Estimating the Wage Premium to Supervision for Middle Managers in Different Contexts: Evidence from Germany and the UK

Abstract

The analysis of wage distribution has attracted scholars from different disciplines seeking to develop theoretical arguments to explain the upward or downward trend. In particular, how the middle management wage premium changes in different contexts is a relatively neglected area of research. This study argues that wage distribution changes in different contexts, representing different forms of capitalism. To shed light on this, we considered the size and the shape of the wage premium to supervision paid to middle managers in Germany and the UK. We find evidence of two forms of context: middle managers are paid differently for the same task according to the economy where they work; of this amount, about half of the difference is related to the context. We frame the analysis within the literature on varieties of capitalism.

Working from home and income inequality: risks of a ‘new normal’ with COVID-19

“…Researchers, not only in the economic literature, are often interested in evaluating the homogeneity of distributions across different samples and the Kolmogorov-Smirnov (K-S) statistic, which is obtained as the largest discrepancy of the empirical distribution functions by these samples, is probably the most used approach (Lehmann and Romano 2005 ; Leonida et al 2020 ; Otsu and Taniguchi 2020 ). Therefore, in order to preliminarily test any difference in all moments between the two distributions, we develop the non-parametric K-S test based on the concept of stochastic dominance.…”

“…As for the skill heterogeneity among employees, we enlarge the set of covariates used for UPE estimates including other three (probably endogenous) variables to solve this issue. Specifically, we add the occupation skill level of employees to control for skill heterogeneity as suggested by Picchio and Mussida ( 2011 ) and Leonida et al ( 2020 ). The occupation skill level is included through a set of dummy variables representing different levels of the ISCO classification of occupations.…”

“…This method estimates quantiles for two counterfactual distributions, one if every employee had a high WFH feasibility, the other if they had all a low WFH feasibility, where in the first stage the conditional probability of performing an profession with a low(high) WFH feasibility is estimated by using a Probit model, given a set of characteristics. In other words, the counterfactual density can be determined by a ‘reweighting’ function that estimates the probability of having a WFH feasibility as a function of all the other characteristics to be kept constant (Leonida et al 2020 ; Scicchitano et al 2020 ).…”

What does the wage structure depend on? Evidence from the national salary survey in Spain

“…Concerning the responsibility within the organization, the intensity is a little high in people who occupy positions with responsibility in the 2010 and 2014 series, while in 2006 the opposite is found. In this sense, some investigations point out that the wage premium to supervision, usually associated with middle management, represents a fixed component, although middle managers are paid differently for the same task according to the context where they work (Leonida et al, 2020). The type of contract has no relevance, although the intensity is more considerable in permanent than in temporary workers.…”

All that Glitters Is not Gold. Effects of Working from Home on Income Inequality at the Time of COVID-19

“…Finally, we further enlarge the set of covariates used for UPE estimates including other three probably endogenous variables. Specifically, we include the physical proximity and the disease exposure indexes recently provided by Barbieri et al (2020) and the occupation skill level of employees to control for skill heterogeneity as suggested by Picchio and Mussida (2011) and Leonida et al (2020). As for the physical proximity index, it ranges from 0 to 100 and it is measured for each occupation at 5-digit ISCO classification level through the following question from the ICP 2013 survey: "During your work are you physically close to other people?".…”