Volume 30, Number 1 (Winter) 1995
Reilly, Kevin T. 1995. "Human Capital and Information: The Employer Size-Wage Effect." Journal of Human Resources 30(1):1-18.
This paper examines the issue of the establishment size-wage effect. It analyzes a cross-section for the year 1979, with information on 607 individuals and the 60 private sector establishments where they work. It discusses four theories of the establishment size-wage effect and uses empirical proxies to test them. It shows that when a dummy variable on computer access in the establishment is introduced as a regressor, the establishment size variable is an insignificant regressor. This result and other evidence supports the contention that the establishment size coefficient captures the effect of unobserved human capital accumulation.
Kevin T. Reilly is an assistant professor of economics at York University, North York, Ontario, Canada. This paper is a revised version of his unpublished University of Toronto dissertation (Reilly 1991). The data set used in this paper was collected by R. Apostle, D. Clairmont, and L. Osberg of Dalhousie University using funds provided by the Social Science and Humanities Research Council, the Council of Maritime Premiers and Dalhousie University. The author wishes to thank this group and their funding agencies. The paper benefitted from the comments made by participants in workshops at William and Mary College, the University of Waterloo, the University of Toronto, the Canadian Economics Association Meetings in Kingston, June 1991, and the Western Economics Association Meetings in San Francisco, July 1992. The author gratefully acknowledges specific comments by D. Benjamin, M. Gunderson, D. Hammermesh, C. Robinson, W. Simpson, A. Siow, and the referees. The author also thanks J. Ham for pushing him in the direction of this topic and for criticisms, of a previous draft. He exonerates all individuals except himself from the responsibility for any errors that remain. The data used in this article can be obtained beginning in July 1995 through July 1998 from the author at the Department of Economics, York University, 4700 Keele St., North York, Ontario, Canada, M3J 1P3. Internet: kreilly@rsrch.econ.yorku.ca.
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