Wage dispersion and firm performance: evidence from Kazakhstan
International Journal of Manpower
ISSN: 0143-7720
Article publication date: 28 July 2023
Issue publication date: 14 May 2024
Abstract
Purpose
The aim of the paper is to explore within-firm vertical pay inequality and its relation to firm size and firm performance.
Design/methodology/approach
Using firm-level microdata for Kazakhstan, the authors measure within-firm pay inequality as the wage differential between the top- and the bottom-level job occupations. The authors carry out their analysis based on panel regression models.
Findings
The authors find that within-firm pay inequality increases as firms grow. Further, they identify that this trend is mainly driven by top-occupation workers receiving more significant wage increases compared to lower-level workers as firms expand. Once the authors address concerns about endogeneity, they find that pay inequality is negatively associated with firm performance.
Practical implications
Developing strategies and policies that prioritize fairness and transparency in compensation practices is crucial during the expansion process of firms. By actively discouraging rent-seeking behavior, firms can create a work environment that promotes productivity and sustainability, ultimately leading to improved firm performance. The research findings highlight the importance of implementing context-specific interventions, recognizing that different environments may require tailored approaches to address pay inequality effectively.
Originality/value
This study contributes to the study of within-firm pay inequality, firm size and performance in an emerging economy, an area that has been largely overlooked in previous empirical research. The contrasting findings show the importance of the structural and industrial characteristics of emerging markets that contribute to broader and deeper impact of pay inequality compared to developed economies.
Keywords
Acknowledgements
This research was funded by Nazarbayev University's Faculty Development Competitive Research Grants program (Funder Project Reference: 16133385 - GSB2020001).
Citation
Yergabulova, A., Alpysbayeva, D. and Subramanian, V. (2024), "Wage dispersion and firm performance: evidence from Kazakhstan", International Journal of Manpower, Vol. 45 No. 3, pp. 425-448. https://doi.org/10.1108/IJM-11-2022-0542
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited