Wage differentials across firms: An application of multilevel modelling

Multilevel modelling techniques are applied to a dataset that matches firms and workers, to pinpoint and explain contrasts among company wage policies . Results indicate that wage differences across firms are statistically sig nificant, affecting every parameter of the pay policy (returns to schooling , tenure, experience, the penalty imposed on newly hired workers and on wom en). Gross labour productivity, average schooling in the firm, firm size an d economic sector are relevant forces shaping the contrast between employer s' pay policies. Copyright (C) 2000 John Wiley & Sons, Ltd.