Title: Ownership and wages: spatial econometric approach

Authors: Marko Ogorevc; Miroslav Verbič

Addresses: Institute for Economic Research, Kardeljeva pl. 17, 1000 Ljubljana, Slovenia ' Faculty of Economics, University of Ljubljana, Kardeljeva pl. 17, 1000 Ljubljana, Slovenia

Abstract: The aim of our paper is to disentangle the relationship between ownership and wages using cross-section data for Slovenian medium size and large companies, where we account for spatial dependencies in wage determination. Space here is not considered in geographical context, but as a set of relations between firms originating from the same owner. Using a detailed database on Slovenian ownership, we apply a spatial econometric approach to detect any ownership-based wage spillovers, while accounting for different standard factors, such as size, capital intensity and productivity, and also some ownership-based variables, such as ownership concentration and ratio of cash-flow to control rights. Our results indicate that ownership is an important factor in explaining differences in wage levels. Many large owners divert cash-flow into their own pockets which has a detrimental effect on wages and indicates that this behaviour induced by owners is not sustainable.

Keywords: spatial econometrics; business ownership; wage differentials; wages; cross-section data; Slovenia; large companies; small and medium-sized enterprises; SMEs; spatial dependencies; wage determination; space; ownership-based spillovers; wage spillovers; standard factors; firm size; capital intensity; productivity; ownership-based variables; ownership concentration; cash-flow ratios; control rights; wage levels; large owners; sustainability; sustainable development; sustainable economy.

DOI: 10.1504/IJSE.2013.052971

International Journal of Sustainable Economy, 2013 Vol.5 No.2, pp.207 - 224

Published online: 31 Mar 2014 *

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