Firm‐provided social concerns – just another compensating wage differentials story?

Firm‐provided social concerns – just another compensating wage differentials story? Purpose – To analyse two important effects of the level of social concern in the firm. First, the effect on the labour force composition, i.e. do particular types of concerns attract certain kinds of employees? Second, the effect on the wage level within the firm, i.e. do firm‐provided social concerns substitute for money wages, or are they provided as an additional compensation? Design/methodology/approach – Empirical analysis using a survey on more than 2,000 firms, linked to administrative data for each employee in the firms. Estimates wage equations using the IV approach to deal with endogeneity of the level of social concerns. Two competing theories aiming to explain the use of social concerns toward employees, the compensating wage differential theory and corporate social responsibility, are compared. Findings – Finds indications in favour of the compensating wage differential theory when looking at wage effects at the firm level, whereas looking at the target group level finds that white‐collar workers might experience higher levels of social concerns without having lower wages, which contrast the theory of compensating wage differentials. Originality/value – The paper compare two well‐established theories within two different disciplines – the compensating wage differential theory from economics, and CSR from management. This is done using solid empirical analysis. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Manpower Emerald Publishing

Firm‐provided social concerns – just another compensating wage differentials story?

International Journal of Manpower, Volume 26 (7/8): 32 – Oct 1, 2005

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Publisher
Emerald Publishing
Copyright
Copyright © 2005 Emerald Group Publishing Limited. All rights reserved.
ISSN
0143-7720
DOI
10.1108/01437720510628130
Publisher site
See Article on Publisher Site

Abstract

Purpose – To analyse two important effects of the level of social concern in the firm. First, the effect on the labour force composition, i.e. do particular types of concerns attract certain kinds of employees? Second, the effect on the wage level within the firm, i.e. do firm‐provided social concerns substitute for money wages, or are they provided as an additional compensation? Design/methodology/approach – Empirical analysis using a survey on more than 2,000 firms, linked to administrative data for each employee in the firms. Estimates wage equations using the IV approach to deal with endogeneity of the level of social concerns. Two competing theories aiming to explain the use of social concerns toward employees, the compensating wage differential theory and corporate social responsibility, are compared. Findings – Finds indications in favour of the compensating wage differential theory when looking at wage effects at the firm level, whereas looking at the target group level finds that white‐collar workers might experience higher levels of social concerns without having lower wages, which contrast the theory of compensating wage differentials. Originality/value – The paper compare two well‐established theories within two different disciplines – the compensating wage differential theory from economics, and CSR from management. This is done using solid empirical analysis.

Journal

International Journal of ManpowerEmerald Publishing

Published: Oct 1, 2005

Keywords: Pay differentials; Social responsibility

References

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