The authors consider six explanations for the positive relationship between employer size and wages: large employers (1) hire higher-quality workers, (2) offer inferior working conditions, (3) make more use of high wages to forestall unionization, (4) have more ability to pay high wages, (5)...

Workers' reports of employer size are highly correlated with true values; age of business and industry are reported with reasonable reliability. Larger employers offer more fringe benefits and more formalized personnel systems, but are less likely to match outside offers. Established employers...