23 Jul 2009

Wage gap between large and small firms still unexplained

3:34 pm on 23 July 2009

Research from Waikato University says skill levels cannot be used to explain pay gaps between employees from large and small firms.

The data found that in New Zealand, as in the UK, Ireland and the United States, found big firms are paying employees a premium of as much as 30%.

Waikato University economics professor John Gibson says after reviewing 12,000 workers across nine countries there was no clear evidence that big firms hire better workers.

He says of the two remaining explanations - that big firms are more productive or that they enjoy a market power - productivity will be the next area under examination.

Professor Gibson says the debate is particularly important to New Zealand as it has so few large companies.