Human Capital and Information: The Employer Size-Wage Effect

Abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.. University of Wisconsin Press andThe Board of Regents of the University of Wisconsin System are collaborating with JSTOR to digitize, preserve and extend access to The Journal of Human Resources. ABSTRACT 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 andother evidence supports the contention that the establishment size coefficient captures the effect of unobserved human capital accumulation.

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