Recent Canadian Evidence on Job Quality by Firm Size

Abstract

We provide recent evidence on job characteristics by firm size in Canada. Using a variety of household surveys, we assemble a wide set of facts on wages, fringe benefits and work schedules in small and large firms. We show that the wage gap between small and large firms has remained fairly stable over the past decade. After controlling for observable worker characteristics and industry-specific effects, large firms pay 15-20% more than small firms. Pension plan coverage remains at least four times higher in large firms than in small firms. While the gap in pension coverage between small and large firms has not increased over time for men, there is some evidence that it has increased for women. We assess the extent to which work schedules vary between small and large firms. Our results indicate that compared to workers in large firms, employees of small firms work at least as many weekly hours. Furthermore, they are more likely to work more than five days per week. This implies that the firm size wage premium cannot be explained by a longer workweek in large firms. As long as workers prefer working during the day, the greater frequency of shift work in large, goods-producing companies is one dimension along which work schedules are less desirable in large firms. According to the theory of compensating differentials, the size-wage differential may partially reflect the willingness of large firms to compensate workers for shift work. We test this hypothesis and conclude that shift work has virtually no effect on the firm size wage premium. Our results emphasize the need to look at several dimensions of work to assess how job quality varies between small and large firms.