Department of Management

Do Startups Pay Less?

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DOI

    M. Diane Burton, Cornell University, United States
  • Michael Slavensky Dahl
  • Olav Sorenson, Yale School of Management, Denmark
The authors analyze Danish registry data from 1991 to 2006 to
determine how firm age and firm size influence wages. Unadjusted
statistics suggest that smaller firms paid less than larger firms paid,
and that firm age had little or no bearing on wages. After adjusting
for differences in the characteristics of employees hired by these
firms, however, they observe both firm age and firm size effects.
Larger firms paid more than did smaller firms for observationally
equivalent individuals but, contrary to conventional wisdom,
younger firms paid more than older firms. The size effect, however,
dominates the age effect. Thus, although the typical start-up—being
both young and small—paid less than a more established employer,
the largest start-ups paid a wage premium.
Original languageEnglish
JournalIndustrial and Labor Relations Review
Volume71
Issue number5
Pages (from-to)1179-1200
Number of pages22
ISSN0019-7939
DOIs
StatePublished - 2018

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