Human Resource Management Practices and Wage Dispersion in U.S. Establishments



Among the three employee involvement practices defined by the percentage of workers participating
in regular problem-solving meetings, teamwork and job rotation, teamwork has a strong positive impact
on wage dispersion in the non manufacturing sector. On the other hand, given that the sample is very
small, this result may not be representative of the non manufacturing sector.

Table 6 presents the results based on the NES 1993 and one can see that they are similar to those
from the NES 1996 in that the workforce characteristics variables are the one affecting wage dispersion
while almost none of the technology variables and workplace organization variables have a significant
impact.

Note that in the NES 1993, among the workplace organization variables that may potentially affect
wage dispersion, it is the span of control represented by the number of workers per supervisors rather
than the hierarchical levels that has a significant positive impact on wage dispersion. This result
suggest that less supervision (or more workers per supervisors) would be associated with greater wages
for managers conditional on production workers’ wages. This could be interpreted as compensating
differentials to managers for taking on supervisory responsibilities. As with the NES 1996, teamwork is
associated with greater wage dispersion in the non manufacturing sector. In addition, problem-solving
meetings is weakly significant and also positively associated with greater wage dispersion in the non
manufacturing sector.

Overall, the results show that wage dispersion do not seem to be significantly affected by employee
involvement workplace practices as measured by the firm’s percentage of workers under the given prac-
tice. However, it is possible that the practices have an impact on wage dispersion for firms above or
below average wage dispersion. In other words, the effect of employee involvement practices on firms
wage dispersion may differ at different percentiles of the distribution of wage ratios. I now consider an
analysis of the practices intensity based on quantile regressions of the log of the manager/production
worker wage ratio.

The results of the quantile regressions are shown in table 7 for both the NES 1996 and NES 1993.
Interestingly, an analysis at different part of the wage ratio distribution across establishments show
some evidence of differential effects. Indeed, whereas the effects of the practices were very small and
non significant when estimated at the mean of the wage ratio distribution in the NES 1996 (table 5),
they are significant at the 25th percentile or for low wage dispersion firms. Moreover, the practices do
not have the same effects on wage dispersion. Whereas problem-solving meetings and job rotation are
associated with an increase in wage dispersion, self-managed teamwork reduces the dispersion.

In the non manufacturing case, the results based on the NES 1996 show that the effects of the
practices, similar in signs as those found at the mean of the wage ratio distribution (from table 5), are
significant at the 90th percentile or for high wage dispersion firms.

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