Flattening Firms and Wage Distribution

Xin Jin ()

No 414, Working Papers from University of South Florida, Department of Economics

Abstract: This article studies the consequences of firm delayering on wages and the wage distribution inside firms. I consider a job-assignment model with asymmetric information and a slot constraint. The model predicts that more efficient firms are not necessarily larger than less efficient firms if firms are allowed to adjust their internal organizational structure through delayering. After delayering, wages at all levels increase and the wage distribution becomes more unequal. These predictions match a set of empirical findings in recent studies that are not well explained by existing theories.

Keywords: Delayering; asymmetric information; wage distribution; slot constraint (search for similar items in EconPapers)
JEL-codes: J31 M51 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2014-09
New Economics Papers: this item is included in nep-cta, nep-ger, nep-lab and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:usf:wpaper:0414

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