427–451 | Cite as

The establishment-size wage premium: evidence from European countries

  • Thierry Lallemand
  • Robert Plasman
  • François Rycx
Original paper


This study examines the magnitude and determinants of the establishment-size wage premium in five European countries using a unique harmonised matched employer–employee data set (the 1995 European Structure of Earnings Survey). This data set enables to test the validity of various traditional explanations of the size wage gap (i.e. the labour quality hypothesis, the theory of compensating wage differentials, the role of monitoring and institutions) and of more recent hypotheses (i.e. size differences in job stability and in the concentration of skilled workers). We find some support for traditional explanations, but there remains a significant wage premium for workers employed in large establishments. Further results indicate that the magnitude of this premium fluctuates substantially across countries and appears to be negatively correlated with the degree of corporatism.


Establishment-size Wages Europe 

JEL Classification




This paper is produced as part of a Targeted Socio-Economic Research (TSER) project on Pay Inequalities and Economic Performance (PiEP) financed by the European Commission (Contract nr. HPSE-CT-1999-00 040). Due to confidentiality issues, the 1995 ESES is only available for members of the PiEP research project (http://cep.lse.ac.uk/piep/). We would like to thank the Coordinating Editor of the journal (Michael Pfaffermayr) and two anonymous referees for their valuable suggestions and comments. The usual disclaimer applies.


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Copyright information

© Springer Science+Business Media, BV 2007

Authors and Affiliations

  • Thierry Lallemand
    • 1
    • 2
  • Robert Plasman
    • 1
  • François Rycx
    • 1
    • 3
  1. 1.Department of Applied Economics (DULBEA)Université Libre de BruxellesBrusselsBelgium
  2. 2.Centre de Comptabilité et Contrôle de GestionUniversité Libre de BruxellesBrusselsBelgium
  3. 3.Institute for the Study of Labor (IZA-Bonn)BonnGermany

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