The paper examines the labour quality explanation of the employer sizewage gap: larger firms pay higher wages because they employ more skilled workers. Most previous studies control for unobserved skills of workers using longitudinal data and the fixed effects estimator thus relying on a...

"We investigate various stylized facts on wage growth, labor mobility and firm size, to date unexplored in Italy. Using a wage decomposition that allows to separate "individual premiums" from firm-effects, we ascertain: (1) whether movers are better off than stayers; (2) whether firm size...

We show theoretically that when larger firms pay higher wages and are more likely to be caught defaulting on labour taxes, then large high-wage firms will be in the formal sector and small low-wage firms will be in the informal sector. The formal sector wage premium is thus just a firm size wage...