When it blows, it does not do so at the top: employment and wage inequalities in Norwegian small and large firms

Abstract

Panel data of Norwegian industries between 2001 and 2014 show that while employment growth occurs equally in small and large firms percentage-wise, employment reduction largely occurs in large firms. The findings imply that large firms are not an engine of employment growth but instead take a lead position in employment reduction. Large firms' employment reduction, in turn, increases wage inequality while median and mean wages are unaltered. The findings imply that large firms' layoffs do not dominate among top-earners but among employees earning median and mean wages.