Vertical and horizontal wage dispersion and mobility outcomes: evidence from the Swedish microdata

Kacperczyk, A and Bachalandran, C (2018) Vertical and horizontal wage dispersion and mobility outcomes: evidence from the Swedish microdata. Organization Science, 29 (1). pp. 17-38. ISSN 1047-7039 OPEN ACCESS

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.

More Details

Item Type: Article
Subject Areas: Strategy and Entrepreneurship
Additional Information: © 2018 INFORMS
Funder Name: European Research Council, Riksbankens Jubileumsfond, Swedish Research Council Formas, Swedish Research Council Formas
Subjects: J > Job satisfaction
P > Pay differentials
Date Deposited: 30 Aug 2017 15:32
Last Modified: 17 Sep 2019 05:54
URI: http://lbsresearch.london.edu/id/eprint/854
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