Low job mobility fuels wage inequality between firms, study finds.
Differences in productivity between companies can lead to differences in wages, contributing to overall wage inequality. Around 15% of productivity differences between companies affect the wage differences. In countries and industries with less job mobility, low-productivity companies can pay lower wages without losing many workers. Competition in the market can increase this effect, while centralized bargaining and higher minimum wages limit it. Promoting job mobility could reduce wage gaps between companies and help workers move to more efficient companies.